Status on 2019 Booking Season

Your Best Friend – Your Revenue Manager!

I’m the Revenue Manager for Seachange. You’ve probably seen me at Starbucks pouring over (hah! no pun intended) spreadsheets analyzing booking data. I dip in and out several times a day. I pull pacing reports (year on year comparisons). I track actual data on Guest booking patterns and compare to see where we were the same time the prior season.

Before I dive into the numbers I needed to explain a little about how we track bookings.

What is Tracked? There are two numbers I watch: revenue and occupancy. Revenue is a priority over occupancy; although occupancy is a bellwether for revenue. We set revenue goals for the season in the preceding fall (or at time of first listing) when we get you to sign off on your annual Rate Sheet.

How is it Tracked? You’ll remember that with your annual Rate Sheet you get your summer season rental income proforma. We plug in your approved rates and use the proforma to track actual revenue and occupancy reported to you real time as bookings come in. You get a tracking update to the summer rental income proforma with each booking.

Reporting. There are 17 weeks, or 119 nights in our summer season. Revenue is an easy one to track and report. Occupancy, however, is a tricky one. Since we begin the summer booking season with strict stay rules of a 7-night minimum and a check in/check out day of Friday or Saturday (depending on property), then common sense dictates we track occupancy in weekly units. We enforce strict summer stay rules often until 3 weeks prior to an arrival date. If the week is still available, then at that point we lower the nightly minimum to 3-nights, and bump up the nightly rate. This way we get at least mini-weeks/long weekends booked and recover most, if not all, and often more than the 7-night rate that has not been filled.

What Makes Reporting Of Occupancy Tricky?

  1. Owner Time. Your Listing Agreement covers this. It’s your property, you should be able to use it when you want to use it. Recognize, however, that taking dates off of Guest availability impacts your bottom line. This is an important reason why we share our summer rental income proforma/tracking sheet with you. Using the sheet, you can see the impact on your Gross and Net Income by blocking dates off of Guest use. Notice however, that the proforma/tracking sheet is broken down by weekly blocks. If you book Owner Time for part of a week, or crossing over two week blocks that cross over a normal turnover day (Friday or Saturday), then this means that for occupancy purposes, a full week (or both weeks) are recorded as Owner Time. From a revenue perspective, our reservations calendar and our Agents work to usually fill the odd gaps with Guest bookings and we’re able to match or exceed our revenue goals set out the prior fall.
  2. Dynamic Rate Pricing (DRP). Here’s an explanation of how it works. You approve it. We use it. The other rental agencies don’t use it. We make you more money doing so. That simple. Not simple to manage, however. DRP runs 24×7 365. It’s not just tied in with a number of weeks ahead of a summer weekly check in date. DRP monitors Guest booking patterns not just for your property, but across all of our managed inventory, company wide. Also, with our recent purchase of new software, we can now access vacation rental market booking data for our area and further fine tune our rates and stay rules in line with real time Guest booking data. How cool is this? So, with DRP not just tied in with looking for empty dates 3 weeks prior to a Guest check in, this means that minimum stay rules and nightly rates adjust to maximize revenue constantly.

Where am I going with this?

This makes reporting of weekly availability blocks in the 17-week summer season difficult when a Guest may have booked part of a week and not a 7-night stay.

Similar to Owner Time, revenue is easy to track and report.

For occupancy, we have to make a decision, do we track based on number of nights booked? Or do we track occupancy based on weekly units? We track occupancy based on weekly units for the summer season. If a Guest has booked part of a week, or broken two weeks up by booking across a normal turnover day (Friday or Saturday), then we record the entre week as occupied in our reporting system, but out reservation calendar, and our Agents track empty nights and work to fill them to maximize revenue.

Now The Important Stuff – Where is 2019 Compared to 2018?

2018 to 2019 Booking Pacing Analysis

  1. Tracking number of weeks booked for 2019 summer season: we’re currently 48% booked versus 54% booked at the same time in 2018. This means that 2019 is running around 6% lower than 2018 at this time last year.
  2. Tracking number of weeks booked for the 2018 summer season as a whole: we finished up at 95% occupancy. This means we booked  41% of our summer weeks after April 24 2018.
  3. Tracking number of nights booked for 2019 summer compared to same time last year (April 24): 2019 is running around 12% lower than 2018 at this time last year.
Rehoboth Beach houses

What Does This Mean, Andy?

  1. Summer 2019 bookings are running behind the same time last year for 2018 bookings. It’s not a huge gap, but enough that we’re monitoring carefully.
  2. I’m encouraged that 41% of 2018 summer occupancy was booked after April 24, 2018 and that we finished the season with a healthy 95% occupancy and a record-setting revenue year!
  3. It’s time now to be lowering some 7-night rates on key weeks to stimulate bookings. It’s not just that bookings are down on last year, inquiries are down also. This means that, just like in real estate sales, pricing is higher than the current market can bear. Our 20% pre-approved rate adjustment window will kick in. We will test Guest sensitivity to small reductions in 7-night rates and monitor inquiries and bookings.
  4. In order to recover the income from lowered 7-night rates, DRP will kick in to increase nightly rates on 3-night minimum stays.

What Do I Think is Causing a Lower, Slower 2019 Summer Rental Season?

  1. Inventory. There is more quality vacation rental inventory on the market. With more inventory Guests are not feeling the pressure to book as early as possible for fear of missing out. Instead they’re waiting to book until it suits their needs. Our Guest demographics skew heavily to family groups with children. School systems are notoriously slow to lock in end and start dates, dates of after school and summer programs. Guests are now waiting on these dates settling as opposed to booking early and trying to cancel later. The flip side of this is that we’re seeing less requests to cancel (don’t worry we have a 0 cancellation policy).
  2. Online Shopping! Stay with me here – I believe I’m right on this one too! With the rise of technology and the accompanying reshaping of bricks and mortar retail, Guests are now trained to look online and scour for deals. Seachange is not a huge lover of the branding message of deals, deals, deals! We leave that to Crazy Eddie and his, “INSANE PRICES!” (just showed my age there). We’re just not fans of training our Guests to bargain basement vacation rental pricing. Frankly we rarely need to use a “Deal” to stimulate bookings. DRP takes care of that for us. That being said, Guests are waiting longer to book in the thinking that the longer they wait, the lower the price will be. That’s old school summer beach rental thinking – wait until the property is empty and it’s crisis mode to bargain basement pricing to get it filled, at any cost. DRP takes care of this for us at Seachange. In fact, with Seachange it mostly goes the oppsite way. The longer you wait, the more you pay. Stays booked closer to the arrival date tend to be shorter at higher nightly rates, often exceeding the weekly rate for that timeframe.
  3. Change in Size of Guest Groups. We’re not seeing the large groups that used to book at the Delaware Beaches. It’s rare to get calls from groups of 18, 20, 25 people these days. Frankly, we’re relieved! We purposely do not have properties of that capacity in our inventory. With that number, you get greater potential for noise, damage, parking issues and all that go along with that. Our listing model is to have enough properties clustered together that if we get a large group inquiry, we can accommodate them in multiple properties and spread the income across multiple Owners. It’s a win-win! Large groups were always in a rush to book as early as possible in the fear that they would not find a property that could accommodate them.

So, generally slower than 2018, but not overly concerned at this point. DRP will kick in and should correct this.

Thank you for staying with me during this manifesto! Andy.