BLOG TOPICS
There are many questions short-term rental owners and managers face when trying to figure out how to make as much money as possible from their investment. One of the biggest questions is where and how to list it? There are basically two ways to do so—indirectly and directly. Let’s explore both ways to see what can work best for you.
Indirect bookings are when properties are listed on large online travel agencies (OTAs) like Airbnb or Vrbo. Direct bookings occur when a customer books directly with the property owners and managers, usually through their own website or over the phone by a reservationist.
In general, direct bookings net you more revenue per booking because you aren’t having to pay OTA fees, while indirect bookings net you more eyeballs because the volume of traffic on their platforms are significantly larger than what you could expect on your own, single website.
Direct bookings also require purchasing and maintaining a website, but also provide the ability to connect directly with your customers and get their repeat business without depending on OTAs.
An increase in indirect bookings from OTAs can help drive occupancy during low season by increasing the potential booking audience for your portfolio of properties, while an increase in direct bookings helps to drive net ADRs for property managers to maximize revenue during high season when there is a lot of demand.
Let’s dive a little deeper into distribution costs in order to get a better understanding of how and where you should invest resources towards generating more bookings.
Distribution costs are constantly on the rise in the travel industry. As OTAs look to drive more revenue, they will likely look to increase the distribution fees on their platforms. Property managers and owners understand that the power of the OTAs (marketing, audience reach, etc.) is incredibly valuable and will need to fight, or at least plan for, these increases as best as possible. Since we now know that all bookings are not created equal, it’s important to understand how distribution channel factors can have an impact on net ADRs.
First off, the fee structures differ per OTA. Some charge a flat fee, while others use a percentage model, and within the percentage model, the total percentage of OTA fees can vary by market.
At the end of the day, someone has to pay for those fees. That's either a visible line item to the guest, or a hidden cost property managers have to absorb or decide to “pass-through” to the guest (in essence, increasing the base price to take into account the OTA fee).
Let’s look at an example—say you get two $100/night bookings for 3 nights, one on Airbnb and the other through your direct booking website. Are you taking in the same amount of revenue?
In effect, you aren’t. When taking into consideration all aspects of managing a short-term rental, the difference between OTA vs. direct bookings can become noticeable.
Understanding how distribution costs can impact the bottom line of a short term rental business is only half the battle for property owners and managers. It's also important to have the right tools and know-how to be able to effectively manage booking distribution for specific properties.
Performing a basic distribution cost analysis is the beginning. Questions to ask yourself can include:
The ultimate goal should be to make the guest pay without having an impact on booking pace. One option to accomplish that could be to explain to the owners how the landscape is changing and distribution fees need to be taken into account at some point. The alternative is for property managers to pay for it. As distribution costs rise, property managers should be focused on minimizing those costs and ensuring that they do not eat into their bottom line.
If you’re using a channel manager—like Relay—you can use the channel markup features to automatically increase pricing only on certain channels to help cover the cost of that OTA’s distribution fees.
Higher prices on OTA channels will either help cover the cost of the distribution fees, or, with a good direct marketing campaign, higher OTA prices will train guests to book via direct channels instead.
Be aware, however, that having different prices for the same listing on various online channels places your listing out of price parity. While OTAs do not currently “punish” listings for having a higher price on their channel versus another, this may be a tactic that the OTAs use in the future to discourage price disparity.
Whether or not you use indirect or direct bookings, or a combination of both, it's important to understand how distribution fees work and fluctuate. Having a strategy in place to ensure you’re maximizing revenue is essential for the health and success of your short-term rental portfolio.
We recommend that you use both a direct and indirect booking strategy, combined with a dynamic pricing tool like Beyond’s tool, in order to maximize the revenue and occupancy for your short-term rental property.
Mi tincidunt elit, id quisque ligula ac diam, amet. Vel etiam suspendisse morbi eleifend faucibus eget vestibulum felis. Dictum quis montes, sit sit. Tellus aliquam enim urna, etiam. Mauris posuere vulputate arcu amet, vitae nisi, tellus tincidunt. At feugiat sapien varius id.
Eget quis mi enim, leo lacinia pharetra, semper. Eget in volutpat mollis at volutpat lectus velit, sed auctor. Porttitor fames arcu quis fusce augue enim. Quis at habitant diam at. Suscipit tristique risus, at donec. In turpis vel et quam imperdiet. Ipsum molestie aliquet sodales id est ac volutpat.
Elit nisi in eleifend sed nisi. Pulvinar at orci, proin imperdiet commodo consectetur convallis risus. Sed condimentum enim dignissim adipiscing faucibus consequat, urna. Viverra purus et erat auctor aliquam. Risus, volutpat vulputate posuere purus sit congue convallis aliquet. Arcu id augue ut feugiat donec porttitor neque. Mauris, neque ultricies eu vestibulum, bibendum quam lorem id. Dolor lacus, eget nunc lectus in tellus, pharetra, porttitor.
"Ipsum sit mattis nulla quam nulla. Gravida id gravida ac enim mauris id. Non pellentesque congue eget consectetur turpis. Sapien, dictum molestie sem tempor. Diam elit, orci, tincidunt aenean tempus."
Tristique odio senectus nam posuere ornare leo metus, ultricies. Blandit duis ultricies vulputate morbi feugiat cras placerat elit. Aliquam tellus lorem sed ac. Montes, sed mattis pellentesque suscipit accumsan. Cursus viverra aenean magna risus elementum faucibus molestie pellentesque. Arcu ultricies sed mauris vestibulum.
Senectus nam posuere ornare leo metus, ultricies. Blandit duis ultricies vulputate morbi feugiat cras placerat elit. Aliquam tellus lorem sed ac. Montes, sed mattis pellentesque suscipit accumsan. Cursus viverra aenean magna risus elementum faucibus molestie pellentesque. Arcu ultricies sed mauris vestibulum.
Montes, sed mattis pellentesque suscipit accumsan. Cursus viverra aenean magna risus elementum faucibus molestie pellentesque. Arcu ultricies sed mauris vestibulum. Montes, sed mattis pellentesque suscipit accumsan. Cursus viverra aenean magna risus elementum faucibus molestie pellentesque. Arcu ultricies sed mauris vestibulum.
Nunc sed faucibus bibendum feugiat sed interdum. Ipsum egestas condimentum mi massa. In tincidunt pharetra consectetur sed duis facilisis metus. Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.
Morbi sed imperdiet in ipsum, adipiscing elit dui lectus. Tellus id scelerisque est ultricies ultricies. Duis est sit sed leo nisl, blandit elit sagittis. Quisque tristique consequat quam sed. Nisl at scelerisque amet nulla purus habitasse.
Nunc sed faucibus bibendum feugiat sed interdum. Ipsum egestas condimentum mi massa. In tincidunt pharetra consectetur sed duis facilisis metus. Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.
Morbi sed imperdiet in ipsum, adipiscing elit dui lectus. Tellus id scelerisque est ultricies ultricies. Duis est sit sed leo nisl, blandit elit sagittis. Quisque tristique consequat quam sed. Nisl at scelerisque amet nulla purus habitasse.
Nunc sed faucibus bibendum feugiat sed interdum. Ipsum egestas condimentum mi massa. In tincidunt pharetra consectetur sed duis facilisis metus. Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.
Morbi sed imperdiet in ipsum, adipiscing elit dui lectus. Tellus id scelerisque est ultricies ultricies. Duis est sit sed leo nisl, blandit elit sagittis. Quisque tristique consequat quam sed. Nisl at scelerisque amet nulla purus habitasse.
Nunc sed faucibus bibendum feugiat sed interdum. Ipsum egestas condimentum mi massa. In tincidunt pharetra consectetur sed duis facilisis metus. Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.
Odio felis sagittis, morbi feugiat tortor vitae feugiat fusce aliquet. Nam elementum urna nisi aliquet erat dolor enim. Ornare id morbi eget ipsum. Aliquam senectus neque ut id eget consectetur dictum. Donec posuere pharetra odio consequat scelerisque et, nunc tortor.
Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.
sed interdum. Ipsum egestas condimentum mi massa. In tincidunt pharetra consectetur sed duis facilisis metus. Etiam egestas in nec sed et. Quis lobortis at sit dictum eget nibh tortor commodo cursus.