We know, we know—we're not even halfway through 2017, but now's the time to lay the groundwork for 2018 budgeting. Hear us out.
For vacation rental managers, budgeting and forecasting can seem daunting, even haphazard. We're all in that boat, and it's never ideal. But regular attention to revenue management contributes substantially to the bottom line in ways that decreasing fixed costs simply can’t. Budgeting and forecasting accurately are essential, but there are some straightforward tools and strategies that can make it far easier.
Consider this: How hard would it be to look at July occupancy right now? Perhaps you’ll quickly that find that four- and five-bedroom units are in high demand, which is a clear opportunity to raise rates and drive revenue. It really can be as simple as this. But the more you invest in the consideration of budgeting and forecasting, the greater the return.
In order to budget more accurately, VRMs should avoid the blanket “5% increase over last year,” and instead consider external trends and market data. For instance, a new direct flight to your destination will have a substantial impact on demand, increasing rates for you and your competitors. Other considerations include what days holidays fall on, special events, gas price fluctuations, and more.
Monthly budgeting goals should also be based on a variety of internal trends and assumptions, including unit volume, pace reports, booking window by season, length-of-stay patterns, and online reputation.
Just as budgets should be amended based on changes in the market, forecasting should be reviewed monthly. In some cases, VRMs should re-forecast weekly during the high season in order to achieve maximum rates. For instance, let’s say you have a five-night minimum but you’re booked solid, and you can’t sell anything before or after it. This is an indicator that you could consider increasing occupancy by raising the minimum to seven nights.
If you can find opportunities to increase your rates even just five weeks of the year—which requires regular budgeting and forecasting—you will bring more to the bottom line that just about anything else you could do. It’s more than worth the time and energy.
For more budgeting and forecasting strategies, consider signing up for “Helping Managers Get Ready to Budget and Market for 2018,” a VRMA webinar presented by Pam Carder, NAVIS’ senior revenue management consultant. Pam’s presentation is scheduled for 11 a.m.–noon EDT on Wednesday, May 24, 2017 but will be available for free to VRMA members thereafter.