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 second of these.
Elimination of Unwanted Services. Would even one of your renters or homeowners volunteer to accept fewer services in return for a price discount?
If so, you are “over-serving” that customer.
This generally happens when rental managers build up their services over the years to attract and keep their best (most profitable) customers.
If you only serve luxury homes or economy homes, you may be okay.
But we can take a lesson from hotel executives, who have learned that you can’t be all things to all people. Hotels create multiple “brands” that allow customers to pay for the services and level of luxury they want. If your competitive position is secure, consider splitting your program into two branded operations, one focusing on your high-end properties. This will allow both groups to be more profitable.
Or we can take a lesson from the airlines, which are lowering the base price of air travel by asking customers to pay extra for each accommodation they want. I’ll cover this in a future blog titled, “This is a Good Time to Take a New Approach to Add-On Fees in Vacation Rentals.”
If your rental program includes homes that run the full range of price and quality, you probably “over-serve” a good number of guests and homeowners who feel they are forced to pay for services they don’t need.
Your risk is that over-served renters and homeowners will leave your program to try rent-by-owner or a competitor who offers lower prices for less service. So your best chance of protecting your existing customer base is to look for ways to appease renters or homeowners who will take less service in return for lower prices.
Don’t overlook opportunities just because they weren’t viable in the past. For example, revisit questions like the following after doing some research on the Internet to see how new or innovative competitors are reshaping their business models.
- Do you provide linens for all renters? Or can they pay less money to rent a home that doesn’t have linens (or made beds)?
- What about designating homes that offer lower rents because they are “cleaned but not inspected” (“call for immediate response if you are dissatisfied”). Many renters take the same risk when the book rent-by-owner. I know very good companies who have found ways to eliminate the cost of inspections.
- Do you provide a welcome basket or special products (coffee, cookies, wine) to renters who might be willing to go without?
- If you print a brochure, are all the homes paying their fair share of the costs? What about revising your processes to include only those that do?
- Do you require all guests to check in at your office? “Express” check-in can free up staff time.
You get the idea. During a time of change, you have to be flexible and innovative to protect your customer base. Get the staff together and revisit old assumptions
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