Revenue Management Strategies (Ep592)

In today's episode of “Get Paid for Your Pad,” I had an enlightening chat with Tom Lyons, diving deep into the complexities of revenue management for property hosts. Tom brought to the forefront the significance of grasping market trends. He shared an intriguing anecdote about how his team once decided to set their prices 20% lower than their competitors, a bold move that was met with skepticism by some property owners. This decision, however, wasn't made in haste; it was based on an informed understanding of market dynamics.

Christmas trends were another focal point of our discussion. Tom illuminated a shift observed over the past few years, where the holiday season seems to be divided into two waves. While many competitors offer consistent prices from the 21st to the 31st of December, Tom has noticed a more nuanced trend. The first wave peaks around the 22nd to 24th, then dwindles a bit until the 26th, only to rise again from the 27th to the 31st. Recognizing such nuances, Tom expressed, is vital to strategizing pricing and length of stay.

Speaking of length of stay, Tom identified it as a key factor that hosts, especially those with 1 to 25 properties, often overlook. A significant revenue increase can be observed when implementing a length of stay pricing strategy. Tom elaborated that the value of a customer staying five nights is certainly different from one staying two nights. Hence, prices should vary accordingly. He pointed out that tools like Wheelhouse are making strides in this realm, but being ahead of the curve is crucial.

Wrapping up our discussion, I touched upon how property presentation, including photos and descriptions, can significantly influence pricing and guest decisions. Tom added that seasonal updates to these elements are beneficial. Moreover, he highlighted the importance of early bird and last-minute discounts to attract bookings.

Tom graciously shared that those interested in learning more about CasaGo, the platform he represents, can explore their offerings and even franchise opportunities at www.casago.com. It's a comprehensive solution, supporting everything from revenue to housekeeping and marketing.

I genuinely hope this episode provided valuable insights to our listeners. Whether you're new to property hosting or a seasoned pro, understanding your market and being flexible with your strategies can pave the way for success.

Jasper Ribbers:
Welcome back to Get Paid for Your Pad. My guest today is Tom Lyons. He is the chief revenue officer at Casaco, which is one of the larger shorter rental property management companies in the US for sure, even worldwide, pretty large, 7,500 units. And we're going to talk about revenue management specifically, like how do you manage revenue on a large portfolio like that? So Tom, welcome to the show.

Tom Lyons:
Hey, thanks Jasper. Really appreciate being here. Looking forward to having a really good discussion and hopefully we can have some really good take home for your listeners for sure.

Jasper Ribbers:
I have no doubt I spied on your LinkedIn and I noticed you've been in the hospitality industries for 25 to 30 years it looks like.

Tom Lyons:
Yeah,

Jasper Ribbers:
So yeah, why don't you give us a quick background and tell

Tom Lyons:
sure,

Jasper Ribbers:
us about

Tom Lyons:
absolutely.

Jasper Ribbers:
Casaco

Tom Lyons:
Yeah,

Jasper Ribbers:
as well.

Tom Lyons:
so long time, I've dated my age, you know, I've been around, you know, over 25, you know, almost 30 years was with W hotels start their brand with revenue management, went from there to Hilton. And then along the way went to a larger A hotel management company oversaw, was our vice president of sales and revenue, oversaw our revenue for all our properties was, we had Hilton's, Marriott's. Starwood properties, you know, we had all these brands. So I was able to take the best of both worlds from all of them and implement my own processes and strategies, which was great. So I learned a lot with Hilton. You know, they're really, we, at the time, we thought we were in the number one in revenue management. Greg Cross was the head of revenue management there. So he's kind of… the older Godfather of revenue, but a lot of different strategies and stuff that we're able to, even today, implement and do as new processes.

Jasper Ribbers:
Hmm. So that's interesting. So you were managing revenue for larger hotels and now you're managing for a short term rental company, right? What

Tom Lyons:
Sure.

Jasper Ribbers:
are the differences between managing revenue for a hotel versus

Tom Lyons:
Yeah.

Jasper Ribbers:
like a short term rental?

Tom Lyons:
Sure. You know, it's a whole different, you know, in a lot of ways it's the same, but there is a different processes and everything. When I started in revenue in the hotel industry, you know, really the airline industry were the first ones to start revenue management. The hotels started adapting it. back in the late 90s like 95, 96 area where revenue management started to be implemented in hotels. Even then, a hotel would have a front desk manager. uh, some, maybe a front desk clerk or the GM of a smaller property, doing all the revenue management, doing all the pro, you know, what they thought was revenue management, they might, you know, at one time, a long time ago, people would drive around and look for how many cars were in the, the parking lot for hotel to see what their occupancy was, believe it or not. Um, and you know, they started like shopping rates for competitors, et cetera. And as the industry and the hotel industry grew for revenue management, you know, more and more they were hiring revenue managers, you know, for each property. And in pretty much today. there's probably not a property that doesn't have some type of revenue management person or experience. Now, I've been with Costco over four years now, and when I came on board, I really wasn't, I was kind of like a lot of your listeners. I had a few Airbnb properties we owned in Scottsdale, Arizona. We were very successful in it. I was having a blast. You know, we're one of the probably the top properties in all of Scottsdale at the time. And, and I loved vacation rentals because it was so different than hotels when it came to, um, you know, strategies, processes and everything. Um, hotels were great, but it's very competitive, right? And I thought I could bring a lot of those strategies and processes to the vacation rental industry. You know, there's a big conference in our business called VRMA. You know, when I started four years ago, you know, they had the big VRMA conference, and there's just one or two sessions at most on revenue management. Well, today, there's a whole conference now from VRMA on revenue management. So, I knew how much it played a pivotal role because we were so big on innovative strategies, new processes, finding new money. revenue, because opportunity revenue is hard to find, right? You don't define it. You can see it on like a budget or expenses, you've got P&L, etc. But how much opportunity revenue can you win or lose? And being the best, trying to be the best that you can be at your business, coming up with different strategies and processes. that would increase revenue was something I loved. And we were able, you know, when I started with Costco, we really didn't have a lot of processes and strategies and all that stuff. So, you know, I made a commitment to our CEO. You know, I said, hey, I'll grow your revenue 30, 40% within the first year. He was… No way you could do that. Maybe 15%, maybe 10%. That would be even awesome. And then you calculate what the percentages to the revenue. Well, of course, we grew like 30%, 40% at each location. So he understood that revenue management played a real pivotal role in the success of his business. And then more and more. companies today, small and large, even if you're 5-10 properties or even less, people are understanding the pivotal role revenue management plays. You can't really just sit and forget it. You have to have great strategies, processes, and great way of analyzing data.

Jasper Ribbers:
Can you explain, you mentioned the term opportunity revenue. What does that mean exactly?

Tom Lyons:
That's a great question. Okay. So opportunity revenue is no one knows it. So if you report to a boss or a manager or someone in the hotel or vacation rental industry, they're not gonna understand that you could have made X. Our way of succeeding the old school way is, and you hear this still today is, hey, did you increase revenue year over year? You know, how much revenue did you increase year over year? Which is, is always good sign, you know, what you're doing, but what if it's a downturn economy when you know you're not decreasing increase in revenue, you're kind of decreasing? Well, that opportunity revenue is what your competitors doing. how much revenue are they doing? How much occupancy are they doing? Now, us being a large company, we can really get that data. We look at all the different management companies, some self-renting renters that are out there, and we compare us each destination. And we have over 55 destinations. Each destination, we can compare like what the hotel industry does, which is called a star report. Smith travel research that compares you to other hotels if you're in the hotel business. Now with the other hotels that plays a huge role in what we call Revpar. Some of your listeners probably understand Revpar but revenue per available room we call it in our industry we can call it Revpar. or we can call it RevPAR, revenue per available unit. So they come hand in hand. And in the hotel business, RevPAR is what we call 100% penetration index, which means if you did $100 per revenue unit per day, and your competition did $100, then you're getting 100% share. If you're doing 110%, you know, you're getting higher than 10% more, which is great. Now, if you're doing 90%, hey, you're making last year numbers. Well, you're not doing as well. So in our business, we have an opportunity to really look at, you know, our competition. what they're doing. And we like to always be around the 120s, 130s and red part index. I challenge my team always because of our strategies, processes that we come up with, innovative ways of revenue managing that we always should be higher than them, unless we have inferior products. Now, for someone that has maybe not that technology, it might only have two or three properties or something like that. I would really encourage him to come up with maybe comp sets. Okay. And you probably have talked about this in the past, but I mean, we really drill down on competitors, right? Comp sets. We look at similar amenities, location, you know, pitchers. You don't really have to worry about too much walking a property or seeing what it looks like. It's all about the pitchers because that's what the guest is going to see. And that's to guess making a decision because of that. So you can compare apples to apples. Now for, you know, people without this technology can really, you know, go online, search for their property, see what comes up in impressions, the same similar properties usually would come up. And then you would, you know, simple way, you know, you'd like them, you know, hard them, whatever, you know, put in your favorites, and then look at their occupancy on a given, you know, monthly basis. you know, how many days are full. Now there could be owner blocks. It might not be as strategic as what we're doing, but then compare your occupancy to that. So that's a kind of a good way of doing some type of opportunity revenue. And that'll guide you to say, wow, they're on 30 days, you know, they're occupied 80%. you know, I'm occupied 60 percent. Maybe my rates are too high on some of these dates. And then, of course, you can search your competitors with rates, et cetera. Now, we can drive in deep. We understand what the ADR is for the year, what the occupancy is for the year, what the rates are consistently. We kind of have all that data. But if you don't, there's still ways and you really want to that opportunity revenue. which we segued into is so critical for your success. You know, raising rate on some dates, 10%, 15%, you can actually take that to the bank. So doing things like that are very important in the vacation rental business today.

Jasper Ribbers:
Yeah, you mentioned CompSets. I think that's something that's really important, because if we're not measuring how we're doing, compared to similar listings in our marketplace, if we don't measure it, then we also can't learn if our

Tom Lyons:
Yes.

Jasper Ribbers:
strategies are working. So it's really important. So when it comes to the CompSet, you mentioned we have to compare apples to apples, right? Now is that easier in the hotel industry? Cause I just imagine if you had, you know, hotel rooms are maybe a little bit more similar, like every short rental is unique, right?

Tom Lyons:
Oh, so much more easier in hotels. You got like five or four hotels. You call the hotel, ask for a site visit. You look at the hotel, you look at the unit. Similar one bedroom, two bedroom, three bedroom. Not many even have three bedrooms. A lot of properties, maybe a couple of suites. But it's really easy, right? Setting up comp sets and I tell our franchises and our team members should be a really, really strategic process that takes a lot of time. But once you set them up, it becomes easy because you don't, you know, you review every quarter, you looking at comp sets, but it's really important to make sure you have true competitors. Now, length of stay, for example. You don't want to have competitors that you know you're having a two night length of stay and they have a five night or a one night or even a 30 day night, some proper, you know, you don't want to look at competitors like that. You want to get them out of there right away. But you really want to understand that these competitors are showing up with impressions with your property. So the more likelihood they're going to be comparing you to those, you know, the guests, potential guests is going to be comparing you to those properties. So it's very important you set that comp set up. And what we do, our system is really good for some locations. We have comp sets that interface with our PMS system. that we can put based on periods of dates, we can say, well, we want the rate minus 10% of the competition plus 10%, and we can do a lot of things with that. That's pretty strategic, but we were really big on consulting with our PMS team. to really come up with CompSet pricing, which is an ideal way to price today in the marketplace, along with your market-based pricing tools.

Jasper Ribbers:
Right. OK, so it's really important for us. Most of the pricing algorithms that people use, PricedApps and Wheelhouse and beyond, and there's a few others, most of them have pretty customizable CompSat technology. So

Tom Lyons:
Yeah.

Jasper Ribbers:
we can actually tell the tool, like, hey, these are the listings that we want to compare to. One thing that I think is important, too, is thinking about the amount of properties that we put in our CompSat. Right? Cause if

Tom Lyons:
Yeah.

Jasper Ribbers:
we have too few, then the data is not really going to be reliable. Right. So if I have, let's just say I have a short term rental in a market, there's, let's say there's a thousand listings in the market. I have a pretty standard, you know, two bedroom and there's not our 200 two bedrooms, but they're kind of in different neighborhoods in the town. Like how many, what kind of numbers should I go for? Like

Tom Lyons:
Great

Jasper Ribbers:
how big

Tom Lyons:
question.

Jasper Ribbers:
should that

Tom Lyons:
Yep.

Jasper Ribbers:
concept be?

Tom Lyons:
So great question. So I have a strategy and process I, you know, put together based on my experience, the technology I have, and, you know, just general knowledge, right, to get what I believe could be a good comp set. So, at minimum, you want to have around five properties at the minimum. And again, you got to check for outliers. So, What I mean by outliers is that what I mentioned earlier with the length of stay, but also if they're overpriced or if they're statically priced all the time, right? See, you know, maybe you do that with a static price, but you probably want to want a property in your comp set that's overpriced because now it's going to dilute your data that you're analyzing. So I would encourage you to really look at the pricing. you know, for, you know, four, six months, et cetera, along with, you know, five properties, and then you could go up to, you know, 20 to 25. You know, you don't really need 30. You start getting an extreme level when you go up. Now, what we also look at is, you know, the comp sets, but we look at different management companies' pricing. So we'll put some of the other larger management companies or even smaller, if it's a smaller destination, into our comp sets so we can evaluate what those management companies are doing. We're looking kind of like what their trends and strategy are. Are they looking at booking windows really closely? Because we're big on booking windows, 90, 120, really. owning that real estate. And then a lot of different management companies, a lot of novice revenue managers forget about, you know, 120 days out all the way to 30, they start dropping 30 days out. If they would have dropped a little bit 90, 120 maybe, they only would have had to drop four or 5%, but now they're dropping 25% to 30%. Back to opportunity revenue. just lost X amount of revenue. So things like that play a pivotal role in how you do this.

Jasper Ribbers:
Yeah, because I was creating a CompSat for one of our clients and I noticed there was a couple of properties in his marketplace that were very close and very similar in size

Tom Lyons:
Yes.

Jasper Ribbers:
and everything, but then their price, their ADR was just so much higher, right?

Tom Lyons:
Yeah.

Jasper Ribbers:
And so I looked at the listing and I realized, oh, this is like a really… beautifully designed A-frame with like high-end furniture,

Tom Lyons:
Sure.

Jasper Ribbers:
right? So like if we find something like that, like we don't really want to include those

Tom Lyons:
Yeah,

Jasper Ribbers:
types

Tom Lyons:
absolutely.

Jasper Ribbers:
of listings, even though they're the same size, same location, but they're just, this is a different experience.

Tom Lyons:
Yeah, because then your strategy is off then. What the last thing you want to do… is have a strategy that's wrong. And I'll see, you know, from my experience, I can see things pretty quickly, just because I have the experience. Anybody with the, it's not that I know more than people, I just got a lot of experience in revenue. I can see strategies off right away. And that will mess you up for a whole year or longer. You know, one thing we also look at that I forgot to mention is, you know, our review, you know, rating compared to the competition rating. You know, we want to kind of keep it, you know, point five, you know, point five, you know, difference. We don't want to have a five compared to we have a four on our property because you're not really measuring numbers correctly or the other way around. So it's really important to make sure you have all that information before you really say, OK, they're going to be a competitor. I really want to watch. And that's what I mentioned earlier, Jasper. It takes time to set these compsets up. If you do it not correctly, your strategy is off then. And then that's

Jasper Ribbers:
Mm.

Tom Lyons:
gonna affect you for the year in revenue.

Jasper Ribbers:
So let's talk about strategy now. Right. Obviously that's, uh, that's very important, but I think a lot of hosts are maybe a little confused with like, okay, well, I, you know, you go into your pricing app and you set base price. You look at your comp set, you look at all the listings and you see, oh, okay. The, you know, similar listings are charging around 200, a little higher on the weekends, a little, you know, a little lower and low season, like all of that stuff, but then like what, how do you actually define a strategy? Like what, where do we start with that?

Tom Lyons:
Well, you want to try to be, you don't want to really be a follower, okay? You want to be a leader when it comes to, even though you might be under lower price than them. So you just really can't count on a comp set. You really have to evaluate. First, it goes with your 365 rates, right? We call those base rates, seasonal rates. So you have different seasons throughout the year if that's how you price. And you really wanna put that down on Excel sheet, paper. Don't go right in your Airbnb portal or, you know, really, again, it goes back to strategy, having that on paper or whatever. tool you need to utilize and really look at the 365. Really analyze your history from year prior, how many rooms were occupied per month, and then what were your rates. Now, if you're occupied in June, July, 30 days all month, then you know one of the general rules is people say hey I'm just gonna raise my rates 10% next year 365 and leave it right well that doesn't really it's more by month right so you can't generalize and say 10% all across the board and that goes with you really analyzing your last You can also look at when they booked. OK, so what was my and it goes back to booking window. When did they book? Was I if it was short term and you knew that you lowered the rate in our system again, of course, well, we can see what was lower, what was not. And you had to lower the rate to get the booking to get the 25 or 30 days. then maybe you don't raise your rates for next year. Maybe you keep them there because you don't want to be lowering your rates 25% again. You're repeating the same thing over and over again. And you just can't do that in our industry. So you really want to look at, you know, by month how many rooms you were occupied by month. Did you have to drop rate late? Did you have to, you know, what was your strategy throughout it? And then, you know, you look at your your busiest time dates, right? And you really want to lead there. You want to just beat everybody big time. You want to own those dates, right? And you start there, you know, with your rates being maybe higher than your competition, knowing that everyone sells out anyway, you might have a larger length of stay with some length of stay pricing going on. So again, it goes back to really, you have your busy dates, have those down. look at your other months, analyze, and then analyze your competition on what their rates, you know, are for next year. Now, a lot of the competition you guys might be looking at might not be as detailed as some of our management companies that have different, you know, real different strategies. But again, it goes back to then breaking down your booking windows. You know, we break it down really strategic. You know, you. might not have to or it takes time. You know, we go from 365 to 240 to, you know, 100, you know, 180, 120. And all those dates, we are really analyzing pricing. We're analyzing pickup. We're analyzing the market. Is it up year over year? If it's down year over year, what's the trend? So what we saw this summer in a lot of locations, I'm not going to pick on the location, but it was mostly coastal. Um, that, you know, last year we knew that 33% of bookings came within 14 days of arrival. Okay. So that was one thing. Now we're seeing that actually even go up. Now at the first of the year, it was declining or it was increasing. Now it's then it started to decrease. So that is something that, you know, softballs come at you all the time in our business, you have to react. You can't, again, set it and forget it, right? So what we saw a lot of, you know, in coastal markets, you know, overall markets, you know, were running like 88, 89% occupancy for this year. The last year they ran 81, 82, but the rate was down 40 to $70, okay? Where overall your RevPAR, was down year over year, so you lost money. Okay, so this is a lot of locations did this. Not one management company was a lot of locations. So they didn't anticipate the short term demand coming in. So what they were seeing, you know, 91, 20 pace was down, let's overreact, okay. Looking at trends, you know, maybe that wasn't the right, wasn't the right decision. So I think there was an overreaction in rates. So you have to, we have to really be able to understand your mark, where pace is going, where pickup is going. And sometimes you have to take chances. We have a tendency to drop rate pretty quickly in some markets, that's easy to do. But remember when you're dropping rate, you're dropping revenue, you're conceding revenue. for those dates. So you got to be real careful with it. And then like I said, that's where it goes back to, you know, your 90 to 120, you're making decisions then on do I price up? Do I price down? Do I take price down? You know, there's all this going on that you're looking even for these trends. Now, in May, like I said, the first of the year, it was, you know, the 30th, you know, 14 days, it was actually increasing, you know, 20 days, you know, it's going up. But then in May, we saw it go down. Okay, so, you know, researching, you know, your May trends, your booking window trends there might have helped some of that offset rate loss from this coastal market.

Jasper Ribbers:
So you're saying that in, you saw that like basically more people were starting to book in the last like 15 days, but then

Tom Lyons:
Good

Jasper Ribbers:
later

Tom Lyons:
question,

Jasper Ribbers:
it

Tom Lyons:
Jess.

Jasper Ribbers:
went down.

Tom Lyons:
It wasn't really 15 days, it was like the 30 to 60 day window, okay, and the 15 days, right? But you know, that 30-60 window trend we saw, you know, we saw last year for this coastal market, we reacted a lot different, we did really well, we grew year over year. But the trend was happening last year. Now, people were wanting to book even, you know, 30, 60, 90 days out in some ways, but they were full or something. So, you know, really being, you know, really going back to really understanding how pace is trending, how the market's trending, and don't overreact to and dropping rate, if that makes

Jasper Ribbers:
Right.

Tom Lyons:
sense.

Jasper Ribbers:
Yeah. So, you know, so this is an important part of revenue management is understanding when predicting when are people going to book? Right. Is it 50 days out or 30 days out or the, you know, half of the people book 60 days out, then you know. So let's take a concrete example. Right. So let's say in a particular market, you see that last year, 50% of people booked, you know, 60 days out or more. Right. So then does that mean that before 60 days out, I should be roughly, you know, like for half booked for my, for my units at the 60 day mark?

Tom Lyons:
Good question. Now again, if it's trending, okay, go back just for a moment. Booking windows change for room types. So I want to be clear with your audience that, you know, the four or five bedrooms, if you had the bigger homes, your window is a lot different. Okay. If you're going to 30 days without a booked, you know, that's going to be hard to get it booked, right? Or you may have, you know, it's, it's your window is that clearly 90 to 120, right? You need to be booking there. I mean, you live in that those days, right? When you're in like pace wise, if you're in to what we mentioned, if you're 50% booked 60 days out, it could go both ways. So what are your competitors? What are they booked at occupancy wise on those, you know, 60 days out? So you're reviewing what the trends are in occupancy. And you could get that a lot of ways, Airbnb, Verbo, you can get AirDNA. There's a lot of ways of getting that data. We have other tools. But seeing what those trends are and then really, and then understanding what is getting booked. So if it's the luxury, so we break it down. and you want to break your properties down too, right? So you got budget, you got economy, you got mid-scale, you got upper scale, you got upper upscale, you got luxury. So those are broken down. And you kind of really want to look at those segments. Well, is all luxury being booked right now? What segment is being booked out of those? And then you want to come up with a decision on, do I hold my rate or do I discount a little bit or discount more than a little bit, you know? or do I hold my rate knowing that I'm seeing these trends, I saw May decrease, I'm seeing these trends that are signaling that I should be okay here. Again, if you use length of stay pricing, which I very much encourage you, with Hilton, I was, you know, we were started length of stay pricing. It goes a long way and how you… strategize and we could probably go into detail a little bit more but you can always you know make some like the state changes too on that 60 window you know instead of dropping all the way but

Jasper Ribbers:
Mm-hmm.

Tom Lyons:
there's always got to be analyzing and understanding where your market's going also understanding what the supply is in the market too many times I see um you know revenue not understanding their supply. And when a market, and we saw this, we knew that supply went up 28% overall last year, right? Now we had an estimate that with home prices and interest rates, et cetera, we were looking at supply dropping 10 to 12% for the year. Well, it really hasn't dropped that much, okay? So. if you have new supply coming to your market, that is a definite radar for you. And if it's supply that is your same bedroom type, that is huge for you. Okay. Because now demand has to outpace supply by X. And if you're seeing trends that demand slowing down, then that's a big factor. So in so many markets, we have seen supply grow 50, 100%. And that strategy has to change because you have so much more in the marketplace. For example, we're in Arizona and Phoenix, Scottsdale. We knew that two years ago, supply was around 7000 properties and Phoenix today, it's 14000. OK, it's a lot more properties. We acted differently for Super Bowl. We had the Super Bowl and Phoenix this year. We acted differently than any of our competitors did for Super Bowl. We knew that with 14,000, 7,000 more rentals based on the bedroom types, et cetera, and the hotel inventory based on our history from last year's Super Bowl, that we have to be somewhat aggressive. We can't do seven night minimums for Super Bowl, even though there was a huge golf tournament over the same dates. We have to shrink that down. We have to get that out to ownership, letting them know that here's our strategy, here's what we believe, here's our processes, here's what we're gonna do and set with it. Now all our properties sold out and we did really good over Super Bowl. But vacation rentals over Super Bowl ran about 45% off. So that's just an example of how we anticipated all that new supply affecting demand.

Jasper Ribbers:
Mm.

Tom Lyons:
And then if the supply is coming in with the same length of stay as you and everything, it just plays a pivotal role. That's when you really have to adapt to pricing changes.

Jasper Ribbers:
Right. So the Super Bowl is a good example, right? Because people, more people think, oh, the Super Bowl is coming, we can increase our rates, everyone jacks up the rates for that period of time. And then, half the people don't get booked, because you

Tom Lyons:
Yeah.

Jasper Ribbers:
mentioned there's so much more supply, and then everyone's panicking in the last couple of weeks and dropping

Tom Lyons:
dropping

Jasper Ribbers:
the prices.

Tom Lyons:
rates so much.

Jasper Ribbers:
So

Tom Lyons:
I

Jasper Ribbers:
in

Tom Lyons:
had

Jasper Ribbers:
that

Tom Lyons:
so

Jasper Ribbers:
example,

Tom Lyons:
much heat from owners, but they were so like not understanding like we would take, why are we 20% lower than our competitors, 25%? And some owners didn't wanna go to where we needed to go. And they didn't feel. And, you know, but if you really understand what's happening and have confidence in it, you're going to have to make some tough decisions sometimes. You're going to have to take chances. Now that's a chance we want at, but there's chances we've lost at too. But that's just one example of how the market trends. Now, Jasper, now Christmas is different too. Christmas, you know, in the last few years, we've seen a trend change on Christmas, right? In the last four or five years, you know, so there's two ways with Christmas in a lot of markets, not every market, believe me. So I don't want you to think your markets, I'm generalizing a little bit here. So I don't want you to think, oh wow, I gotta do this on our market, but you have to look at different things to come up with these strategies. So we look at two waves. So Christmas comes into 21st to 31st, that's your wave. Now we see a lot of times our competitors are pricing the same the 21st all the way to the 31st. A length of stay is the same, everything's the same. What we've seen in the last few years it's really two waves. Actually it goes to 22nd, 23rd, 24th, peaks a little bit and then it goes down like a wave goes down a little bit to 25th. and maybe the 26 a little bit, or you'll have arrivals coming in 26. A lot of people today want to be home, okay, for Christmas. You know, it's a big deal for them to be home. Depending on airline flights, and that's another thing you want to be looking at for your market, cost-wise on flights, and unless you're a drive market. So that second wave, we know is gonna be bigger than the 27th through 31st. So… We understand that now our rates need to be X amount higher, process strategy, length of stay, everything has to be set up that way. If you have it flatlined, you're going to get a lot of price resistance on that first wave into second, which we see a lot of times. So we're looking at markets, and we're seeing competitors always flatlining that. So I would encourage you to look at your market and make sure, just like with Super Bowl. Now again, it goes back to supply. If there's a lot more supply in the market than there was last year, you have to take that in consideration. But a lot of markets, not all markets, believe me, but that 2731st is a huge demand. So demand, even with new supply, has a tendency to outpace supply.

Jasper Ribbers:
To wrap up this podcast, what would you say are the biggest mistakes that hosts generally make? Let's say smaller hosts, let's say 1 to 25 properties.

Tom Lyons:
Yeah, okay. So, you know, we talked a little bit about some of it. I think length of stay pricing is huge. Anytime we incorporate length of stay pricing with franchisers or any, we see a 20%, 30% increase in revenue with Hilton. When we started length of stay pricing over the brand for the first year was like, 18%. We wrote it out. was very successful. Hilton has like a revenue management university that you have to go to is very hard, it's two weeks. And a lot of people unfortunately do not pass it, they cannot be a revenue manager for Hilton. But it's all about this length of stay pricing strategies and everything. So, we see in a lot of tools today, we see people pricing one through seven the same. the value for a five night customer compared to two, it has more value to you. So why have them at the same price points, right? Your ideal situation and in a lot of markets, you know, are like to stay. Again, we can see competitors, we judge this, you know, 5.9, our average is 5.94 in locations compared to 4.6. and with length of stay and their rate is about 20% higher too. So making sure, you know, whatever tools you have, you can do some length of stay pricing, big time strategy pricing when it comes to it. So what we like to do is, you know, two, three, four, five, six, seven, there's different price points. And what that allows you to do is there's demand, believe it or not, The highest demand might be for the two nights, right? That might be 70%, let's just say, for a two-night stay at a location. Then it goes down to maybe 15% for three nights or maybe 20%, 10% for four, 5% for five, and then it goes down to seven. You get a percent that people are looking for. You wanna make sure you have price points for all those. So for the whole entire month with RevPAR, Your goal, when you see your calendar, you have one seven night stay, two five night stays, one four night stay, three two night stays. So over the whole month, your RevPAR is gonna be higher than your competition because you outperform them in length of stay. Our industry is not really big in the length of stay, yet. Yeah, I hope they can be. But really, a lot of the pricing tools out there and everything looks at one night, etc. A lot of the pricing tools that are out there like Wheelhouse and some of that are getting really good at some of this stuff. But as they keep going, you want to be, again, ahead of the game. So coming up with a great length of stay pricing strategy is really important. Don't just have a weekly, monthly, you know, put 5% off or something like that. Understand. you know, what your strategy is. And then look at your competition for weekly. You know, what are you for the one night stay? What are they? So you want to make sure your price accordingly, where we, what we call probability factors of being able to book. If you're priced at X, maybe you want to be 60% probability factor of being booked at X. If you're at X higher, your probability factor goes down to 40%. So on those member, we just talked about your value for that customer is a lot more. So make sure you have a probability factor for those higher length of stay pricing for you. And that would be

Jasper Ribbers:
So.

Tom Lyons:
the biggest thing. I mean, I look at so many listings, Jasper, you know, this is really not revenue management related, but, you know, the photos and you talk about this constantly. But I look at so many because I have to look at competitors, but the photos and your descriptions and making sure your seasons change with your photos and description and all that stuff plays a pivotal role in how you price. And you might want to come up with, I'm saying Airbnb, but a last minute discount or early bird. So you're getting some slash through, et cetera through that will also help you with this. But really the one take home thing is really, you know, if you, you know, put in on a document or whatever, is have your 365 strategy all, you know, ready to go, you know, months in advance before you hit and have that set up. Now you're going to have to react to that consistently, but understanding that and knowing that and have goals, you know, for each month would be

Jasper Ribbers:
Mm-hmm.

Tom Lyons:
good.

Jasper Ribbers:
So when you say length of stay pricing, you basically mean that if for a two-night stay, we should be charging a higher price than for a three-night stay, or the longer the stay, the lower the daily

Tom Lyons:
Yeah,

Jasper Ribbers:
rate should be is what you're saying,

Tom Lyons:
absolutely,

Jasper Ribbers:
right?

Tom Lyons:
yeah.

Jasper Ribbers:
Yeah.

Tom Lyons:
Because your demand goes down based on length of stay. Your demand for searches goes down based on that. So just think of length of stay as your occupancy pace for a market, right? Because your three nights gonna not, if you're forecasting a 70% occupancy on a two night, that might be 55%. So you wanna be more competitive. and have

Jasper Ribbers:
Mm-hmm.

Tom Lyons:
a good strategy. Now what we do, we have the technology to do it like say for Christmas or other holiday days. Let's just say we want a three on the house, right? Now on some holidays, we might not sell out, we might. We'll have a two on there, but it's at 70% higher rate than for the three. So you can even take the rate up more. Now you're getting more hits on demand, and then maybe you can gap manage out of the rest of that time frame to be really successful and get even a higher rate in revenue. But yet, length of stay, we have so many different, we call those length of stay maps, that we have maps for periods with all types of different strategies that play a pivotal role. It takes time to do it. but your revenue will increase dramatically. And that goes back to your opportunity revenue you didn't even know you had. That's just little things you could do to be successful.

Jasper Ribbers:
Yeah. Awesome. Tom, I appreciate you sharing your wisdom today on the podcast here. Before I let you go, if people are interested in learning more about the CasaGo, where can they go?

Tom Lyons:
Yeah, great. So we have franchises too. So smaller companies, even, you know, if you have five, 10, you know, properties or more, if you're an even larger company, we offer all support revenue from revenue to housekeeping, to marketing, to owner acquisition, et cetera. That could be really beneficial for you. The best way to find us is on www.casago.com.

Jasper Ribbers:
Awesome. Sweet, Tom, thank you so much. Appreciate

Tom Lyons:
Thanks Jasper.

Jasper Ribbers:
you taking the time here.

Tom Lyons:
Appreciate it. Thank you.

Jasper Ribbers:
Alrighty, and to the listeners, I hope you enjoyed this episode, another one on this topic of revenue management. Have a great weekend and we'll see you next time.