Sometimes, the only thing we have to fear is fear itself- but when the world around you goes crazy, you must adapt- and help as you can. If you are not a doctor saving lives, but a vacation rental manager, you will try to save your margins to save your company, and save the jobs that depend on you.
Which is hard in a context when your incoming bookings go down by 50% - see the excellent article from @thibaultmasson https://www.rentalscaleup.com/vacation-rental-data-and-charts-coronavirus-impact/ and these Keydata graphs:
In that context, yield management recovers its original meaning: selling the right stay at the right time to the right guest at the right price - to optimize not only your revenue, but more importantly your profits (curiously, that last part has been forgotten in the last years by many vacation rental companies and service providers - see our previous article ).
Sad thing is, in times of crisis maximizing profits might actually just mean minimizing losses...On the other hand, what does not kill us makes us stronger- pricing for profit will help survive the critical months and prosper faster after.
In this article, we share ideas to salvage what can be in Coronavirus crisis months.
Defense - doing your best with already booked guests and cancellations
True, usually we think of revenue management in terms of pricing to get new bookings. But in crisis times, when you may lose more bookings than you get, your thinking must include a defensive side. Anyway, if you tried to forget about it, your reservation team's inbox will remind you soon enough 😬
To reach actionable policies and pricing, you will have to segment existing bookings. At this stage, I find it useful to retain 2 dimensions:
|Guest country or region/Your country||Low risk country||Medium risk country||Quarantined country|
|Low risk guest||
Example 1: out of date
Example 2: LA guest to Hawaii
Example 1: Portuguese Guest to Italy
Cancel smoothly -see tip 2- and replace what you can with locals or stranded people- see tip 6
|Medium risk guest|
Example 2: Chinese guest to Hawaii
|Example: Italian company, Italian Guest:
See tip 2- replace foreigners with locals
How to check the risk: Google it! But a good starting point are the WHO statistics and the interactive map like this one https://zahranicni.ihned.cz/c1-66726720-mapa-sireni-koronaviru-podivejte-se-jak-se-postupne-infekce-sirila-z-ciny-do-sveta leveraging data from John Hopkins University https://github.com/CSSEGISandData/COVID-19/tree/master/csse_covid_19_data/csse_covid_19_time_series
How to simplify/scale the analysis and action:
1. Do it at least for your main segments (like, the 5 main countries of origin of your guests) and leverage templates and your CRM to be efficient and precise. Do not forget to distinguish by time horizon (bookings for next month vs. further in the future).
2. Explain the methodology to your reservationists so they finish precisely booking by booking.
What to do in the grey zone- neither black, nor red, all of these medium-medium situations:
be agile, start with the clear cases, the black, then the red. And then yes, the challenge is to deal case by case with the grey zones.
Tip 1: Re-assure your safe guests that are not at risk
Ok, so you judged they are not at risk and they are not a risk. This is in the black background cell in the matrix above. In these times of panic and changes, this is something to prove and update...
It is usual that the fear of a crisis/event does much more damage to your bookings than the actual risk.
Past example and tips:
In my vacation rental company in Prague, about ten years ago, I had to deal with a flood. Le Monde, the famous newspaper, chose the headline"Prague est sous les eaux" (Prague is under the water) and illustrated that with a picture of a river bank under water. What they forgot to mention is that the river bank under water was the lower bank, and there were several more meters to go up before the water level would even start to threaten any apartment... The noble newspaper that gives lessons of "déontologie" to everyone was just trying to make more money with sensational/misleading/fake news that sound dreadful. Does that ring any bell?
You can check the example of what we wrote then on https://www.rentego.com/prague-center-is-not-flooded/, and do the same for today using facts and WHO statistics on Coronavirus.
Use facts- statistics like WHO statistics
Share live videos from your destination
Manage expectations - be honest about limitations to the stay: what is closed, which areas are not safe to visit, etc.
The past example- flood in Prague:
The actionable task list for your team:
- Check statistics and advice to build the safety check matrix above (make sure to appoint someone to update it every day)
- For the safe box (the black background cell above), list the countries that are relatively safe. If your own country is not one of them, pass and wait for next tips ;-)
- Prepare your templates- the web page as above, and a corresponding email with the same content.
- Decide which time horizon/booking window you will address: bookings for this month, the next two months, more?
- Communicate it. Depending on your size and tech stack, the scenario may be easier or harder:
|The pink scenario:||Your PMS and CRM enable you to filter the bookings from safe countries for the next x months and send them the message.|
|The In real Life- more common scenario:||
You may have to:
b. Sort out and filter those that match the guest country and booking start date you target
c. Join/link/lookup your bookings and guests tables. Tricks: if you are still missing a guest country/region field, you can map country/phone codes.
d. Link that to or go dig into declarations to foreigners police/wishbox/checkin etc. where the other members of the group filled in their country of residence.
|The brute force scenario:||You let your reservationist go through each reservation and send manually the right message according to the matrix above. The good news are that there are so few new bookings coming in that they may actually have the time to do that.|
To be continued...we will try to post one tip a day.
Tip 2: Deal quickly and pro-actively with cancellations of those at risk, and try to re-rent fast
Tip 3: Replace foreign guests with locals
Tip 4 : Replace senior guests with young guests
Tip 5: Target safe regions
Tip 6: identify less Coronapanic-sensitive niches
Tip 7: Revise your prices
Tip 8 : Replace short -term rentals with medium or long-term rentals
Tip 9: Adapt all your mix, from cleaning
Tip 10: make your bets about how long the crisis will last- and adjust your options accordingly
The webinar is planned for Tuesday, March 17th at 16:30 CET that is (11:30 AM Tuesday, Eastern Time (ET)). If you cannot attend, we will send you a recording.
You can vote below for which tip you would like to read first, we'll try to prioritize.