You’ll encounter a lot of KPIs as a vacation rental owner that is crucial to property management. These KPIs serve as a gauge of a firm’s performance and support decision-making by business leaders.
Using KPIs can provide far more precise results, whether you want to concentrate on revenue management, competitive benchmarking, or occupancy trends.
What Is the Daily Average Rate?
One of the most important KPIs for gauging the operation of your vacation rental is the average daily fee. The ADR provides information on the typical daily income that an occupied room may generate, considered one of the finest measures of room quality. What can you do with this knowledge, and why is it significant?
Knowing your vacation home’s ADR might help you identify serious weaknesses in your business strategy and increase your earnings. It enables you to examine significant patterns, compare your rates over longer periods, and find out how well your rivals are doing.
One skill that might help your organization is analyzing and comprehending your rates over time. It not only may signal major issues, but it will also help you make important strategic choices.
How to Determine Your Daily Average Rate
Easy to calculate your ADR! Simply divide the overall number of rooms occupied by the total income generated by the rooms occupied on a particular day.
Let’s look at an illustration. Let’s say you earned $4000 from renting out 25 rooms. You would need to divide $4000 by 25 to obtain the ADR. Therefore, the ADR would be $160.
Just remember to divide by the total number of occupied rooms, not the total number of rooms. This is a frequent error that produces unreliable findings.
How to Raise Your Daily Average Rate
Running a vacation rental involves a lot of expenses. The greatest strategy to balance your expenditures as expenses mount is to increase your income (and therefore, your average daily rate).
Despite this, there is no one optimal technique to raise your daily average rate. To achieve this, you must continuously enhance several components of your company. Here are seven techniques to boost your daily average rate and make your holiday rental successful:
1. Pay attention to brand marketing
Your brand image is the opinion that consumers hold of your company. It’s your personality and the impression you want others to have of you or your business.
How can your brand marketing be made better? Here are just a few suggestions to get you going:
- Analyze your rivals and target market.
- rename your business
- Switch up your slogan
- Rebrand your artwork, including the logo, color scheme, fonts, etc.
- Increase your social media participation and interaction with your audience.
Make sure that everyone on your team has the same vision for and knowledge of the brand after you’ve found what works for you. Setting greater fees is more acceptable the better positioned you are.
2. Establish accurate pricing
Your average daily rate is heavily influenced by price. You won’t get enough visitors if your pricing is too expensive for your intended market. Although you’ll likely get more reservations if your rates are too cheap, your profit and average daily rate won’t be at their best.
If you don’t know what criteria to consider, it might be difficult to determine the proper pricing for your holiday rental. Analyze your costs, the costs of your rivals and the occupancy rates across the various seasons to start.
Think about using dynamic pricing, an algorithm that may improve your prices and boost revenue. The key is to be flexible with your price since demand will fluctuate throughout the year and on certain days.
3. Enhance the visitor experience
According to research by Cornell University professor Chris Anderson, hotels may raise their review score by only one point, increasing their score by 11.2% while keeping the same occupancy.
Several methods improve the visitor experience, including better communication, giving helpful items and information, creating a welcome basket, and delivering a distinctive and customized vacation rental experience. The more contented your visitors are, the more likely they are to suggest you to their friends and family and come back in the future. The outcome? More reservations and a better daily average rate!
4. Start providing more services.
Most vacation rental owners are losing out on upsells, a significant source of income. Upselling is a sales strategy that persuades customers to spend more on additional services that might enhance their overall experience. This not only enables your visitors to enhance their stay, but also greatly raises property income.
It may surprise you to learn that many visitors are more than happy to pay for the following:
- Late check-outs or early check-ins
- During their stay, transportation to and from the airport
- Storage for bags
- A basket for a birthday or anniversary
- Local tours
- Food delivery
The list is endless! Think of additional services you may provide for your particular company based on your location and the interests of your target market.
5. Pay attention to your rivals
It’s always a good idea to keep an eye on your rivals, but when it comes to daily rates, it’s vital to know what other establishments are charging their customers. If your prices are lower than those of your rivals but you have considerably better ratings overall, it may be wise to reevaluate your pricing approach.
6. Provide reductions
It might be challenging to manage discounts, but if you do it right, you’ll be able to draw in plenty of new visitors and boost sales. Be wise and weigh your alternatives before taking any action, whether you’re looking into extended-stay savings or low-season promos.
7. Launch your website for holiday rentals.
There are many advantages of having your vacation rental website, but the option to take direct reservations stands out. You’ll be able to quickly raise your average daily rate once you’re free from having to pay the additional charges or commissions that most online travel firms impose. Additionally, building a website for a vacation rental gives you complete control over every part of the site, enhancing your trust and reputation.
Utilize a channel manager to handle your reservations and prevent human mistakes. By synchronizing your calendars and pricing from several online travel companies like Airbnb, Expedia, Booking.com, and Vrbo, this amazing application may help you grow your company. A channel manager will automatically update your calendars once a booking occurs on one platform, saving you the time and effort of having to do it by hand.
What to be wary about
The average daily prices do not account for staff-occupied rooms, empty rooms, free rooms, or canceled reservations. Because of this, even while calculating it is very helpful for operating your property, it’s also crucial to monitor other KPIs like revenue per available room (RevPAR) and occupancy rates to get the whole picture.
