August 19, 2022 | Amelia Melching
How do you know when to optimize pricing if you’re scaling a vacation rental management business? When does market demand necessitate peak pricing, and how do you secure bookings during slow seasons?
Answering these questions are the responsibilities of revenue managers.
Revenue managers are responsible for decisions regarding sales and pricing strategies. They help businesses optimize revenue through market analysis and turn data insights into growth.
Using revenue management strategies and powerful tools like Wheelhouse, revenue managers for hotels, short-term rentals, and vacation rentals work to maximize profits and revenue for their clients.
How? Let’s review.
Revenue managers are decision-makers in rental management businesses (hotels, property management teams, and more) that:
The main goal? To strategically manage and optimize revenue.
Depending on a rental business’s size, revenue managers can be one-person shows or managers that lead entire revenue teams. They also handle communications with internal and external stakeholders to improve revenue strategies.
Revenue managers aren’t just responsible for setting price points: they also work to optimize revenue in other areas of the business to result in greater profit.
Revenue management uses performance data, consumer behavior analysis, and market trends to inform pricing and distribution to maximize revenue.
The concept originated in the airline industry. We all know booking a flight to Florida for a week from now will be much more expensive than a few months away.
Since businesses know consumers will pay more for the same product under certain conditions, like time of year, availability, and more, there’s an opportunity to implement dynamic pricing strategies.
Dynamic pricing is the practice of using the current market demands to inform your pricing. That means keeping prices flexible to change with competition and the market to create maximum profit.
Whether it’s lowering prices during the week or hiking them on holidays, prices are optimized to improve revenue without turning away your customers.
Revenue management is essential to profitability in short-term rental or hotel management businesses. It helps property managers:
Are you looking to embark on a revenue manager career or seeking a revenue manager for your Airbnb business?
Here’s what you need to know:
Some employers might require a bachelor’s or master’s degree, while others are more interested in work experience and demonstrated portfolio results.
Revenue managers might have some different names on Indeed and Glassdoor. For example, you might see ads for revenue analysts, data analysts, and business development associates with similar duties.
Some typical tasks for a revenue manager include:
Bottom line? Revenue managers are responsible for a lot of analysis, coordination, monitoring, and communication. It’s not an easy job, but it’s usually rewarding, lucrative, and dynamic.
Many revenue manager positions require a few years of experience for consideration. If you’re fresh out of college, you might have trouble qualifying.
But you can transfer work experience from other roles into a revenue manager position. While you study (more on degrees shortly), consider picking up a job as a:
And if you can’t score one of the above roles? Get creative and find other ways to demonstrate your experience. That might even mean renting out your bedroom on Airbnb and learning from other property managers.
But you can also consider a college diploma or associate’s degree in a relevant field. But not all courses of study give you relevant knowledge for the role.
Here are some majors you might consider:
Not every revenue manager has this credential, but it’s certainly useful in communicating your expertise. You’ll need some work experience to be eligible, about 2-3 years. The CRME can be a fantastic resume booster, especially if you didn’t attend university.
As a revenue manager, you’ll monitor performance data, industry trends, and competitors. Start early by cultivating that monitor mindset before commencing your career.
Subscribe to industry newsletters, attend networking events and property management conferences, keep track of the news, and research revenue management strategies.
Do you ever notice certain hotels or businesses at the top of your Google search page? Or perhaps you see an attractive tour guide upsell on your hotel booking.
These are both examples of revenue management strategies. Here are a few key areas every revenue manager should plan for:
A revenue manager might look at the above data and change prices with their insights. But a better way to conduct a pricing strategy is dynamic pricing software.
Today’s modern tech uses artificial intelligence to make everything more efficient — the same goes for dynamic pricing. For example, Wheelhouse’s dynamic pricing tool uses robust AI capabilities to gather essential market and business intelligence. It then converts that knowledge into actionable revenue-pumping recommendations for minimum pricing, discounts, peak pricing, and more.
The best dynamic pricing software recommends revenue boosts while keeping your individual business initiatives in mind. Wheelhouse allows you to complement its recommended strategies through personal adjustments to meet your business goals.
The most famous upsell is the hotel mini-fridge. When else would you ever consider paying $6 for a Perrier?
One vital aspect of revenue management is picking the right price for the right time. Customers who indulge while on vacation are more likely to splurge on an extra convenience than at home. Upselling strategies capture that reality and infuse your business with more revenue.
Some vacation rental management software features combined ancillary software to capitalize on upsells. Here are some upsell examples for hotel and short-term rental management companies:
Search engine optimization (SEO) helps you target an audience with needs your business can solve. Your goal is to optimize your business website and distribution channel web pages, so they rank highly on Google and reach customers looking for your product.
For property managers, the value of SEO can be incredibly high – it’s not only one of the most cost effective marketing channels, but it can be the difference between lots of traffic on your site, or next to none.
Revenue managers might also use Google Analytics to determine high- and low-performing web pages and track keyword performance over time.
Market segmentation helps you understand the motives behind customers purchasing your service.
For a short-term rental property management company or hotel, your market segments into two primary audiences: business travelers and vacationers. However, some hotel revenue experts segment the market into different rate categories like:
A rock-solid booking website isn’t complete without mobile optimization. Every revenue manager should look at ways to bring marketing efforts, discounts, and pricing to customer mobile phones.
And make it incredibly easy to use. After all, 94% of leisure travelers switch between devices as they plan or book a trip.
Maybe you’re a family-run rental agency or a revenue manager in a large hotel corporation — either way, the right tech stack can optimize your revenue faster than competitors.
Wheelhouse’s dynamic pricing tool is a cost-effective, data-driven way to inform your pricing and boost revenue. With AI and laser-sharp accuracy, we sweep past outdated data and human error to give you pricing recommendations that generate sustainable revenue so you can see profits and scale your portfolio.
There’s freedom to customize your rates based on seasonality, last minute discounts, and much more, all while taking into account your properties’ unique amenities.
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