Matt Willis, Kigo’s VP of Product Development started out with a quick overview of the short-term rental industry. “A hybrid of the rental and hotel industry, the short term rental industry is so new that the even the name is new. At one point, it was referred to as the ‘vacation’ rental industry. Not anymore. Now it’s catering to corporate stays and anyone else who’s looking for a short-term stay in a place that feels a little more like home.”
Businesses, at this point look like this:
- 9 units or less – “The host” – people who are earning extra income.
- 10-39 – “The Entrepreneur” – this individual is officially a business owner
- 40-250 units – “The Professional” – the up-and-coming organization
- 250 units – “The Enterprise” – a mature organization that is a well-oiled machine
Each is trying to get to the next level and one of the most important keys to expansion is in channel management.
But what is a channel?
“Simply put, a route to market,” said Paul Smith, Kigo guest speaker best-selling short-term rental author and business owner in the UK, who happened to be sitting in on the session. To him, it’s a simple description that paints a crystal clear picture.
The complete listing of those “routes” is a lot more complex though. There are 5 major channels—HomeAway, Airbnb, Booking.com, TripAdvisor and Expedia— that are accompanied by literally thousands more, from a country region to even the local level. Navigating those channels is another story. And each has its own rules, fees, commissions and benefits. Deciding where to spend your time and how to portray your property can be the difference between occupancy and vacancy. It’s not like you’re comparing apples to apples or even apples to oranges, Willis said. “More like apples, to oranges to pineapples.” Airbnb is part of the sharing economy, while HomeAway or VRBO are more like a typical OTA. What works for one may not work for the others. And that doesn’t even take into account boutique or regional sites.
The key is in treating each channel as a unique property. “It’s like Radio, TV and Magazine advertising,” Willis said. “A radio ad isn’t going to work well as a magazine ad. It’s better to focus on what each does well.”
“One key is learning more about your audience,” he said. While vacation travelers are still the largest part of the market, he sees business travelers quickly becoming a bigger piece of the pie. He suggests you show each audience the unique amenities they want on the channels they frequent.
But there’s one channel they hadn’t yet talked about that Willis said he believes is the most important: your company website. It’s your brand and it can be a lot cheaper than the channels – because there’s no commission! Willis wanted to know what others thought about the importance of websites. Some attendees said they know people who have completely abandoned even the large channels in favor of their website and Google AdWords. Micah Berg of RealJoy Vacations, who manages a large quantity of short term rentals of all sizes, said channels are still key because they are always following the market and that makes a great safety mechanism for your business. “Even if 80% of bookings came through website, I wouldn’t leave the channels. Changes happen to the industry and the big channels are all over it. They’re an important part of the equation,” Berg said.
“The bigger you grow, a channel management system like Kigo is a must,” Willis said. We went on to say that managing all of the pieces, from booking and reservations to revenue are insanely difficult to manage in Excel. Pricing is a science and software like Kigo can do it on the fly, serving it up to who you want and when you want it.
Most conceded that there are still some market challenges to solve. Even the most advanced channel management systems have trouble managing all of the fees and on-the-fly changes like last minute discounts or seasonal changes, in part because the channels are all a moving target as well. Can you adapt the length of stay to the type of guest or demand or occupancy, and do it on the fly? Right now, it’s all done manually, but we’re moving toward automation. It needs to be automated.
That’s why it’s good to have a partner like Kigo on your side to help figure it all out. They’re working on challenges like these.
Learn more about Kigo Channel Manager.