Instant Software Blog

JUST RELEASED! February 2010 State and Regional Vacation Rental Industry Trends Report

Instant Software is pleased to announce the release of the February 2010 Vacation Rental Industry Trend Report. This monthly report discusses State and Regional trends, highlighting the top and bottom performing states in comparison with 2009 Vacation Rental activity, focusing on revenue streams, number of arrivals and length of stays.

This and all other ISI trend reports are the most useful and accurate resource in the vacation rental market because Instant Software is the largest technology provider in the industry. Our leadership position provides you with the greatest amount and broadest range of data available.

Instant Software releases Monthly, Semi-Annual, and Annual Trend Reports available for the Vacation Rental industry. Visit our website to get February's Trend Report and other industry reports and White Papers on a monthly basis!

Get the February 2010 Trend Report Now!

Instant Software Partners With RentExpert, Adding Additional Marketing Programs Through ISILink

Instant Software, Inc. (ISI) announces its partnership with RentExpert, a website that provides only “professionally managed” vacation rentals for popular destinations worldwide.  RentExpert offers free branding on their website for Vacation Rental Managers and promotes their properties through affiliate sites such as Yahoo and AOL, growing mobile device market, email campaigns, and on RentExpert.com.  RentExpert also has increased search engine optimization compared to Rent-By-Owner listings sites and a Hot Deals program to help Vacation Rental Managers sell their inventory at a discount with no commission to RentExpert.

RentExpert will be integrated with Instant Software’s ISILink, the largest web distribution system for the Vacation Rental Industry.  Through ISILink, RentExpert will have the ability to access over 200,000 vacation rental properties running on ISI’s market leading business management systems for real-time automated availability and reservations.

RentExpert is dedicated to promoting the advantages of renting professionally managed homes and firmly believes that professional vacation rental managers are the best in the industry when it comes to taking care of guests.  Some threats to the continued growth of the vacation rental industry are unmemorable guest experiences, poorly set expectations, and properties that are not well maintained. RentExpert enhances what managers already do well and helps grow the vacation rental business by properly setting the expectation of a guest’s vacation experience.

“Vacation goers are looking for professionally managed properties and our partnership with Instant Software gives us the ability to offer the greatest number of integrated properties,” said Ganapathy Krishnan, CEO of RentExpert. “Instant Software clients consist of first-class vacation rental managers and we are thrilled to send vacationers to them for bookings.”

“We welcome RentExpert into the Instant Software Channel Partner network because of their capability to work with the unique elements of the Vacation Rental industry and ability to guarantee great guest experiences,” explains Dave Hopcroft, CEO of Instant Software, “this partnership is yet another advantage that ISI offers our property managers through ISILink and adds to the growing dominance that ISILink represents as the Vacation Rental Industry’s only true Global Distribution System.”

RentExpert is a member of VRMA and only works with vacation rental managers who maintain high standards of cleanliness and hospitality. To learn more about RentExpert, please see this video:  http://www.rentexpert.com/video_intro.

Annual Report: State and Regional Trends for 2009

Instant Software Research Center is pleased to release its Annual Report: State and Regional Vacation Rental Trends for 2009:

• 2009 Guest Arrivals.  These reports analyze advance booking windows and the year-to-year trends that shape 2009 profit and loss statements: guest reservations, revenue, and nights.
• 2009 Bookings.  We also analyze 2009 booking activities, which influenced 2009 results and are the best measure of consumer booking trends going forward.

The attached report is the most useful and accurate resource for trends in the vacation rental market because Instant Software is the largest technology provider in the industry.  Our leadership position provides you with the greatest amount and broadest range of data available.

Another software company recently reported “national” trends.  While we commend them for their effort, we urge you to be careful making any conclusive business decisions based off of that report which only measures a small handful of industry data with a limited cross-section of client-types.   While there are similarities in the reports, that company reported markedly more volatile booking swings, different proportions of weekend arrivals, more 1-3 day stays, fewer 4-7 day stays, and a heavier balance toward short vs. longer advance booking windows. 

Moving forward, Instant Software will be making Monthly, Semi-Annual, and Annual Trend Reports available for Instant Software clients (Entech, PropertyPlus, First Resort, and V12.NET users).  If you are not currently an Instant Software client, and would like to receive these reports, please feel free to contact us at 866-746-6347 or Sales@InstantSoftware.com.

DOWNLOAD REPORT NOW

ISI Announces Partnership with One-of-a-Kind Vacation Rental Website, ParadiseHunter.com

Instant Software’s relationship with ParadiseHunter.com brings together technology, property management companies, and vacation travelers for a new and unique travel planning experience.


Instant Software (ISI) proudly announces its partnership with ParadiseHunter.com, a vacation planning search engine that offers a variety of resources  to help  vacationers plan the perfect trip. By combining Detailed Destination Information, a television series, and the ability to book travel directly on their website, ParadiseHunter.com is unique in its ability to connect travelers to the people and services who will create their memorable travel experience.

ISILink, ISI’s global distribution system for the Vacation Rental industry, will provide ParadiseHunter.com with the information needed to seamlessly create and maintain Vacation Rental listings, including property information, rate cards and up-to-date availability calendars.

ParadiseHunter.com’s President, Dennis Kambeitz is excited about the benefit this relationship will have for their customers. “ISI’s property management solutions manage more than 250,000 properties throughout North and Central America and the Caribbean.  Our affiliation will increase the number of destinations represented on our website, as well as provide an influx of top-rated and quality rentals for our website’s visitors to choose from.”

ParadiseHunter.com is a comprehensive website for travelers, inspiring and educating them with information, videos, and photos on destinations worldwide.  It features a powerful search engine for Vacation Rentals and International Real Estate, making it enjoyable and easy for visitors to find the perfect destination.  In addition, website visitors can watch the Paradise Hunter TV Show online to learn more about the different locations and activities.

“Paradise Hunter brings a unique and  wide-spread approach to the marketing of Vacation Rentals, which we feel will greatly benefit our clients,” said Dave Hopcroft, CEO of ISI.  “With the economy still sluggish in the United States, Paradise Hunter’s popularity with Canadian travelers will help our clients tap into a growing customer base of thirty million people, resulting in increased occupancy rates.”

Volsky’s View: When to Rely on Your Accountant...and When Not To

Knowing the Difference Between Accounting and Financial Management

By George Volsky, Instant Software - Director of Research

I was sitting in the office of a property manager who related this story.  The manager and the company owner had met with their accountant, who—perhaps defending his turf--chided the manager, “You don’t need to be putting so much attention on the accounting.”
  
The problem here is that the accountant was wrong, for reasons I summarize below.  He could have done some serious damage if the company owner had taken this seriously.

Accounting involves the recording and reporting of revenues and expenses. Its most visible role involves taxes. Accountants sort revenue and expenses into categories to create the tools you use to manage: Profit and Loss Statements, Balance Sheets, Cash Flow Statements, etc.

You’d think that it is a natural extension of an accountant’s job to give good advice on budgets, revenue prospects and expenses. But this is an unwarranted assumption.

Financial management is the use of accounting to set budgets and make business decisions essential to a company’s growth and profits. Managers use accountants’ reports to decide which expenses to cut, to set budgets, and to decide how to spend money.

The Problem. Unfortunately, most companies in our industry have not set up their books to meaningfully match expenses to revenues. Decision makers can’t accurately measure whether each expense is one that should continue or can be justified.

Our industry does not have a standard system of accounts. Two competing vacation rental managers almost never calculate costs and allocate revenues the same way., i.e.:

a. Housekeeping and maintenance costs may or may not include the wages of front office staff that take and enter work orders or track whether a home has been cleaned and inspected.

b. Two competitors’ are likely to calculate marketing costs differently. Some will include brochure expenses such as pre-press; printing; postage; staff-time related to unit descriptions; staff time expended with homeowners over unit descriptions; pro-rated administrative expenses (telephone; office space); staff time expended on taking or selecting photos; web site expenses such as give-backs and welcome baskets. Some will omit many of these expenses.

It is a general principle of good financial management that every revenue stream should be matched against its underlying expenses. But in many companies, the general ledger accounts were haphazardly pieced together when the owner or book keeper decided to put a particular expense in a particular category, with little thought to consistency or financial management. The accountant simply makes sure the company complies with tax and escrow rules.

In situations like this, the company decision makers are working blind, without the kind of financial analysis they need to make decisions. It doesn’t have to be that way. You don’t need a consultant to fix this.

Who is Monitoring the Bookkeeping?  Generally, company decision makers understand that they should never delegate financial management to accountants. But they often don’t know when their accounting is not set up to help them make good business decisions. Example:

Add-on fees today often generate revenues that account for all profit and much expense. Yet our accounting often fails to allocate these fees to the services they subsidize.

Ask yourself, “Why is it that so many companies believe their maintenance department loses money, but never seem to fix the problem?” Are their managers inept?  Or do their gut instincts tell them that the accounting doesn’t tell the whole story:  when fees are considered, the rental manager is keeping a big enough share of the renter’s money to cover all expenses, plus earn a profit.

The Reality. In the case of my office visit, the manager who was criticized by the accountant had been reorganizing the company’s general ledger accounts to get a more accurate picture of the revenue and expenses associated with each of the company’s major services. The well intended, but incorrect admonition by the accountant arose when the manager and company owner consulted with him to make sure they were not violating generally accepted accounting principles.

His expertise is accounting. Theirs is the vacation rental business.

Now, my friends’ company accountant does the books for several rental managers.  He knows how other companies in the area are categorizing revenues and expenses. He prides himself on his work, and does have a better-than-average grasp of business management.

But in this case, better-than-average is not good enough. This translates to the fact that none of the competing companies have a good handle on their finances.

I am not knocking accountants (though this one didn’t understand financial accounting).  I’m pointing out that there is a difference between accounting (which accountants do well) finance, and business administration, which are AKK separate disciplines in all business schools. 

As an attorney who has worked side-by-side with accountants, economists, and MBAs for years, I can tell you simply, “Managers should never, never leave business decisions to lawyers or accountants.”  Neither group has the experience, industry expertise or skill set to foresee the changes your company must make to stay competitive. 

What You Can Do.  If you are a decision maker, reflect on the likelihood that your accountant is better at identifying an expense for tax reporting purposes than he is at organizing your general ledger in a way that will help you make important business decisions.

Casually browse through your general ledger accounts. If this reveals several instances where department costs appear misplaced, do what my friends did:  spend a few days (or a week) to come up with your thoughts for changing the accounts to give you a better view of each department’s revenue and matching expenses. Then ask your accountant for input, with his job being to tell you whether you’ve missed something, or whether your reorganization would contravene sound accounting practices.

In this changing market, the competitors who can best use their accounting to make business decisions will have an advantage.

Volsky’s View: Cutting Costs in Vacation Rentals By Modifying Your Business Model

By George Volsky, Instant Software - Director of Research

In a recent blog, I suggested that you look for ways to become more efficient in five categories. In this blog, I include my thoughts about the last of these: “Changing your business model.”

For years, I’ve joined the rest of you in following the role of rent-by-owner. RBOs are simply one facet of changes that are arising from the Internet, which is today responsible for many new expense categories and more pervasive discounting.  Among my conclusions is this:

The legacy of the Internet (and Rent-By-Owner) evolution will not ultimately be the eradication of mainstream rental managers but fundamental changes in what they do and how they do it.

Taking a Lesson from the Real Estate Industry

We have seen a trend similar to rent-by-owner in real estate sales, when FSBO’s (“For Sale By Owner”) came into prominence on the back of new consumer-friendly Internet technology.

In the early years, real estate agents worried that FSBO would put them out of business.  They saw FSBO as the enemy, and worked actively to oppose it.  In extreme examples, the government took action to prevent the industry from relegating FSBOs in the context of multiple listing services. 

Before long, the National Association of Realtors was advising sales agents to find ways to work with FSBOs.  Their polls concluded that the vast majority of homeowners were reluctant to price their home on their own, market it properly, and do the related paperwork.  The FSBO trend peaked, and trailed off to occupy a fraction of the industry’s annual sales.

The FSBO trend changed the industry.  Many real estate agents began to offer services a la carte. They let FSBOs pay them to do almost any aspect of the sale:  provision of signs, marketing, MLS listings, and the like.  The industry also departed from its commission structures to become much more competitive.

Changes in Our Industry

Today, there are many new rental managers who began by renting their own homes.  They have leveraged the Internet to redefine the way they do business.  Many do not have central offices and don’t require renters to check in and check out.  Many are able to service far larger geographical areas.  Some rely primarily on the Internet for bookings and/or allow their reservations staff to work from home.

The net effect is a breed of vacation rental companies that have lower costs than mainstream competitors (and provide less service).  They can charge lower commissions, or spend more money on Internet marketing.  This new breed is growing, proving that mainstream rental managers have many homeowners and renters who would accept less service in order to get lower prices.  This new breed is steadily stealing inventory and market share from mainstream managers.

There will be many markets in which there is no discernable change from the Internet.  But you cannot afford to take this for granted.  Change can occur if one of your mainstream competitors is sold to a new-breed rental manager. Rental managers must always have a contingency plan .

1. Think about ways your company can profit by providing services to RBOs;
2. While you are at it, consider services to vacation home owners who do not rent;

Also consider whether it can be in your company’s interest:

• To specialize in a type of vacation rentals that is efficient (high-end luxury homes; or more basic “Motel-6” type properties, etc.)
• If you are large and secure in your market, to split your operations into two or more distinct businesses;
• To offer a la carte services so that the renter and homeowner need only pay for services they really want.

As farfetched as some of these ideas sound, we are seeing similar trends in industries where the business models were so perfected that such changes would have been considered unthinkable ten years ago.

I’ll cover some of these in future blogs.

Volsky’s View: Cutting Costs in Vacation Rentals by Trimming Fat

By George Volsky, Instant Software - Director of Research

In a recent blog, I suggested that you look for ways to become more efficient in 5 categories. I include my thoughts about the fourth of these:  trimming fat to become more lean and fit.

During prosperity, companies, like people, tend to buy things they don’t absolutely need. 

Sometimes, the purchase looked like it could produce great benefits, and the buyer gave it a chance because he could afford to experiment.  Sometimes, the purchase generates tools that the manager loves but fail--when the numbers are examined—to generate enough new bookings, homeowners or savings to justify the program’s cost.

When prosperity disappears, it can be difficult to re-evaluate the cost-effectiveness of expensive systems that we formerly celebrated as a generator of competitive advantage.  All programs benefit someone, and any effort to eliminate them generates pushback, especially if they have been integrated into the company culture.

No one can help you find the fat.  But I can offer this encouragement to do so:

As much as you might hate to reduce services, amenities, or staff, you have a duty to your company’s employees, renters, and homeowners to generate enough profit during slow times to meet your company’s cash flow needs and pay for new initiatives that may be needed to retain and attract homeowners and renters.  By becoming lean, you free up money that can be redirected to buy more service than your competitors (allowing you to offer customers a better value).  Conversely, you will lose renters and homeowners if you allow a competitor to become leaner (more efficient) than you are.

Failure to trim fat jeopardizes the major stakeholders in your business, all of whom depend on you.

• Unneeded “fat” translates to lower productivity for each dollar of expense;
• When customers think they can get better value elsewhere and start to leave, others start thinking about doing so;
• Once homeowners and renters feel that another company offers a better value, it takes years to turn that perception around.

Being a manager means making the hard decisions.   This is a time of change in our industry, which makes it the time to revisit all the assumptions behind major expenses.

Volsky’s View: Cutting Costs in Vacation Rentals by Downsizing Outdated Promotional Programs

By George Volsky, Instant Software - Director of Research

In a recent blog, I suggested that you look for ways to become more efficient in 5 categories.

In this blog, I include my thoughts about the third of these: Revisiting each of your company’s major promotional expenses with a view to identifying/downsizing programs whose benefit can no longer be justified.

I recently accompanied a visiting rental manager who visited three of the four largest rental companies in a particular vacation destination.  The visits left me with questions of simple but stunning implications.

I’ll share my impressions and leave you with my questions.

Each of the three companies told the visitor that they spend a lot of money on a specific program that then knew none of their competitors had. I won’t identify the programs, but each are designed and promoted to help managers generate more bookings. 

Each company told the visitor, in effect, “I guarantee you the cost is worth it.”   Each could produce at least one statistic to back up their guarantees.  I suppose each program could be worth the price. 

But here’s the rub:  Over several years, none of the three has won significant new ground over the other two--and all three have lost market share to a fourth competitor that doesn’t use any of the programs. 

The fourth has won its newly gained market share by offering lower prices to generate more bookings.  It touted its superior bookings to successfully attract more high-end rental homes.  It’s showing no signs that its strategy is losing strength.

This has “gotta” make us ask, “What did each rental manager have in mind when they told the visitor that their unique program was expensive but well worth it? “

If each lost market share to the fourth competitor and none increased their market share relative to each other, how could their expensive programs really generate any unique economic benefit?

• Are all three paying a lot of money just to maintain parity among themselves while the fourth continues to steal their market share?
• How much of their confidence is rooted in past benefits?
• How much is rooted in the natural need to believe that a past decision to spend money was a good one?  Or in statistics that—examined closely by a business consultant--are cancelled by stats they didn’t think to measure?

I was drawn to these questions by my observation that the website specials page and innovative Internet marketing are allowing both managers and rent-by-owners to steal bookings from conservative mainstream managers merely by lowering prices as needed.

I have seen all too many examples to support the unfortunate conclusion that homeowners pay more attention to the number of bookings than to the net amount of their rental revenue. 

So we have to ask:

• Has the Internet made pricing so important that it trumps almost every other activity in the mainstream manager’s promotional budget? 
• Are mangers’ most expensive workhorse programs—and the assumptions underlying them—still viable in today’s Internet world? 
• Going back to the visitor, was his “take-away” that the benefit of each company’s expensive program was lost over time to a competitor who has lower costs (doesn’t pay for similar services?)  I can tell you that the visitor’s program generates more bookings through aggressive pricing, and he hasn’t changed his marketing since his visit.)

I have reluctantly come to believe that the Internet has turned competition into a jungle where the overconfident, slow and meek fall prey to the quick, lean and mean.

The point:  Re-examine each big-dollar program in your budget.  Play devil’s advocate and force yourself to re-prove that each program is cost justified today.

Don’t get side tracked just because:

• Your percentage of on-line bookings may have increased;
• Your revenue has increased; or 
• Your best renters and homeowners are happy.

The only important measure of your competitive health, beside your profit and loss statement, is whether your share of bookings and desirable rental homes is (a) increasing, (b) holding steady, or (c) decreasing and—whichever of these is true—whether any competitor is doing better!

If you are paying for expensive programs (as opposed to the homeowner paying), consider the fact that our industry’s most aggressive managers are passing the full cost of discounting on to homeowners and still managing to increase or maintain their inventory.

Force yourself to prove that your company’s most expensive programs are today increasing your “share” of renters and homeowners.  Consider whether that same money could be better spent (or given back to homeowners to help them tolerate the dynamic pricing that is often the most pivotal generator of more bookings).

The streets are getting mean!

New Webinar Series: Get More Bookings!

Instant Software announces a new webinar series - Get More Bookings!  Learn about book-ability ratings, utilize distribution channels, connect to ISILink for free, market your distribution options to gain new listings, and meet your channel partners.

Wednesday, January 20th 2:00-3:00pm MST

Attention all Hawaii property managers – Get More Bookings presentation by Katie Kratzig, Business Development at Instant Software, and meet our newest Hawaii-focused channel partner Exclusive Getaways www.exclusivegetawayshawaii.com
 
Register Online


Tuesday, January 26th 2:00-3:00pm MST

Need help marketing your high end homes?  Join the Get More Bookings presentation by Katie Kratzig, Business Development at Instant Software, and meet Mike McFadden, Co-Founder of The Society of Leisure Enthusiasts, our featured channel partner guest www.thesociety.com.

Register Online

Instant Software Selects Las Vegas for RezFest 2010

Instant Software announces its plans for RezFest 2010, the premier conference for the Vacation Rental industry, to be held in Las Vegas, Nev. Returning to one annual event, Instant Software will celebrate its fifth year hosting RezFest and over twenty years of company users’ conferences, which has been built upon years of success as the best attended and most informative networking event. 
 
“In response to the economic environment and requests from our clients, we took RezFest ‘on the Road’ in 2009,” stated Dave Hopcroft,  CEO of Instant Software. “The five regional locations made it more accessible and cost effective for our clients to get the education and resources they need in order to maintain their market share in these trying times. However, with the upturn seen by many of our clients, we are looking forward to returning  to one huge event   offering more education, greater networking opportunities, and increased idea exchange  by industry professionals.”

“It seems fitting that the Ritz-Carlton, Lake Las Vegas, should have been selected as the venue for RezFest 2010. The quality of the facility, the upturn being seen in the economy and continued expansion of Instant Software will ensure a record turnout for this event,” continued Hopcroft.  “I am very excited about 2010 and I will be making a number of ‘game-changing’ announcements in the next few months!”
 
Hosted on September 20-22, 2010, RezFest will bring together clients of Instant Software’s market leading Vacation Rental solutions, including: First Resort, Entech, PropertyPlus, V12.NET and TravelStorm.  It will include three days of education, resources, and networking covering industry trends, channel partners, and best practices. RezFest is also a venue for Instant Software clients to learn more about the features in their Reservations and Business Management Solutions and how to take advantage of Instant Software’s powerful suite of online solutions to market their properties to the greatest number of vacation rental travelers on the Internet.