At Beyond, we’re here to help you find INSIGHTS into the performance of your short-term rental. One of the best ways to do that centers around the idea of “pacing,” and how you can leverage it to make your portfolio more profitable.
While reviewing historical data to inform your strategic decisions is a key aspect of short-term rental management, using pace data allows property managers to be proactive with their revenue management strategy and make smart decisions while there's still time to optimize revenue.
In this piece, we’ll walk you through step-by-step how to analyze historical year-over-year pacing at the portfolio level, then the listing level, and finally, against the market comp set.
Download the Pacing Into Profitability Quick Guide here!
Step 1: Portfolio Level
What To Look For Regarding Pacing
Looking at year-over-year performance for the whole portfolio is nothing new, but even veterans need a good refresher now and again. With the pace of change we are undergoing, a weekly review is no longer enough.
We recommend using the tools and dashboard in your PMS, business intelligence tool, or Beyond Pricing’s free Insights tool multiple times a week.
The goal of Insights and other analytical tools is to show you key information about your short term rental portfolio performance, specifically:
- Total Revenue
- Paid Occupancy
- Average Daily Rate (ADR)
Simplify and Focus on Occupancy
While it’s important to review all aspects of your portfolio, there are a few that should always be at the top of the list, with occupancy pacing being one of them. Looking at this coming year of occupancy, for example, and comparing it with occupancy for the same time last year, as well as final last year, gives the clearest story.
In the example above, we can see where we are nearly as full as last late-May/early-June ended up, but then in August they are pacing behind last year for the same time.
The Other Side of the Coin: ADR
The other side of this coin is the average daily rate (ADR), so being able to see how ADRs correspond at the same time, again with the same fields, can spot not only any problems, but also what to do about it.
Now incorporating the ADR chart above, we can see that the period of late-May/early-June, while booked up almost to last year, is actually still getting rates much higher than last year. In fact, we can see we're successfully getting higher rates all summer - with the exception of August - where we knew we were pacing behind.
Looking at the cumulative occupancy and ADRs is useful, but given your booking lead time, that could be from reservations made months—or years—ago.
While this is all great to know, it's only the first step in an encompassing analysis. We suggest repeating the above by the different markets you may be in, by bedroom size, or any custom listing grouping that you may use to distinguish similar listing types to better focus on certain areas.
Step 2: Revenue per Available Night (RevPAN)
Be On the Lookout for Dips
While the overall pacing and bookings for summer may be on track, it’s easy to spot that quick dip in occupancy for June 3rd and 4th below, circled in red. This is even more pronounced when looking at adjusted Revenue per Available Night (RevPAN).
Even though it’s only a few days, we are expecting a very busy high season (as we have already reached 2020 levels) and a few additional days at higher ADRs can really make property managers, and especially owners, very happy.
Leverage the Tools at Your Disposal
Using Beyond's Lens view, we can select that troubled time period to see at the listing level the revenue, ADR, and Occupancy, and we can then compare it to last year. In our case, it's incredibly useful to see which listings have $0 revenue for that time period so that we can address it ahead of time.
Now that we are aware of the issue and the listings contributing to it—what's next? With an integrated data and pricing tool, we can simply click on the listing link to go directly to that listing’s pricing page for further analysis and quick action.
Alternatively, if you’re managing a large amount of properties, you can leverage the bulk actions feature to lower the price of this period (and increase occupancy and revenue) for all listings with just a few clicks.
What Goes Down Can Also Go Up
While this example shows how pace data can be used to identify date ranges that may need price decreases, the same data can be used to spot when demand is higher than usual and prices can likely be increased.
Any date ranges that are pacing quickly against historical booking pace can be increased to help regulate booking pace back to normal while driving ADRs at the same time.
Utilizing your own property’s pace data is a great way to proactively manage the revenue of your listings and maximize booking potential. Now that you know how to analyze your portfolio and listing over time, let's learn how to be an expert at comparing your performance to the market!
Step 3: Comp Sets and Comparing to Market
How Does Your Portfolio Compare?
While it’s important to spend most of your time focused on your own listings, it's also vital to keep an eye on what and how the neighbors are doing. Let’s take a look at an example of a user who recently connected their account and what we can learn about them and their market.
A quick word before we rush to see how this property manager stacks up against their rivals (friendly or not)—for property managers with a large number of listings or with similar type listings such as condos in the same building, it can first be useful to compare between different groups of listings.
Most analytical and market comparison tools should allow you to group or select your own listings and then allow you to compare between groups. In the example below, we're comparing last year’s Revenue per Available Night (RevPAN) for a group of listings close to the water versus a group further away, making it very obvious which group has the superior RevPAN in summer.
Before You Compare, Understand What You’re Comparing
The first part in any good external comparison is selecting the right listings to include. At Beyond, we take a painstaking amount of time to personally customize all of our regions and neighborhoods that end up determining comp sets. As our pricing algorithm runs off selecting the right comp sets, and not just by the similarity of the listing but its data integrity as well, it's our number one priority to optimize them.
Furthermore, we don’t solely rely on arbitrary city/state boundaries or irrelevant telephone or zip codes; instead, we rely on machine learning combined with the human element from our team of analysts. Therefore, selecting the best comp set can be as easy as picking the market you want to assess from a drop down.
Now that we have our comp set—lets see the data!
Back to Basics: Occupancy and ADR
Let’s start by looking at occupancy and ADR as we did in the previous sections, but this time compared to our market. While we can do this for many different time ranges, let’s look just at last year as a baseline.
Given the ever present discrepancy in the baskets of listings, there will always be some deviation. In the case below, this property manager’s ADRs are almost always less than the market; however, their occupancy always tends to be higher as well.
Going one step further, we can see how this deviation in occupancy and ADR affects what we truly care about—total revenue per listing per day. This property manager tends to be below the market, on average, due to the quality of their listings. It’s most noticeable the week before July 4th, where the average is $266 (whereas the market’s at $305), mostly due to the lower ADRs we can see above.
History is, Well, History
We can’t change what’s already happened, so let’s look ahead to this year and see how this property manager is comparing to the market and what actionable insights we can gain. Analyzing pace data against the market for future dates is the best way for property managers to stay proactive with their revenue management strategy and spot issues ahead of time, which allows for more time to course correct.
We can see again that, on average, the ADRs are still below the market. June and July, however, are much closer to the market, most likely due to rising rates from an increase in demand.
There’s a lot more here to unpack. First of all, occupancy in late April and early May dips below the market when this property manager is typically more full. At the same time, the user’s ADRs have crept above the market, which is not standard for this property manager’s listings.
This suggests that there may be some over-pricing happening here, which if they are Beyond customers, they can easily address with “Bulk Action,” as we demonstrated earlier.
Additionally, we can see a similar trend around the second week in August, and then the inverse later on in early October, all from a quick glance at two charts!
Other Ways to Look at the Data
While most revenue management stories revolve around occupancy and ADR, there are a whole host of other charts and subsequent conclusions that can be drawn and detected. With that said, let’s take a look at one more chart—cancellations as a percentage of reservations by stay date.
Here we can see that, unfortunately, this property manager suffered worse than the market in April with cancellations. While this trend has shrunk, it remains elevated. This is a perfect reminder that as cancelations affect revenue, re-assessing your cancelation policy from time to time is a good revenue management practice.
Now that we’ve added pacing to the market to our revenue management tool belt (along with historic pacing and historic listing), we're ready to reap the benefits of analytical tools and the insights they can, with the right training, deliver.
Let’s Wrap This Up
We hope this review of pacing and how you can leverage it to make your short-term rental portfolio more profitable was helpful. By understanding the ebb and flow of the market by following the steps above, and what to do at each moment, you can effectively position your listings to capitalize on those fluctuations.
When you’re ready to test your skills, come on over to Insights and see what you can learn!
Download the Pacing Into Profitability Quick Guide here!
.jpg)
.png)
.png){kind=small}
.png){kind=small}
