How to crush your revenue management in 2025 (Ep 630)

Jasper Ribbers (00:01.486)
What's up everybody, welcome back to Get Paid for Your Pad, the very first episode of 2025. Now know I have been taking a break from the podcasting for a few months. I think the last episode I recorded was somewhere in October, as we've been extremely busy with our revenue management service that we launched in 2024. Fortunately, we've been able to find some team members and so I'm…

slowly getting myself out of the day-to-day a little bit. I'm still, will continue to manage a number of portfolios, but the last couple of months has just been a little overwhelming with the demand. We've got a lot of applications from companies that wanted to work with us, which is amazing. Obviously that's a good problem to have, but it also meant that I've been extremely busy.

to manage all of our new clients and hire new team members and all of that good stuff. So anyway, I am back now. I've freed up some time and my goal is to continue to record two podcast episodes every single week. So one on Monday and one on Friday. So today what I wanna do is I wanna give everybody a quick update on what's been going on inside of FreeWild.

what we've been focusing on. And I also wanna give a quick recap of 2024, share some insights, some insights of what we learned, a little bit of an outlook for 2025 as well. I actually just got back from a conference, the Short-term Mental Winter Forum Conference was held in the last week in Miami, organized by IMN.

It was a pretty cool conference, not too big, a couple hundred people, but it was really insightful. There was a few companies that shared some really interesting data that I will share with you guys today as well. And I am currently staying with my in-laws. My wife's family lives here in Miami, so I'm sitting outside on the terrace. It's nice and warm here, a little humid, a little rainy, but definitely a nice time of the year to be in Miami. It's not so hot.

Jasper Ribbers (02:19.194)
like in the summer. So my wife and I are now officially traveling nomads or digital nomad or what you want to call it. lease in California has expired. And also my work visa here in the States is up in a couple months. So my wife and I are going to be traveling for a while. then eventually later this year, our plan is to move back to the country where I was born, the Netherlands.

to start a family there and really settle down and build up a life back there. So that's kind of my personal plans for 2025. Excited to travel for a couple months. I will be staying in Colombia at our Airbnb there for probably for a month or two and most likely we'll be traveling a little bit through Central America and South America just to be kind of in the same time zone as the States.

And then we'll, yeah, we'll make a move from there. Now, I want to start off with, you know, wishing everybody a happy new year, of course. I hope you all had great holiday. Also, I to mention that, you know, our thoughts and prayers are with our friends in Los Angeles. So I spent about a year and a half living about an hour and a half south of LA. And we have a lot of friends over there.

A lot of hosts in our community are in LA and some of them have lost some of their homes. Fortunately, I haven't heard of anyone in our community being affected by the fires in terms of their health or anything like that.

everybody we know is still healthy, so I'm happy about that, but it's pretty horrible what's been happening there. So just wanted to mention that before we get started. And with that said, let's dive into the content of this episode. So I wanted to start off with a quick recap of 2024. We just learned some interesting data points at the conference.

Jasper Ribbers (04:33.826)
And 2024, for the most part, was actually fairly similar to 2023. There was not a lot of growth in the market. Well, there was growth in inventory, but no real growth in performance. Overall, worldwide, IEDR and revenue was pretty flat, a little bit down in lot of places. Obviously, market dependence on markets did better than others.

But for the most part, 2024 was kind of a copy of 2023. One thing that has changed, I will say, is booking windows. Booking windows have definitely shortened quite a bit. I don't know if that's because of some of the economic uncertainty. There's a new president being inaugurated in the States as well, so that might have something to do with it. Or if it's just people getting a little savvier with Airbnb and kind of knowing that

A lot of operators tend to drop prices as we get closer to the check-in date. So I think a lot of travelers may have learned that they can get a better deal if they wait. And so the booking windows have shrunk, which has caused some operators to kind of freak out a little bit. Because if you're in a very seasonal market, like for example, a ski market, most of the ski markets in the States and Canada,

saw a pretty significant drop in booking window, meaning that these operators were used to being booked for Christmas, for the winter, for January, February, somewhere in like September, October, they'd be at least like 50 % booked or even more. And this year, those bookings came a lot later. So there was a lot of operators in those markets that were kind of freaking out a little bit, thinking like, what's going on? Why don't we have a lot of bookings yet?

And so, you know, that's one reason why it's really important if you're doing the revenue management in your business to keep an eye on those booking windows, right? Because if the booking windows are shortening, then you don't want to be too aggressive lowering your prices when you compare yourself to last year, because then you run the risk of being too aggressive taking down your prices and actually getting booked too much ahead of the curve.

Jasper Ribbers (06:52.782)
when it comes to the booking window. And then you will be able to maximize your revenue, right? In general, we kind of want to follow the booking curve in the market. There is exception. Sometimes we want to book a little further in advance. And sometimes we might want to get more bookings later in the booking window. It really depends on how much of the market you expect to be booked up. There are some situations where the market will book up almost 100 % in those cases.

it can be advantageous to wait a little bit longer and kind of play that last man standing game. But for the most part, it's always good to, to some extent, just follow that booking curve. So that's one thing that's really changed. A couple of other things that have changed are trends. I guess these are trends that have been going on for a while. But one trend that's very…

And that's very clear right now. And that's been going on for a while is the lows are getting lower and the highs are getting higher. And what I mean by that is that fewer people travel in the off season and more people travel in the high season. So when COVID hit in 2021, the traditional travel trends kind of got shaken up, right? Suddenly, everybody had the flexibility to travel.

whenever they wanted, like schools were out, people didn't have to go to their offices. So people started traveling all year round, right? So that was a big disruption to the traditional travel trends. But since mid-2022, that trend has been reversing. And so what we're seeing now is that if you compare it to 2023 or especially 2022 and 2021, you'll see that the slow season is really

becoming a real slow season again, right? So January, February, March, those are typically like very slow months in the States, in most markets, obviously there's exceptions, but this month, the month of January, we see in a lot of markets, we see a very, very low demand. So lot of markets are down 10, 20, even up to like 30, 40 % compared to last year.

Jasper Ribbers (09:08.904)
And the reason for that is that people are really returning to traditional travel trends. So they travel in the summer, they travel during the holidays, and they travel during the long weekends. So Memorial Day weekend, Labor Day weekend, we're already seeing some really strong demand for the, what's it called? I think it's a President's Day. I think it coincides with, kind of coincides with Valentine's this year. It's like the second week, somewhere in the second week of February.

So we're seeing some strong demand there. We're seeing some strong demand for the Memorial Day weekend as well. And we're seeing very strong demand for the summer. And that was kind of similar to last year. So if you compare this year to 2024, you're going to see that probably there's a bit more demand in the summer and for those holidays. But that was the case in 2024 as well, right? So that's really a trend that's been going on. And so how do we adjust to that trend? Well, it's quite simple. We got to be more competitive.

during the low season. So right now for most of our portfolios and by the way, we we've grown our revenue management service quite a bit. We're we're at over a thousand listings now. We have free revenue, full time revenue managers on our team and we're looking for one or two more because we have a lot of companies that are kind of in the pipeline wanting to work with us that we currently don't have the capacity for. So, so yeah, our revenue management services expanded quite a bit and that kind of gives us a

It brings us in a good position to kind of see like what's going on like worldwide. But also mostly in the States, like most of our portfolios are in the States. And so what we are doing right now is we are being very, very, very aggressive with our pricing. And when I say aggressive, I mean competitive. So our prices are very attractive to book. And the reason for that is because there's just not much demand right now and in the next couple months. And so

we are just, we are setting up our prices to be competitive way in advance. So we're not waiting last minute to try and get those bookings. We're also using a lot of OTA discounts, especially in Airbnb. We're using the Airbnb custom promotions. We're using length of stay discounts. We're using the early bird discounts to really entice people to book. Because the more anything you can get in these slow months is extra revenue, but also it's very important to keep your listings going, right?

Jasper Ribbers (11:36.358)
a listing that doesn't get a booking for like a month, it kind of loses visibility, especially on Airbnb. And so that's kind of like the worst case scenario. If you have a listing that's just sitting idle for like a month or two, and now the shoulder season, the spring starts up and the summer, you want to get some bookings for the summer, well, if your listing has been idle for a couple months, then it's hard to get those bookings even for the higher demand.

In our opinion, it's really the best strategy is during the low season, get heads and bets, just get as many people in the doors as possible. These people might come back. These people will hopefully leave a review. And so that kind of keeps that momentum on the OTA, right? So be very competitive. Don't wait until a week or two weeks before check-in to start lowering your prices. I recommend you set up your prices very competitively already now for February, March, April.

Depending on your markets, I know in some markets that's actually the high season, but you get my point. Just be competitive during your low season. And don't freak out if you're not matching the amount of bookings for the summer that you've seen in the last couple of years. Because as I mentioned, the booking window has shortened. And people are definitely willing to pay high prices for the summer. So I recommend you hold off lowering prices.

for the summer, keep those prices elevated because we're already seeing in lot of markets that bookings are coming in for the summer at very high price points. And we expect quite high demand in the summer as well. So lower lows, higher highs, that's a trend that seems to be continuing. Another trend that we've seen is the gap between professional hosts and what we call the set of forget it hosts is widening.

And it's widening quite a bit. And there several reasons for this. But this is a feeling that we really had for quite a while, or something that we anecdotally saw in the portfolios that we managed. But this was confirmed by a company. I'm blanking on the name now. But there was a company that shared a lot of data on the short-term rental industry. And they showed a very clear graph that the

Jasper Ribbers (14:01.23)
the performance between professionally managed inventory and not professionally managed inventory is widening very, very quickly. And so you kind of have to take a very professional stance towards your business. You cannot be the set it and forget it host anymore, where you're just kind of, know, for our listing and Airbnb and then not optimizing it and just kind of letting it sit there without updating it. Same with the revenue management, you know, signing up for a pricing tool and

turning it on is just not going to cut it anymore. If you have that tragedy, then you're to be falling behind. we're seeing that within our community. that's now also being confirmed by the data. This company did a very large study into this subject. And they split up the short-term rental inventory into investment grade and non-investment grade. And investment grade, in fact,

basically means you got good reviews, you're managing it professionally, you have a decent occupancy compared to the market, and non-investment grade is everything else. And that gap is widening quite a bit. the people that are really focused on their marketing, optimizing your listings, have a professional revenue management.

revenue manager on your team, or if you do it yourself, just educate yourself, or hire a service like ours. I think those are kind of like the three options. So yeah, we really have to take this stuff serious, because otherwise we're falling behind in the current climate. Another thing that a lot of operators are talking about at the conference in Miami last week was

How do you increase revenue when the market is not growing? The market hasn't been growing now for about two, two and a half years. And so how do you still increase your performance in these circumstances? Now, one thing I just touched upon is you really want to make sure you're in that professionally managed category. So anything in your business, the marketing, the operations, it all has to be pretty, no, world class, or at least it has to be at a pretty high level.

Jasper Ribbers (16:24.31)
Compared to three, four, five years ago that you could still get away with it. But right now you just have to have more professionalism in your company. Number two is I mentioned it to be very competitive in the low season, keep prices elevated in the high season. And then last but not least, one thing that you can do to increase your revenue is invest in amenities. This is also a trend that has been going on for a while.

Airbnb used to be kind of a novelty where travelers were just kind of excited to try out an Airbnb. The idea that you're in somebody's home was quite new. But that's changed. Most people now you use an Airbnb, they're kind of used to the process and the experience. And now expectations of travelers that stay at an SDR have gone up. So they expect more.

And one way to cater to those higher expectations is, well, obviously, have that customer experience really dialed in, the communication, the support, and everything else. But also, the travelers are expecting that you provide more things. So that means, for example, if you have a backyard, travelers are now expecting that they can do something in that backyard, not just having an empty backyard, but

whether it's a barbecue grill or some games. There's a couple of games that are becoming very popular. Picketball is very popular. Padel, especially in Europe and internationally, Padel is becoming very popular. obviously, to build those courts is kind of expensive. But you can also just get a net. Actually, my in-laws here in Miami, they have a little backyard right here. And they just purchased a couple of rackets and a net.

And you could play picket ball with that. So that's an investment of a couple hundred dollars. So I would recommend, really think about what kind of amenities can you add? Health and wellness is a very popular trend right now. So anything that has to do with health and wellness, even having some little bit of gym equipment or even like a small gym, can see a pretty high ROI.

Jasper Ribbers (18:46.05)
Other things are a cold plunge, sauna, hot up. That's really the things that people are looking for. One quick tip that I learned at the conference when it comes to cold plunges, because obviously some of these amenities are pretty expensive. And so you really want to think about what's the ROI, right? How much does it cost to add an amenity? And how much does it elevate the experience? So really low hanging fruit is, for example, if you have a large backyard.

There's a thing called Frisbee Golf that's very popular now. And so that's very cheap to buy, right? Or even a game like Cornhole can be pretty fun, right? And that doesn't cost very much to buy either. But if you're looking at other amenities like a pool or a hot tub, those are pretty expensive, right? And Cold Plunge is very expensive as well. So what one operator was sharing at the conference was he wanted to like,

create a little wellness center in his backyard. And so he invested in a sauna, a hot tub, and a cold plunge. But instead of buying a professional cold plunge, those are pretty expensive. What he did, he just bought a cowboy tub. So it's just a tub where you put water in it. It's not very expensive. And then what he did is he bought a commercial ice machine and put it in his backyard and basically told his guests, hey, if you want to take a cold plunge,

you know, just get a couple bags of ice, put it in the water, wait, you know, five time minutes and voila, there's your cold plunge, right? And that way you don't have to service it because, you know, hot tubs and professional cold plunge is like you kind of have to service those and keep them clean and maintain them and that can be quite expensive. So I thought that was a really creative idea. And I think that's the type of thinking that you need in order to…

increase your revenue by investing in amenities. You got to be creative. You really got to think about like, how can we provide something that gives, you know, that really adds to the experience, but it's not going to break the bank. We don't have to invest like five, 10, $15,000 into it. You know, a pool is kind of interesting because yeah, it's cool to have a pool, but it's also very expensive to maintain. There's like, you know, safety issues, potential safety issues with that as well. And it's very, very expensive to install a pool.

Jasper Ribbers (21:04.19)
And if you look at the ROI that you see on the amenities, like this company I was talking about was sharing some data points there too. And a lot of markets, like a hot tub, will give you as much of a revenue increase as a pool, but it's much cheaper. So I highly encourage you for 2025. It doesn't look like the markets are going to be much stronger than the last couple of years. Inventory is still growing.

There's a lot of uncertainty, economic uncertainty, inflation, there's wars, there's all this stuff going on. And so I don't think we're going to see much growth in terms of performance this year. And so you really got to be creative. You got to have a plan and really level up that experience that you're offering in order to increase your revenue. So think about what kind of amenities you can add and that will be a good way to increase your revenue.

Now, talking about increasing your revenue, as I mentioned, we do have our revenue management service. That's only for operators that do at least $1 million on Airbnb or other OTAs, not even the OTAs, just total revenue, wherever that's coming from. Now, obviously, that's a minority of the operators, but that's kind of our niche of companies that we work with.

But we have a lot of resources for those who are smaller. We have a revenue management course. But we also created some trainings and some resources to help you guys. And one thing that I noticed is a lot of operators struggle with is Airbnb custom promotions. A lot of hosts don't really understand how to use that. It can be a pretty powerful tool to attract more revenue. But there is a lot of nuance to it.

Because I'm sure if you've listened to this podcast in 2024, we've talked about this a few times where when you use a custom promotion on Airbnb, Airbnb will calculate the median price over the last 60 days for that particular day. And your promotion is going to be based off of that price, which means that sometimes that

Jasper Ribbers (23:22.03)
that range will be lower, which means that it doesn't really make sense to add a promotion. And sometimes that range might be higher and then it does make a lot of sense to add the promotion because you get marketing benefits. you know, it's funny because I was thinking about this, like some people are saying like, well, if the, you know, let's say like in the last 60 days, your price for a certain day has been like around 200. And then the last two weeks you decrease it to like 150, right?

instead of just putting the price at 150, you can then add an Airbnb custom promotion. And Airbnb is going to take that $200 a night as a baseline. And so to bring it down to 150, you could then offer like a 25 % discount, right? But some people would say that, well, if 150 is the price that you want to charge, then it's not really a discount. But I think a little different because

If you go to a closing store, right, and you see like a pair of jeans or something that's like 50 % off, right? They're not just gonna update the price and put a price point on that jeans, on that pair of jeans that's like half of the price where they used to set it for. No, they keep the original price and then they have a big strike through and they have like big call out sign that says 50 % off, et cetera, et cetera. And of course there's a reason for that because that helps.

converts, right? More people buy knowing that they're getting a 50 % discount, right? And so that strategy is being used everywhere in pretty much any business, any product you buy. If there's a discount, then they're going to talk about it. They're going to show you that you're getting a discount, right? But when it comes to shorter rentals, most hosts just update their prices inside of their pricing tool or the

You know, they have the algorithm set up in a way that the prices will come down automatically. so to, somebody that just looks at your listing, like let's say a week before the check-in looks at your listing and sees, okay, this, this unit is $99. They don't know that you typically charge $200 or 250 or whatever that is. They don't know that they're getting a deal necessarily unless you tell them, right? And so using these Airbnb custom promotions is a way to kind of tell your, your, your.

Jasper Ribbers (25:46.254)
potential guests like, you know what? Yeah, my place is 99 bucks, but that's with a 50 % discount or whatever it is, right? So I think it's kind of weird that in our industry, we don't really communicate to our customers that they're getting a discount. I think, especially now with the economic uncertainty, people are looking for deals. And so if you don't communicate to your guests,

that they're getting a deal, then that's gonna hurt your conversion. And so that's why those Airbnb custom promotions are important. You can use some other discounts too that will give you some marketing benefits on Airbnb, specifically on Airbnb. There's a whole bunch of them on booking.com as well. Booking.com is something that I've recently started looking into more and more because they're making a big push in the States. They want more market share in the States. And so, you know,

Well, that's kind of like a whole podcast about booking.com. But let me just say that it's worth looking into booking.com because they're making a big push in the States and we are seeing some of our clients, some of our revenue management clients are getting a significant amount of income from booking.com these days. And it's a channel that's a little underused. And so it's easier to be competitive on booking.com than on Airbnb. It is a…

bit of a process to get set up on booking.com though. It's not as user friendly as Airbnb. So just a heads up, if you do wanna get into booking.com, be prepared for some challenges and some, you're gonna have to put some effort into that, but it could be worth it. So just wanna mention that, but going back to the Airbnb custom promotions, there's a lot of nuance to it.

And so if you want to start using them, I highly recommend download our training. We have a training that will walk you through exactly how to use it. It's very important because if you don't use these things in the right way, then you're not really going to see any benefit from it. So you can get this training. free. You can get it at freewildfoundry.com. that's freewild is spelled F-R-E-E-W-Y-L-D.

Jasper Ribbers (28:04.44)
So freewild and then foundry, F-O-U-N-D-R-Y.com slash ACP. So freewildfoundry.com slash ACP. So if you're listening to this and you want to start using these promotions, go to that website that I just mentioned. Go to the type in the URL. get to a page where you just fill in your name, you fill in your email.

and then you get direct access to a free part training, little mini training course, if you will. So that will be, I think that could really help generate some additional revenue for you, especially now in the low season. We kind of have to leverage all the tools that are out there to drive as much occupancy as possible. So with that said, that's it for today. As I mentioned, I have…

put podcasting back on my schedule. And so I will be posting two episodes every week. I'll start doing interviews as well with other people. do some solo, I'll probably do a few more solo podcasts because we've definitely learned a lot over the last few months. Just, you know, with the revenue management, there's a lot to learn. And as I mentioned, it's really something that we have to take serious now.

in order to not fall behind. So with that said, I hope you all had a great start to the year. Again, if you want that training, the free training, go to freewildfoundry.com slash ACP. And definitely keep an eye out for more podcasts because we have developed a lot of training, a lot of other trainings that I'll be sharing on this podcast. So free trainings, you don't have to pay for it. All you need to do is just

Just drop your email. We'll send it to you. So we will be releasing a lot more trainings in the next few months. And so make sure you listen to this podcast as I'll be sharing where you can find those trainings. of course, I'll be sharing a lot of insights and tips on, especially in revenue management. So that's pretty much all I do these days, which is amazing because I love doing it. So with that said, thanks for listening. And we will see you next time.