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Head into the New Year with 20 / 20 vision: Beonprice

Europe: In this blog post, Beonprice chief customer officer Neville Isaac details why short-term rental owners should be more dynamic in 2020, following the liquidation of renowned tour operator Thomas Cook this year.

“What does 2020 hold for the short term rental owner?

“The memory of Thomas Cook may linger across Europe – the impact of their dissolution hitting many small and large operators throughout the tourism and hospitality industry. But one important lesson from their demise stands out as a strategy for success whether you are hoping to sell a spare bedroom or fill an independent hotel group: reliance on one key supplier can endanger your business, so it is time to think multi-channel and be more dynamic.

“Just as the Spanish Confederation of Hotels and Tourist Accommodation predicts around 500 properties may close due to supplier over-reliance and a limited distribution mix, anyone with high reliance on one sales channel are also open to business risk. Strengthening relationships with multiple providers and diversifying the way you sell will be key for survival.

“And it is not just the big players who need to think differently. Technology may have made it easier for accommodation providers to target consumers, with some companies thinking direct bookings are their business strategy’s ‘golden egg’. They are wrong.

“Working with some of Europe’s top accommodation providers, our data suggests the most successful businesses of all shapes and sizes are those who utilise revenue strategies which combine multiple sales channels.

“Consumers are increasingly overwhelmed when researching their holidays, spoiled by too much choice and too much content: Where should I go? When? What expert should I trust? Do I risk ‘flight shaming’ or take the train?

“Self-packaging can leave travellers without protection and with more costly holidays as prices rise whilst they take time to cut through information, endless researching delaying their decision making.

“Dynamic pricing has long been accepted in the travel industry by consumers. And it is by no means a new idea. Airlines in the US have been using it as a sales strategy since the late 1970s, with Delta Air Lines thought to boast around 150 pricing-related staff roles in the mid 1980s.

“Twenty years ago, the world may not have been ready for Coca-Cola’s idea of increased vending machine prices on hot days, but passengers riding an Uber when their peak pricing is in effect suggest ‘surge pricing’ is much more acceptable in today’s time poor, supply and demand culture.

“Modern technology has reduced the number of staff needed to make intelligent business decisions, and the use of AI and machine learning to flex prices is well understood by holidaymakers. Book early and your flight will most likely be cheaper. As the plane fills, prices increase.

“Most hotels use similar technology but have traditionally flexed their pricing around anticipated peaks and troughs, dropping rates if demand doesn’t eventuate, increasing if bookings pick-up more than anticipated. The ‘at-your-fingertips’ access to data enables operators to have greater control over their pricing, more accurately predict demand, optimise rates with specific segments and respond to market changes – immediately.

“The domination of OTAs and high commission charges has forced providers to find new ways to achieve reservations and drive bookings, looking at a wider distribution mix. The revival of high street travel agents is in full bloom: research from Statista found Brits booked through agents for 40 per cent of their holidays abroad in 2018, and ABTA’s Travel Trends 2020 cited the resurgence of the travel expert as a key trend.

“So how can short-term rentals compete with the breadth of offering from other accommodation providers? Consider the strengths of dynamic pricing and what lessons can be applied to your business.

“We have found success in the hotel world is not just a case of supply and demand, but a wider consideration of multiple market factors such as a property’s brand, amenities and services, reputation and competitor positioning all contribute to the ‘right rate’.

“Just as travel agents are positioning themselves as travel experts, there to make customers’ lives easier, short term rental providers can position themselves as experts, using local knowledge to offer a value-add to customers.

“Dynamic pricing is here to stay. Thomas Cook’s demise was a warning to accommodation providers not to rely on one source of business. It’s time to broaden horizons of sales channels and what you offer to your customers to be able to secure bookings and improve your rates. By being dynamic in how you sell and who you sell to, you’ll be a long way towards leaping into the New Year with 20/20 vision.”

For more information, visit the Beonprice website here.