Heads In Beds Show - How Rates & Pricing Impact The Success Of Your Marketing Efforts

Episode Date: December 14, 2022

⭐️ Links & Show NotesConrad O'ConnellBuildUp Bookings YouTubeVideo version with slides🔗 Connect With BuildUp BookingsWebsiteFacebook PageInstagramTwitter🚀 About BuildUp BookingsBuildUp Bookings is a team of creative, problem solvers made to drive you more traffic, direct bookings and results for your accommodations brand. Reach out to us for help on search, social and email marketing for your vacation rental brand.

Hello there, welcome back to the Heads and Beds show. I am your host today, Conrad. We have a solo show today. Paul was out about handling some other things today, so we weren't able to do our typical episode. But do not fret, we are coming back next episode with a banger, as the kids would say, a 2023 marketing overview plan, both on the guest side and owner side.

I think you're going to love it. But in the meantime, I wanted to give you something. So I recorded a video called marrying rates and marketing for our YouTube channel. So if you go to YouTube and search build up bookings, you should see that video there called marrying rates and marketing. I wanted to share the audio of this particular recording with you today on the feed, but feel free to check out the video as well. There are some graphics on the screen and things like that that you won't get in the audio version,

but if you have a chance to check that out, please do let me know. Subscribe over on the YouTube channel. We're going to post more videos next year, so you might get some additional value there. In the meantime, please enjoy this presentation. If all you do is cut rates, you're never going to maximize the performance of your vacation rental properties. Let me explain. In today's presentation, we're going to talk about marrying rates and marketing together. So this is a topic that I haven't always articulated well in the past, or I always haven't been clear in the past about what I see the value creation is between rates and marketing. I always saw rates as people who knew the market and knew

what was going on, and therefore could tell us what the market would actually demand, what the cost would actually be willing to pay. And then I always thought marketing is awareness, right? We need to go out there and generate traffic. And the more awareness we generate, typically, the better we're able to do with getting occupancy actually filled in. I think that's still true. I think a lot of what I believe there is still true. However, I've learned over the past year, as we've gone from COVID boom to a slowdown, that rates and marketing need to be a lot more interconnected. There's usually not, most of the companies that we work for, there's really not always a strong dialogue between these two areas.

In fact, in some cases, they're both done by third-party companies where there's a marketing agency and then there's a rate service. There's many out there that offer that as a service, and the two don't even know that the other one exists, nor do they even talk to each other. So I think this is something that can be drastically improved. And in today's little mini presentation, mini talk, I'm going to talk about the concept of marrying rates and marketing together so that you can actually maximize performance. So the famous quote goes, if a tree falls in the forest and no one is there to hear the sound, does it actually make a sound? My posit is that if a tree falls in the forest, does it make a sound is similar to if a rate falls in your PMS or pricing tool, does marketing make a sound? And

I think the logic that I'm following here is that when you're going in slashing rates, we'll use simple examples. Let's say it was $200 a night for a two bedroom oceanfront condo. And you adjust that to then say, okay, now this property because of weakening demand, because of whatever rules you've set up in your PMS or pricing tool is now $175. How does marketing make a sound? How does marketing and the awareness channels that you have at your fingertips, at your disposal, email, social, etc., actually know that there's a rate adjustment or rate change? Is that even clear within the confines of your own company? And I think most of the companies that we work for today, the answer is for most short-term rental companies, most vacation rental managers, the answer is no. The pricing is one

thing, marketing is something else, and they're not really actually interconnected at all. So I want to think about how we could actually solve this problem, because I think it's a widespread problem, and what are the mechanisms or tools that we might use to make these campaigns a lot more effective. And I want to talk a little bit about pricing. Again, I used to always think that pricing was something that was over here in one bucket, and then rate marketing was over here, something in a completely different bucket. But I don't really think that's the case anymore. I think marketing can actually have a really strong point of view and a really strong ability to add value that's not just purely based on rates or just one element of a successful awareness campaign,

right? Some guests are going to book on rate, we'll talk about that in a second. But a lot of guests are going to book and rate isn't really in their top two, top three, top four set of considerations, they might have a certain budget they need to stay within. But you might be able to convince someone to pay $500 more per week, or $1,000 more per week for the right property that has what they're looking for, or the value is actually there. And we'll talk a little bit about value in the coming slides here. So what are we looking for when we're actually doing on the marketing side, when we're actually engaging in marketing activity, what are we looking for? We obviously want marketing that's effective. So effective marketing is marketing where you push out a message, and that message is received by the right people.

And not only is that message received by the right people, they take action on it, right? It's not just that they see that there's a special or a deal, but they see that and they immediately take action. Some of the biggest companies in the world have highly effective marketing channels. When Apple releases a new iPhone or new AirPods, people jump on it right away. You could almost be, you wouldn't have to be very intelligent to run Apple's marketing campaign. It's basically just launching new products and you're going to sell a ton of them. On the flip side, there's certainly a lot of marketing that I see that's a lot of activity is going on, but not a lot of actual action is being taken, right? And I've experienced this in my career, right? Working with some

clients, we're sending traffic to a landing page and it's not converting. The people just are not that engaged in the actual offer. They're not that engaged in the actual property. The marketing that we're doing is effective in getting people there, but it's not effective in them actually converting and we're not really able to drive the results that we want. So number two, what would we want in a perfect world from a marketing perspective, we would want easy to track results. So it's not enough that we're able to actually have, let's say $1,000 in a campaign that's going out, whether that's an email campaign, or paid search, or whatever the case may be social ads, Facebook ads, we need to know what the actual results were from that spend. And did it occur specifically

because of that spend? One thing that I see, I think some people who are getting a little bit of momentum with their direct booking marketing going down the path of is they, they have a campaign that's out there, and they spent, let's say $1,000. And then they see a booking come through on their website. And they say, Oh, great, like I spent money here. And I got bookings over here. But they don't actually set up the proper mechanisms, the proper plumbing, if you will, to pass the data through so that they're actually able to track the results. So in a perfect world, we would have very easy, we would have highly effective marketing where it's very easy to track the results. If we turned off one campaign, we immediately saw a dip. We turn the campaign back on, we immediately see

a pickup, right? Okay. Number three, we want our marketing in a perfect world to work with a short time horizon, meaning a lot of the marketing that we do, it's, oh, we're building brand. There's not really any direct ROI today, but don't worry down the road, there's going to be, you know, lots of ROI associated with this activity. That is very challenging for a lot of small businesses to be able to sustain. They can't invest tens and hundreds of thousands of dollars a year into long time horizon stuff. They need stuff that works right now. They need stuff that's going to work in the next 30 days, the next 90 days, things that are actually going to get people to respond directly. So short time horizon will be the third thing that we might look for in a highly effective or highly profitable marketing endeavor. We want the marketing to be

effective. When people see it, they take action. We want it to be scalable so that when people actually, so that we can't just have one or two bookings come from a specific activity, we want to be able to drive 10 bookings or 100 or000 over time. We want the results to be easy to track and we want a short time horizon. So if we create those four things in our marketing campaigns, we are going to have results. Now here's the bad news. Those things are extremely hard to create

in one marketing channel. I would actually argue that no marketing channel can do all of those things simultaneously, where it works quickly, it's very effective, it's low cost and it's very trackable. That's very challenging. There are some that get closed, and we can talk about those in a second. But one thing that we know is that rates are a primary decision factor. You read articles like this, or I have been reading articles like this since the COVID boom that's happened over the past, let's call it

18 months, 25 months or so. Vacations are, here's a headline from Washington Post, vacations are painfully expensive now, but you can spot ways to save. Prices for flights, hotels, gas are on the rise. And then within this article, the author Hannah Simpson also mentions vacation rentals as well. Oh, you can book money. You can go on this listing site and find deals and things like that. Rate is obviously a primary consideration.

It would be foolish for us to consider that rates are not one of the first things that people look at when they're considering booking with you or with a competition, or they're considering booking with a professional property manager versus a single property host, or whether they're considering alternative lodging options, a hotel, whether they're considering staying in a vacation home, rates are obviously a primary consideration factor, it'd be foolish for us to think. However, I've never read a review, and I've read 1000s at this point that said, man, I'm glad I paid so little for this place. It's not what actually people care about once they're there, once they've actually booked the place,

once they're actually excited to go and experience the vacation that they're on, leisure travel. They're never like, man, I got to get paid so little. I was happy about that. That's really not how they think, right? That's not how anybody thinks. They want great value, but value doesn't always equate to price, right?

Price is what you pay, value is what you get. So I think that the best way for us to think about marrying the idea of rates and marketing, which is that we have to make the value of our offering so much better so that when we drop rates, people respond to it. It goes back to our commentary from earlier where we were talking about effective marketing gets results quickly. It doesn't take lots of rates cuts or it doesn't take a significant amount of time for people to actually go and take action with what we're doing, right? When we do the right type of advertising and marketing, people respond quickly.

They respond ideally right away. We put out a campaign, people respond right away. The only way that they're gonna do that is they think that the rate doesn't match the value that they're getting. And they think, oh man, I'm getting a great deal. I'm paying 175 a night, but I'm getting $250 a night worth of value.

Or they go and compare 175 per night offer property to a 225 or 250 per night property or whatever, a substitute, whatever numbers you want. You're paying $1,000 a night, but you think you're getting $2,000 a night of value. per night offer property to a 225 or 250 per night property or whatever, substitute whatever numbers you want. You're paying $1,000 a night, but you think you're getting $2,000 a night of value. So the experience is always going to be something that people are going to lean into. Experience is going to matter for a lot of people a lot more than rate or price. There's always the bottom feeders who will take the cheapest property and that's the only thing they care about. They'll stay in the worst properties from a quality perspective. And that's fine. If you're listening

to this, I suspect that's probably not your angle. That's probably not your market. So they care about the experience that they're getting when they book. And a lot of experience doesn't have to be just solely based on concierge or things to do or activities or things like that. It's value. It's the value that they get when they actually book with you. What do they get that they're not getting in other places? So here's some ideas that we could leverage or that we could talk about that would be offers that you could run in your vacation rental business now that are clever ways to increase the value of your offering without adjusting the rate, without changing the rate at all.

So if your rates are currently $2.25 a night, that's your standard rate for a property. I don't think you actually have to change it necessarily to see more value, especially if we talk about the specifics of how some of these, the mechanics, I should say, of how some of these offers might work. So we're running this a decent amount right now, which is a free night offer. So when people come in, and they see a banner on the website or something that says get a free night, people are drawn to that. Oh, I want a free night. That's an appealing offer. And a free night offer can be something that you run during the off season, it could be something that you probably don't run during main season, but there might be a time and a place for it. We'll talk about that

in a second. And a free night offer is usually you're giving away a night that wouldn't have booked anyways for the most part. So in a weekend destination, you say, hey, I'm always booking Friday to Sunday. That's no problem. I'm always booking Thursday to Sunday. That's no problem. So when you give away Monday, what are you really losing? I would argue very little at all in most cases in most like weekend heavy markets.

So a free night offer is usually something where you're giving away something that was typically not really being sold anyways, but it's value to the guest. So if you say, hey, my cabin is still $2.25 a night, my resort is still $2.25 a night, my vacation home is still $2.25 a night. However, if you book any three nights during these parameters, during these timeframes, I will give you a fourth night for free. We have a client right now who's running a campaign like this, but the fourth night is half price. So we're still getting a decent amount of value out of it. The guest is still getting, I believe, a good value out of what they actually are booking, but we're not giving away the full free night. We're giving that night away at half value. So if it was $225 a night,

or I'll do $200 a night. I don't want to do any math here. We charge $100 for that fourth night on their ticket. So that's a clever offer. That's something that pretty much anyone can leverage in the weekend heavy market. In season market, it may be a little bit more challenging to do that because you might have hard turn days. A lot of clients we have Saturday to Saturday turns. That's it. We don't really want to be able to have any flexibility there. That being said, most clients that we work with do have a last minute thing where they loosen the calendars a little bit. They loosen their night minimums a little bit. So you might open where someone could come in and do a Thursday to Saturday or Wednesday to Saturday or something to that effect. And in that scenario, you give away the front end. So you'd give away like, all right,

we give away Tuesday or Wednesday, and then you're booking a mini week, a half week, whatever the case may be. And there's ways to do that in season, you might only open that offer during the summer when it's less than 30 days in or less than 20 days in or something like that, just your last minute inventory or availability. But in your marketing, you could communicate that, hey, get a free night's day, come early, have a mini week, but come early, and you get that free night offer during maybe even a season if you're considering doing that. Okay, okay. So next up, we could do a $1 down offer as well. So a dollar down offer is something where you offer an extremely low, it doesn't have to be $1, we've had clients that have run this with $100 before. But if you run a

$1 down deposit, you say, hey, give me $1 now, give me $50 now, $100 now, whatever. And I will reserve your booking for you that might be far out in the future. So right now we're recording this towards the end of 2022. You could run a campaign right now and say, hey, if you're planning on coming in summer of 2023, give me $1 right now, give me $50, $100, whatever number you're comfortable with, and then pay me the balance on January 15th or January 31st or something like that for your June or July or August vacation. A lot of beach markets that we're in do this offer or offers like it, and they work phenomenally well because what are people right now during the end of the year, the holiday season? They're strapped for cash. They want to go on that summer vacation. They might even be meeting with their family and talking about the, they're looking

forward to, oh, I can't wait till we go to the beach this year. It's going to be fantastic. And we just bought Christmas presents. We just bought this. We just bought that. Think about the they're looking forward to, oh, I can't wait till we go to the beach this year, it's going to be fantastic. And we just bought Christmas presents, we just bought this, we just bought that, think about the consumer, they may not have all that bandwidth available to them right now. So offering a very low deposit gives them a little easy foot in the door where they just can say yes. And that's the hardest thing to do in marketing sometimes, just to get someone to say yes to anything, to get a guest to say yes to anything sometimes can be the most challenging thing. So just collecting a small token deposit, a very low amount, locks them in and they go, great, we've saved your dates. You owe us the balance on January 15th. If you don't pay us by the 30th, hey, we're going to release the dates.

And it's probably still something that you can fill that inventory. You've got five or six months to figure that out. You could also have a non-refundable deposit or something like that if you wanted to do it that way. So another way of doing it, dollar down campaigns or low offer dollar down campaigns can be a great way to boost stuff in the summer when you're towards the end of the actual calendar year like we are right now. Okay, I think this one's most applicable to pretty much anybody. And I think it really leans into the idea of an experience, which is that free extras with the value that someone may get from a free extra doesn't always match the value

that it costs you to deliver it. For example, I worked with a client years ago who started doing free beach gear, you would book the actual vacation rental home, they would give away, I think it was like a, in the home, there was like a kayak. There was maybe like a paddleboard. There was chairs. There was an umbrella. There was a lot of stuff that you like could bring in theory.

I just started in the car. It's not that big of a deal, but you don't want to, right? No one wants to bring all that stuff. So the value of what they were giving them was maybe, okay, you go to a gear rental company and pay $75 to get the value of what they were offering you for like a week long vacation or something like that. Maybe with all the kayak and paddleboard and stuff like that, it might be $200. and pay $75 to get the value of what they were offering you for like a week-long vacation or something like that. Maybe with all the kayak and paddleboard and stuff like that, it might be $200. These were $4,000, $5,000, $6,000 per week vacation rental homes that they were promoting.

That's a decent amount of value that you're providing. However, people just don't want to deal with this stuff. They could just say, oh, we can get it from home. We can bring the one that we have, but they don't want to do that if they can help it. So the fact that it was there waiting for them, the actual monetary cost of delivering that might be $200. The value the guests got from having all the beach gear there ready to go so that they arrived, they got all their food, they got settled in the house, and they could literally just grab the beach chair, walk to the beach, have everything all set up there.

The value they got from that was far exceeded the $200 or $250 that you might cost in actually getting that service to them. We've had clients that have done restaurant offers as well. Hey, book this, book any reservation during this timeframe with our minimum night requirement, three nights, four nights, something like that. We will give you dinner on us, $100 gift card to a local restaurant

that people may wanna go to. And again, it's the experience. Oh, it's like they kind of wrap up the fee with the restaurant into the overall booking. They don't think of it as separate. They think, oh, I just had a great dinner on my vacation rental manager who gave me this gift card that was sitting on the table when I walked in. It was sitting there in a little

envelope. Thank you so much for booking. We're happy to have you here. Staying with us, Mr. and Mrs. Smith. Please enjoy dinner on us. We hope you have a great time, right? And there's a million things you could do here. We have clients in the past that have done, on the higher end, they've done car rentals. I don't know if you could do that now in this post-COVID world. This was a while ago. Very high value, right? Book any prime week during this timeframe, and we will give you a seven night, six night voucher for a car rental. This was a client in Hawaii where a car might cost seven, $800, $900. Now these were $10,000 per week vacation rental homes, but people were drawn to that because they were like, oh, great. I don't have to worry about that as an extra expense. You need a car to go around many places in Hawaii.

So this was a high value offer. There was more value in doing that than there was in doing other things. It was all bundled into one price. And that's something that you can leverage a lot of too. So we I could give example after example, right here, you could offer a package, come and stay here. And we're going to give you a tour and activity voucher credit coupon over here, we're going to give you the chance to go do this, we're going to give you credit to park at the National Park for free, if you could do something like that, right? There's a lot of things that you could do to actually create more value here. But extras may cost you X, but to the guest, it's X plus Y, meaning they may cost you $100 to deliver the extra,

but the guest may perceive the value of that to be $200 or $250 or $300, or they just want it and they just don't want to deal with the hassle of getting extra beach gear or things like that. There's a million layers to the idea of free extras, but I don't really see a lot of people leveraging these right now. I might see it every once in a while in small things and they, the chief complaint I hear is, oh, it's extra legwork. And I'm like, yeah, that's why people aren't willing to do it is that it's extra legwork. But if you do it, if you do the legwork, you're going to be rewarded because it's now, you're now no longer competing in an apples to apples scenario. I'm now no longer comparing property manager A versus property manager B,

and they both have a three bedroom house that's in this general location, and one is $2.25 a night and one is $2.50 a night, you're now saying, oh, when I book over here, I get XYZ. When I book over here, I just get X. So why would I ever consider really booking over there unless the difference in rate was just so significant that they felt like they had no choice and they could replace what you're offering. So if you tried these campaigns in the past, they didn't work, you didn't provide enough value. The guests saw that offer and they went, okay, it's not really that valuable. Maybe they don't like the restaurant that you were giving the gift card away to, or maybe they have their own beach gear and them hauling it doesn't really matter.

So there's layers to this. You have to test it. Your market's probably going to be different than other markets. So these ideas that I'm giving here may not be copy and paste, may not fit into your model, but there's a lot of layers here to test and you're not going to know until you go out there and try these things. Okay, next one. I see this a little bit more recently, and I think it can work well, which is the idea of waiving fees. So one of the most common ones that I see is waiving a pet fee.

So clients that have a lot of pet friendly properties, they're promoting them. Many guests are coming with a pet. We have one client where I think it's 35%, 40% of their bookings have pets coming in with them. And they typically charge $100 per pet, almost always a dog, by the way. So $100 per dog per stay. And dog, by the way. So $100 per dog per stay. And honestly, over the year, that racks up a significant amount of fees in terms of there's extra wear and tear, there's cleaning, there's things like that the fee, I believe is very justified. But it's one of those things where waiving that fee during a certain slope slow season, maybe something that will help you a little bit and maintain your right integrity.

So if it's normally a $300 per night cabin, and then typically you'd be charging, you know, $100 pet fee, you know, you could argue, okay, if I back out the rate a little bit, maybe people are willing to pay that, but I'm still charging the pet fee. But there's something I think psychological about the idea of waiving fees. Okay, I'm getting the rate, I'm getting just this rate plus a cleaning fee, that's it, nothing else. Or I don't have to deal with this fee or even knocking off a cleaning fee during certain times and then working that up in your accounting. One chief complaint that I hear from people outside of like our bubble of the vacation rental or short term rental world is, oh, I would never book an Airbnb. The

fees are so high. And there's a perception out there that people charge a lot of fees. A lot of them are necessary. When I see some of the screenshots on social media sites, people are complaining about like taxes. I'm like, okay, we have to charge taxes. But anyways, there's a lot of fees that people typically charge that might show up on the line item that the guest is a little turned off by, right? In some cases, let's be honest. So some of the best ways I think to actually leverage and get more value is not always to change the rate, but say, Oh, you know what, we're going to waive this fee, we're going to change this fee, we're going to omit this and make it a little bit simpler for you to say yes to our offer to what we're actually promoting here. So last idea I believe I have here

is the loyalty program, come back again, I have a client that's ran this several times over the past few years, and it's been pretty successful, which is you come and book any week during certain parameters, during some of their higher weeks, and we will actually give you a $300 credit towards your next visit this year. So now you can't book any of these properties

for $300, not even close. So he's not really giving away a free stay. He's giving away maybe a night and a half at some of his lower end stuff, a half a night really at some of his higher end stuff, but people really like it and a decent portion of them take him up on it. So we can actually defer some of these stays to the off season, people might want to come back and stay again, it's a drive to market. So it

has that appeal that draw to it. But you could certainly say something to the effect of come book this and I'll give you a $300 or $500 credit off of your next visit with us that happens in this calendar year. That makes it a little bit harder to track, I admit, I'll go back to my comment from earlier, this is a little bit harder to do within our system. It doesn't really support it. We have to keep track of it manually. That's hard. I know, that's what makes it valuable

is that most people aren't willing to do this. So when they see your offer, it really sticks out. Oh, we get second vacation at a discount. We get to come back and stay again. When you loosen your night minimums and you offer three nights, people get like a half price second vacation. What loyalty they're driving to you

because then they don't want to miss out on that offer the next year. Oh yeah, we'll come back and we'll book again with you next summer so that we get that little mini fall getaway as well. So a lot can be leveraged here with loyalty program that kind of credit ideas just one, you could weigh fees for people who are on a loyalty program. We have clients that are now testing continuity programs. So you actually pay a nominal fee on a monthly basis, like $10 a month, $15 a month, and then you're a member of their club or their particular program. And then you're willing to weigh fees or you're willing to adjust their some of their pricing and things like that for those people. The reason that can work well is

that then they really have loyalty, they're locked in, oh, I already have subscription with I'm already in the blah, blah, blah card program. So it'd be silly for me to go look and book with someone else because I'm going to lose these benefits that I might get a lower fee or I might get whatever clients actually runs. I think if you stay during your birthday, one of your nights is free a night knocked off your rent. If you stay during your birthday, which I think would be a fantastic like annual celebration for most drive to clients to leverage is the idea, oh, I'm going to come for my birthday every year, because I know I'm going to get my birthday night is going to be free, and so I'm not going to be charged for it. So again, a lot of layers to loyalty programs, you could come up

with a lot of your own that may make sense to you. Again, you could even go back to some of the things we said earlier, loyalty program could be for any repeat guests, we're going to give them the gift card, no matter what their booking length is, we're going to give them during the time where gas prices were very high, we were running gas card promotions that were just crushing it inside of you know, this loyalty program or free bonus idea. It was Yeah, we know it's expensive right now to get in your car and drive to our vacation market. How about this book any six nights here, book any five nights here, we'll give you a $200 gas card as soon as you walk in the front door. It'll be sitting for you on the front desk or it'll be sitting for you, excuse me, on

the on the kitchen counter. Oh, great. I don't worry about gas on the way back or whatever sort of thing when gas prices were really high. So a lot of layers there to a loyalty program, you could play with that quite a bit and come up with some clever ideas. So thank you so much. I hope you've enjoyed listening in or watching to this particular thought process here on marrying rates and marketing. If you have any questions, feel free to send me an email, Conrad, C-O-N-R-A-D at buildupbookings.com.

We would be happy to hear your feedback. If you have any clever promotions or specials that you've run, let me know. I'm happy to share more kind of case studies and battle stories with you of some of the success that we've had with some of these offers. And I will see you in the next video.

Bye.