The travel market is facing unprecedented uncertainty. In the best of years, predicting what will happen for a specific vacation rental is hard. This year it’s nearly impossible. Booking patterns have changed dramatically, with most bookings happening in 2-3 week windows (rather than the 6-12 months of last year). So, what can you do?
Planning is still important
It’s still critical to plan. Many mid-size or smaller property managers might feel like throwing up their hands, but having a plan, even if it turns out to be wrong is far better than not. For large property managers, planning is critical to staffing, cash flow and other decisions.
Take a day to look at your 2019 and 2020 bookings and make some estimates about 2021. Here’s a checklist of what to look for. At a minimum you want a plan that shows you roughly how many bookings you’ll have each month, and what kind of occupancy that will result in, at what average price. This gives you a headline idea of your revenue each month, and your staffing needs.
Look at major holidays and events, then your high season, and then your low season. Each can behave differently; here are things to look for and use in your planning.
What can you predict in December? March?
Many markets are predictable – or used to be. If you know that you’ll get 20% of your 2021 bookings by December 2020, that can be helpful in creating a forecast. Even if it’s wrong – it’s better to have some idea. Look back at your number last December – do you have that pattern? Look at March too – perhaps people hold off on booking a few months. Our Overview page is a great way to compare where you are now to where you were last year at a glance.
Can you predict when bookings usually happen?
Most people will book either right when a property becomes available (a year in advance), or right after a major vacation (for example, booking Labor Day right after the 4th of July, or booking Christmas right after Labor Day). Each market is different – look at your bookings. When do they come in? This also gives you an idea of when to focus on managing pricing and availability: before people book!
Do you expect pricing to be higher this year?
We do! Because of COVID-19, local drive-to market demand is higher and longer than ever. One customer has more bookings in September than they had in July – and July was a record year! Instead of adjusting for inflation, as in past years, think about what your market will look like if prices are 10-20% higher. You can impact this, too, by implementing sound revenue management strategy.
Put this all together
Set your forecast using your expected occupancy, pricing, and (optionally, for fees other than nightly rate) your number of bookings. This will give you a forecast to work with, even with all the uncertainty of COVID-19.
The most successful property managers revisit their forecast once a month, if not more frequently (especially for peak holidays). By watching your comparables, and tracking your own performance, you can drive higher revenue for yourself and your owners – whether that is going for price in a high demand year (likely this year!) or capturing more occupancy by lowering price when demand is softer than expected, working from a forecast will position you for success.