Casa-Cast

Speaker: It's caa.

caa.

They be created by caa.

It's for the show.

Let's go.

Speaker 2: So today we're with
Desiree Garcia, the co-founder of

REM Max and we're talking about the
10 revenue management terms that

every property manager should know.

My first recollections of
Desiree was Carlos telling me

about how brilliant she was.

And I didn't really get to know her until
recently through our classes with RevMax

. It's obvious why Carlos said those things.

Welcome, Desiree.

Speaker 3: Hey, Steve.

Thank you.

Glad to be here.

Speaker 2: Yeah, we're so glad to have
you and thank you for everything you've

been doing over the past couple months.

With the classes, people are
getting so much value out of it.

And I personally learn something
every time I jump on those calls.

Speaker 3: Perfect.

No, like the team is great and I'm glad
that we're able to connect on that level.

Speaker 2: So Desiree, you started
revenue management in 2006.

So you've been doing
this for a little bit.

Correct.

Can you tell us a little bit about
your journey, how you started and

maybe how you ended up here
at RevMaxMD as a co founder?

Speaker 3: Absolutely.

So yes, started as a revenue
manager back in 2006.

Now I'm a revenue manager by trade, right?

I've been in the hotel space.

I started out with the major hotel
brands, Hilton, Hyatt, Marriott, Starwood.

Having that foundation
and that experience.

was really laying a great foundation
of revenue management to the vacation

industry and since then have watched
it explode and really gain momentum

most recently in the past few years.

So crossing paths with Carlos and the
Streamline team, they were very motivated

to be the leaders in the industry.

And part of that included making
a revenue management solution,

which I was able to aid with.

So partnered with Carlos and the
team, and we built out RevMax.

And it's a complete revenue
management solution that's all in

one available to the vacation rental
industry, built by revenue managers.

And that's the difference in what
makes the product unique is that

we are not data scientists trying
to tell clients what they should do

because that's what the data says.

We need that part, but we also need
to understand why we're doing it.

And that's where RevMax is unique
because we have revenue managers who've

built the system can tell you exactly
why you need all of these components

in order to have a successful strategy.

And we have a lot of proven results.

Speaker 2: You know, every time I'm in
Rev Max and especially on classes with

you, I'm always surprised about how robust
it is and all of the features that I

just had no idea were possible, or even
the reports just recently on this last

one, I started screenshotting like every
15 seconds because I'd found a whole

new report that I was so excited about.

And you do a great job explaining
that really appreciate that.

So today we're talking about 10
revenue management terms that every

property manager needs to know, . So
for number one, you had revenue.

Can you help explain why revenue is
a term that everybody needs to know?

Speaker 3: Absolutely.

As a revenue manager, we want to at
least understand what we're measuring.

And revenue is the number one
term that needs to be understood.

And revenue.

In the rev max world means
nightly room rent, right?

Or just room rent, because that's
ultimately what a revenue manager is

managing is the price or part of it.

And so the best KPI or metric
indicator is going to be revenue

and revenue for the company.

In general with any company and
then ultimately revenue per owner,

because that's what they care
about and that to our customer is,

Speaker 2: and there's a lot of
different ways to really think about

revenue , what's the revenue coming
in for the property manager, or for

the homeowner, or what's the combined
take rate between them, there's a

lot of ways to think about it right.

Speaker 3: Absolutely.

And so it's important that everyone's
aligned with what that understanding

is, because that way we are all
strategizing to reach that goal.

Speaker 2: So for number
two, you have occupancy.

Speaker 3: So occupancy is
important as just to understand

the basic key terms, right?

We have to understand Our revenue goal,
but we also need to understand occupancy

because occupancy is going to be a
metric that is measured in the industry.

And you need to understand how
it translates and occupancy is

essentially taking how many nights.

On any given day are occupied
versus your total availability.

So if you have 10 units, five are
occupied, your occupancy is 50%.

So it's really just understanding how
many nights in a year am I booked?

Or occupied because you could
have owner nights, right?

You could have maintenance
blocks, things along those lines.

And it's important to understand occupancy
because, and we're going to call them

young owners come into the industry
and they'll compare rates amongst their

neighbors, but ultimately they also
need to compare their occupancy because.

Having sold nights is maybe more important
than having a high rate because if

you have a high rate and everybody can
see it, that's usually an indicator

that you're still sitting empty.

So you want to focus on or at
least understand occupancy.

Speaker 2: You know, I had a homeowner
who did a study for me one time and

he, he was actually a researcher who
would go out and study like a campaign

and figure out how to build a platform.

He's between campaigns.

He told me, Hey, Steve, I'd be happy
to do this research on your company

as if you were a political candidate.

Speaker: I said,

Speaker 2: sure, why not?

And so he surveyed my competitors.

He went and surveyed our
homeowners, , our teammates, all this.

And he came back and he said, Steve,
Your homeowners will tell you that if

they can get more revenue per night and
with less nights, that's better for them

because that's a smart thing to say.

But he said they're lying when I compare
what their test results are and what

their skin, uh, sweat reactions are.

When they look at calendars that are
empty with the same amount of nights,

he said, occupancy has a direct
psychological connection to whether or

not homeowners are going to stay with you.

Speaker 3: Mm hmm.

Correct.

And nobody wants to walk
away from the full calendar,

Speaker 2: right?

I mean, we're here to drive revenue,
but at the same time, those homeowners,

when they look at those calendars,
they are looking at that occupancy and

their loss bias is important for them.

So for number three, you had ADR.

What's ADR?

Speaker 3: So ADR stands
for average daily rate.

An average daily rate is relative
to when a reservation has booked.

What was that rate, or they reference
it as ADR, and that's going to be a

term that translates across the vacation
rental space as well as the hotel space.

So it's important that, you know, when
Rev Max came out and we came into the

industry and we're building KPIs that it
translates into the hotel space, because

there's a lot of companies and vacation
rental managers that will acquire hotels.

Right.

And they'll have to speak to hotel
owners or hotel investors or condo tells.

So we need to make sure that
we set up clients for success.

In being able to speak that language and
not have a translation barrier moving

forward as they grow so ADR simply means
average daily rate of a reservation and

why that's important is because some folks
will stand high on their ADR, and that's

great that they have that high rate.

However, again, as we talked about
occupancy, if they sat with, you know,

five nights unsold because their customer
can only afford one night at that rate,

then what, what was the opportunity lost
there at the same time, if they stayed

for four nights and had a low ADR, could
we have balanced that out with a higher

rate or what is the strategy just to
make sure we're maximizing that rate?

So ADR in layman's terms
is just simply how much.

Did my unit or home book for,
for that night on average, right?

So as you're looking.

across multiple homes.

It's usually described as a per night rate
because you want to compare a Saturday

night different than a Thursday night or
Friday night and watch your ADR by day.

That also helps set strategy
as you move forward.

Speaker 2: Desiree, a lot of times
ADR can be expressed in different

sets, like what's my weekend ADR,
what's my weekday ADR, what was my

ADR in May compared to June, right?

So there's a lot of comparables that
we do there when we Add them all up

and then divide them by the number of
nights and figure out what the ADR is

and compare them to other sets of ADR.

Is that correct?

Speaker 3: Yes.

And that's also important in why
you want to be in a situation

where you don't have flat rates.

Because once you start changing your rate
based on demand or occupancy, the higher

the occupancy, usually you can start to
increase your rate because ultimately

what we're trying to do as a revenue
manager is really economics 101, right?

You want to find the equilibrium
between supply and demand every

day of the year for every home.

So when occupancy increases, That means
there's a lot of demand coming in.

It allows you to have a higher rate
when occupancy is low many times.

That means you are more willing to
drop price to try to fill occupancy.

And ultimately generate more revenue
the end of the week or for the

month or whatnot, therefore having a
different ADR will help to identify

what price point sells for what day
of week best, and then what season,

and then what bedroom size, et cetera.

So it can get very complex for sure.

However, overall, you want to have
a good understanding of why ADR is

important and how to use that information
moving forward to set strategies.

Speaker 2: So when it comes to ADR,
the whole point of that is looking

for your price equilibrium, right?

Like the price equilibrium is the
most amount that you can get per

night while still driving demand.

It kind of measures the
value of that rental night.

Is that a good way of thinking about it?

Or am I completely off?

Speaker 3: Nope, that's perfect.

Nail on the head.

Absolutely.

Speaker 2: So for number
four, you put RevPAR.

Speaker 3: So RevPAR, now this
one specifically is a vacation

rental term because in hotel world,
it's called RevPAR, it stands

for Revenue Per Available Room.

In hotels, they're all one room, right?

In vacation rentals, it's called
Revenue Per Available Room.

One room is equivalent to one unit,
so we just, to clarify, it's RevPAR.

There are other KPIs that will
say RevPAR, which is your four

bedroom, right, divided by four.

So you get your revenue per
actual room in the house.

But for the most part, it's RevPa,
which is revenue per available unit.

And all we're doing there is just saying,
what is the total revenue that I'm

getting as a vacation rental company?

Divide that by the total amount
of units I have in my portfolio.

And why that's important is because that
is a great indicator of My occupancy in my

ADR mix, that equals your rev pot, right?

So if I had high occupancy and low
ADR, and I made, we'll just say 5, 000.

And at the same time I had high ADR and
low occupancy, but still made 5, 000.

Right?

My RevPaw is the same in both
scenarios, so it's what makes

more sense for your company.

And like you said earlier, Steve,
the better story is to have higher

occupancy with maybe a lower ADR
because my calendars are full.

I'm cutting now more checks per owner,
whereas if I have high ADR, low occupancy,

those four owners are getting big checks,
but my other owners are sitting empty.

That may not always be the best strategy.

So your RevPaw is a good
indicator to understand one thing.

How well am I doing per my neighbor
who sits there and says, well, I'm

available for, you know, 500 a night.

And that's what you should be getting.

Whereas you're selling
at three 50 a night.

So I'm doing better than you, right?

Well, maybe what was your total revenue?

Did you sell only one night at
500 and I sold four at three 50.

So it's between your occupancy and ADR.

You really, your best measurement
of performance is your rev pot.

So how much revenue did I actually make?

Which goes back to number
one, what is my revenue?

The second piece to that is to
say, I'm going to pull it back

now to look at it as a company.

So as a company, you want to make
sure that collectively, if you are

growing in more inventory, are you
truly making more money for your owner?

If I had 10 units and I was making, I
don't know, 900 per unit on average.

And now I grew to 15 units.

And now my new owners are doing great
and I'm selling it for a little bit more.

In general, I'm making more money
because maybe I have, you know, a bigger

bedroom size or whatnot, or the unit is
the same size and a little bit newer,

but my revenue per unit is dropping.

That's usually an indicator
that I don't have enough demand

to fulfill my new inventory.

So in that situation, if you're
growing in supply, And your overall

revenue is going up, but your
revenue per unit is going down.

That's a great indicator that you're
not actually making any more money.

You're just moving the
money between units.

And what you're really saying is Mr.

Owner, I added more inventory,
but I don't have enough demand

to fill you as well to feed you.

I'm feeding all my new guys.

And that's an indicator to
understand, Hey, I got to do better.

It's not just enough for owner services
to go out and grow the product.

I have to also work with marketing
to grow the demand to be able

to sustain my existing product.

Speaker 2: So if you're driving inventory
growth and your rev pause going down,

you could probably expect that to be a
leading indicator of future churn within

your inventory set because the value that
the homeowners are being divided out.

Amongst more properties.

And you know, there's a good possibility
that you'll probably start losing some

properties if you continue to see that.

Speaker 3: Exactly.

Yes.

Speaker 2: It's a great
way of looking at that.

I never thought about it in that way.

That's.

That's a math problem
I'm going to go do today.

Speaker 3: Yes, that's the key P I that's
the metric right we've got to understand.

Yes, I could be getting high rate.

Yes, I could be sitting with decent
occupancy but my true metric to

understand, and or yes and I could be
making more money but organically If I'm

not making more money on average per unit.

To your point.

Yes.

You're going to start to see that.

Speaker 2: So this is going
to go off just a little bit.

When the listeners thinking about Repa,
should they be thinking about it as

their total inventory set, or should we
be thinking about it, like in segments

within your inventory set, because maybe
you brought on a lot more four bedrooms.

And so it upped your
average bedroom count.

So your Rev pop could look.

better, but not necessarily be
better for maybe the smaller units.

Is there a reason to break those up
or think about it in different ways?

Or am I overthinking it?

Speaker 3: No, that's perfect.

That would be what we call level two.

So it's great.

You always want to at
least start high level.

Right.

To at least get a basic
understanding and strategy to

say, okay, yes, I'm doing good.

That's your first checkpoint.

Then your second checkpoint is to
make sure that all of your KPIs, your

revenue, your occupancy, and your ADR
and your RevPA now are falling suit

through every bedroom size or subset
of inventory within your portfolio.

Speaker 2: Really valuable.

So for number five, you said
pace, and I think a lot of people

don't really understand pace.

In fact, I feel like maybe I had
thought about it wrong for a while.

So I'm excited that you
have this word in here.

Speaker 3: Yes.

So pace is really a benchmark.

And when we say pace, I probably should
have said revenue pace because that's

what we're really measuring, but we
want to understand in general, pacing

is going to tell you, where am I today?

How am I performing relative
to same time last year?

So if we're on a race and I need to
get to the finish line and I'm racing

myself, am I going faster this year?

Am I going slower this year?

How do I know if I'm doing better?

Right?

You bring in another revenue
manager, you bring in somebody,

you're like, Hey, how am I doing?

They need to run your pace to
understand how are you performing?

Then measure that pace against
other components like the market.

But revenue is simply just
saying, how well am I doing?

Am I doing better?

Or worse or the same as last year.

Because once you have that information,
then you can help to understand or

guide your strategy moving forward.

Speaker 2: Desiree, have you
ever played Sonic the Hedgehog?

Uh, I have, yes.

Do you remember when you'd go through
the lap and you do the jumps, you get

the rings, and you come back around?

You can put the settings.

On so that you could watch a little
ghost of your last go around and

you're racing against yourself.

And there'd be like a little kind of
transparent translucent hedgehog that

you'd be either running in front of
or behind of, and that was your pace.

And I always think about, uh, that
video game when I think about pace

and how we think about our year going,
you know, our lap around the sun

this time and how well we're doing

.
We're talking about revenue pace
and we won't get to it today.

But there's several different kinds
of pace to think about, right?

So there's like occupancy pace or,
or reservation pace, or there's

other ways to measure pace.

That you'll hear when you're
out thinking about how you're

running your business, right?

Speaker 3: Yes.

Revenue was the number one term
because that's our number one metric

because that's what pays the bills.

So once we know that our revenue
pace is great and that's on par,

then we can back in to make sure,
okay, how is our booking pace?

Because maybe I'm getting my revenue,
but it's because I'm charging more

money for less nights, or I had to
charge more money because I'm not

generating as many reservations.

So, revenue pace is number one,
and then back into it with other

metrics like your occupancy pace.

Your bookings pace, your night's pace,
because your revenue goal is number one.

And once that check Mark is there and
you know, okay, I'm good on that metric.

Now, how can I maximize it?

And that's when you start
to look in other areas.

Speaker 2: That's a really
good way of thinking about it.

And I think I often think about a
reservation pace and I should be thinking

more about revenue pace, uh, when it
comes to the health of the company.

Correct.

Speaker 3: Yes, because I can get
one reservation for one night at

the same value of two reservations.

For six nights, so my booking could be
double, but my revenue could be less and

I could have one booking, you know, with
six nights of revenue and one reservation.

So first I want to get the revenue and
then I'll back into how I'm going to

maximize that between occupancy and rate.

Speaker 2: So number six is
interesting because we've

already talked about occupancy.

But you felt it was important
enough to differentiate between

occupancy and paid occupancy,

Speaker 3: correct?

And the difference between the two
is occupancy is going to reflect

on total booked nights and booked
nights or occupied nights, right?

You could mean if That was
a owner night that stayed.

It could mean a maintenance block.

It could mean a paying reservation, right?

All of those three components add up
to occupancy, but now paid occupancy.

And this is where the vacation rental
space is unique is because I can't control

necessarily how many owners come in.

So when we're measuring performance.

Let's say I have 10 homes.

My whole company sold out this Friday.

That's great.

But was all of that paid occupancy, right?

Or if I had five owners
in and five paid nights.

Okay, great.

So now next year, when that next Saturday
comes, right, I need to consider what

was my paid occupancy the prior year,
because if I just look at total occupancy,

five of those were occupied by owners,
which did not generate any revenue.

So I really only had an
opportunity to book those five.

And if I'm comparing that and
saying, well, dang, last year

I sold out, I definitely need
to increase my rate this year.

That may not be the best metric to use
because half of my inventory was not paid.

So it's not a true reflection of demand.

Paid occupancy is a true
reflection of demand.

And if you had five nights solar,
you were at 50 percent occupancy, and

now you want to grow to 60%, right?

How are we going to do that?

Is that through price?

Is that through availability
or whatever the case may be?

Speaker 2: Yeah.

Just as a point of curiosity, Desiree,
is there a report we can look at

in RevMax that shows the difference
between occupancy and paid occupancy?

Or is it something we just need
to pull out and do ourselves?

Speaker 3: So for RevMax, yes,
there are different reports

that you can pull for paid.

By default, RevMax will always show
you all of your paid statistics.

And then you have the choice to
include your non paying data to

get a total picture of opportunity.

Um, also on the tape chart, we also show
you by day what your, uh, paid nights

was prior year and occupancy percentage.

Speaker 2: Such a powerful tool.

For number seven, Desiree,
you said availability.

What do we need to know about
availability that isn't obvious to us?

Speaker 3: Availability is important
because just as much As we look at

occupancy as the metric, that's great.

If we were at, you know, 40 percent
occupancy, 60 percent occupancy.

But now that's the strategy.

And that's what our goal was, right?

To achieve that occupancy
level, the availability is

everything that is sitting empty.

So availability is really opportunity.

How do I sell the rest of that product?

Because all of that available
inventory is unsold.

It's an empty calendar and my owners
aren't making any money, which

means I'm not making any money.

So we'll get clients who say, yes, I'm
going to pick up 10 percent occupancy

for this weekend, 60 percent empty.

We got to focus on that 60%.

That's not going to get booked, right?

Because that's the available
inventory that's left.

And it's important to understand,
we know you're not going to sell out

every night, but are we exhausting
every opportunity that we have for

our owners to make sure that they're
maximizing their opportunity, right?

And if you have availability,
how are we putting that into the

marketplace for customers to buy?

Speaker 2: Yeah, our revenue manager
for Rocky Point, who's on RevMax, he

always talks about his name is Arthur.

You've met him a couple of times.

He, he doesn't like to look at occupancy.

He likes to look at availability
because he believes that focusing

on the availability left is how you
end up driving, you know, occupancy

and revenue and things like that.

And I always thought that was an
interesting way to almost flip the script

on how a lot of us property managers think
about our occupancy and availability.

Speaker 3: Absolutely.

Right.

I'm going to put this
in very layman terms.

It's kind of like when a
reservationist makes a booking,

it's like, well, that was their job.

That's what they're paid to do.

That's why you're here.

Cause you get those.

And the occupancy is what the
revenue manager's job is, right?

There's going to be some organic demand
that regardless you're going to fill up.

The real strategy comes into how
to decrease the availability, which

ultimately increases your occupancy.

In theory with an optimized rate or ADR,
you would then generate more revenue.

Speaker 2: So our job is
not to build occupancy.

It's to murder availability.

Speaker: Yes.

Speaker 2: I like what you said.

Availability equals opportunity.

I think that's a great quote.

So for number eight,
you put booking window.

And I think this is going to be a
great glossary term to go over and

understand, because I feel like this is.

A word or a phrase that's often misused or
misunderstood in the industry as a whole.

Speaker 3: So I'm going
to get geeky for a second.

Booking window is how far out from
arrival date to reservation creation date.

The difference between those two
is your booking window, right?

So if I make a reservation today
and I arrive in seven days.

Then my booking window seven, right?

If I make my reservation today and
arrive tomorrow, my booking windows one.

So you want your booking window.

You need to understand
your booking window.

So, you know, exactly when the majority
of your reservations are created for

a very specific period of time during
peak season, what is the booking window?

And when they say that they're referencing
the majority of reservations, we know

you're going to have reservations book
a year in advance, two weeks in advance.

But when is the majority of
reservations, when do they come

in for that period of time, right?

And you're going to have a different
booking window for every month of the

year or even seasonality because, and I
can break it down, certain markets like

in the Carolinas, they're usually going
to have a year advanced booking window.

Majority of those bookings are going
to come in 12 months out and that's it.

You may have some that come in last
minute, but it's not the majority.

So.

As a revenue manager, understanding that
booking window and understanding exactly

when your peak demand is going to hit,
that's when you want to make sure that

you have the best rates, you have the
best product positioned correctly, right?

You have everything set your strategy set.

And the more opportunity you have to
build And market your availability

when that booking window comes, that's,
that's going to give you confidence

to know that you can hang on to your
price and demand that price, right?

Because it's all about
that supply and demand.

So if I've already built up enough
occupancy, if you will, for that

prime booking time, whenever they
transact, I know I can, that helps

me to ensure I have optimum rate.

Speaker 2: So the booking window is a
specific time before the reservation.

In which the value of those
rental nights are at their peak.

It's when you're going to get the
most value out of them, right?

And then beyond that, there's a chance
that all things being said that the

value of those nights start going
down because there's less and less

demand for those dates that were that
are specific to that booking window.

Is that right?

Speaker 3: That's correct.

Yes.

Speaker 2: As a property manager,
you know, we're sitting in front

of our system thinking, where
is my prime booking window?

How do I figure that out?

, what report do I run or what graph do
I look at or what historical data am I

seeking for, say, I was looking at for
the 4th of July weekend, what would I

be looking for to figure out what my
prime booking window is for that weekend?

Speaker 3: So in RevMax, we actually
have a booking window report that will

provide all of that information for you.

We break it down by month and then
you also have the ability to break

it down by week so you would be
able to get that answer, right?

When is my prime booking
window for 4th of July?

Is it 60 days out?

Is it three weeks out?

Is it week of?

Now I will also tell you that your
booking window will vary by bedroom size.

So it's important to
understand that, right?

So that's why this is an important KPI
or term because you need to understand

that in the, especially in the vacation
rental space, your 4, bedrooms are

going to have a much different booking
window than your ones, twos, and threes.

So you almost have to have
two different strategies.

When you are setting goals and when
you are looking to set pricing and

set nightly minimums and promos
and things along those lines.

And it's important to understand how
each of those segments of product book,

that way you can make sure you have
the appropriate strategy in place.

What I mean by that is the chances
of the majority of your 10 bedrooms

booking within 30 days of arrival.

During peak time are going to be
very slim and only because logically

it's a little bit more difficult to
get probably three or four families

together within a month and say, we're
all going to go to the destination.

And we're all going to go during
the same time and everyone's

already put in their work, right?

Coordinating that group is a lot more
challenging to do last minute than it

is for just that couple who's going to
go away and just needs a one bedroom.

So usually your larger homes
have a further outbooking window.

And usually your one your smaller homes
or units or condos especially have

a very short booking window, so you
will have a different strategy right

within 30 days of arrival for your one
bedrooms versus your 10 bedrooms your 10

bedrooms at that point may be distressed.

For your one bedrooms, it might
be prime buying time for them.

Speaker 2: This is something I picked
up on my very first season in 2001.

It became obvious something was happening.

I didn't have the sophistication or tools.

I was working on an Excel spreadsheet
at the time, but something else

that occurs to me, it's not only
unit size or bedroom count, but also

location, because I noticed that my
beachfront properties, as opposed

to like, say beach view properties.

had different booking windows and if
I change the rates to be discounted

deep enough to match the value of that
beachfront for what you would pay for a

second row, those booking windows between
beachfront and beach view would get

closer because the price differentiation
made them more competitive.

Does that make sense?

Speaker 3: Yes, absolutely.

Speaker 2: Really interesting stuff.

I feel like you could really play around
and, uh, and do a lot of adjustments.

It's kind of an art in there, isn't it?

Once you get your data there.

Speaker 3: Yes.

And funny enough, because that's
what revenue management is.

It's a mix of art and science.

Speaker 2: Yeah.

Number nine length of stay.

Speaker 3: So this one's a
lot of fun because I can't,

you can blow people's minds.

Length of stay is basically equal to
nightly minimum and nightly minimum

is not pricing nightly minimum.

Right.

But the nightly minimum
requirement for your calendar.

So pretty basic around the board.

Um, your nightly minimum during off season
is probably, you know, three nights.

nightly minimum during peak
season is usually seven.

And that has drastically
changed across the board.

Folks have realized, hey, I can
get, you know, one and two night

stays now because that's the
flexibility that most people have.

And I can also still capture
five and six night stays.

In some cases for the price of seven.

So length of stay is really just
determining what is the nightly

minimum for your calendar.

And it's important metric to understand.

And why it makes the top 10 is
because if we look at the buying

pattern just for ourselves, right.

When we go on vacation, first of all, how
many of us can even get seven nights off?

And then how many of us have to
book Saturday to Saturday, right?

Or Sunday to Sunday, nine times out
of 10, whenever we're traveling, we're

trying to do an extended weekend.

We're trying to cram something in
and it has nothing to do with price.

More so than it has to do with
flexibility, but by having length of

stay air quote restrictions on right,
you're you're prohibiting your own

opportunity, so it's important to
understand what the length of stay is.

It's important to understand.

Hey, be flexible.

If you can, you know, another pun on
Red Max, we give length of stay pricing.

So what that does is that allows
you to stay, you know, one

night for the price of three.

If you're looking and you want a three
night minimum, do you really want a

three night minimum or do you just
want the revenue for three nights?

And within the system, we
can give you that revenue if

they stay one or two nights.

Same thing with if they're, you
really want them to stay a week or

you just want the revenue for a week.

I can give you the same revenue
if you allow them to stay

five or six nights, right?

The system can automatically
make those adjustments.

And that's where we come back to
KPI number one, which is revenue.

And, you know, when the owner says, Hey,
well, I was supposed to get a seven.

I say, you only sold it for five nights.

It's like, yes, that's correct.

But I still got you the
same amount of money.

So part of that is an
education piece as well.

And that's why the number one goal, right?

Is revenue.

We do that with occupancy.

We do that with rate as we're
building, building, building.

Now it comes down to length of stay
and what does the market demand.

Right.

At the end of the day, it's
all about the customer.

The customer is the one
who determines the price.

The customer is the one who determines
the length of stay because they're

the ones who are buying it, right?

That's the demand.

I have this supply.

We got to meet in the middle.

Speaker 2: I love this length of stay
logic that you guys are using because

I can't tell you how many times we've
had homeowners who said, Hey, I've got

a two night or three night minimum.

And so when you search on the website or
on an OTA, it comes up as unavailable.

And so they would have paid the
higher price, you know, or at least

possibly paid the higher price.

But we would have never known because
it didn't show up as available at all.

It shows nothing available
for a one night, right?

So this, this is a great way to, uh, drive
bookings and show, uh, availability on the

calendar and also drive revenue because
of this length of stay logic you guys have

put together and then understanding your
length of stay, uh, in each market and

each type of, you know, property market.

It's, it's a powerful way to segment
and understand how to serve your

homeowners in each segment better.

Speaker 3: Absolutely.

And a lot of times, especially as
there's so much more supply in the

marketplace, what are other owners doing?

If you've typically had a four night
minimum and all of a sudden majority

of your market is offering two and
people are searching for two, right?

Like you said, you're not even showing up.

So it's important to check the
marketplace, not only from a pricing

perspective, but also from an
availability perspective, right?

Am I really showing up?

Am I maximizing my exposure?

If I get a hundred people who will stay
two nights, I'm not even entertaining

them because I have a three night minimum
on, but if I could cater and capture at

least 50 percent of that demand, I just
got 50 more nights, 50 more reservations

that increases my booking pace.

That increases my occupancy.

I'm going to increase
my revenue organically.

And so it's the total revenue
management strategy that helps Drive

KPI number one, which is revenue.

Speaker 2: Yeah.

You know, those, uh, occupied nights,
I don't have to tell you this.

They're perishable and, uh, getting
revenue for them matters because once

they're gone, they're gone forever.

. There's no shelf life for them.

They're gone.

so for number 10, you had
forecast and goal and budget.

And those are three together, but
I'm certain you have a reason for

it and how it all works together.

So tell me how that works.

Speaker 3: Yes.

So the reason why we have forecast goal
and budget is because we all need a goal.

We all need to know what are we
trying to achieve, whether that is

a hard coded budget, depending upon.

the language in, in your culture, whether
that is a revenue goal in general,

or whether that's just your forecast,
because that's how you're pacing, right?

Either one of those will work.

As team, we need to get to KPI
number one, which is revenue.

What is that goal?

I need to make sure the revenue
manager knows that goal.

I need to make sure the GM of the
company or owner understands that goal.

And I need to make sure my
homeowner understands that goal.

Because if all three of them know that
they're trying to get to X, that's

where everyone is aware, and everyone's
on the same page, and we don't have a

revenue manager who's trying to stick
on rate because they're on an occupancy

number, right, where the owner's like,
I don't care how you get to 000, Get it.

The revenue managers, then look, I
have 365 days to make you 80 grand.

Let me do it the best way I know how.

And if the GM knows that, they know,
okay, this is how much money we can

expect for my budgeting purposes.

I know how much commission
I'm going to make off of that.

I can forecast my fees and
cleaning and all of that.

Speaker 2: When I think of, uh, the
team effort, I feel like, , you've got

the quarterback, you know, the revenue
manager, you've got the, the coach,

maybe that's the property manager,
there's all these different positions

on the field, even your reservationists,
they don't have to actually do.

Revenue management, but they need to
be able to recognize it, explain it,

have a conversation with a homeowner
about it when they get the call, an

angry call of why is it this price?

And so everybody's got a different
position to play on the team,

but man, is it a team sport?

Absolutely.

I'm going to throw in one as a bonus
because you said it earlier and I like it.

. So our bonus definition is
opportunity loss, , can you just

give us a quick explanation of that?

Of opportunity loss.

Speaker 3: Absolutely, and that's
a very vague term 'cause there are

many ways we can lose opportunity.

The biggest opportunity loss in many cases
is going to be in availability, where you

have, let's say a five night strategy,
which means a five night minimum, but

your calendar only has four nights
available, three nights available, two

nights available, one night available.

If you have discrepancies with
your nightly minimums, you're

already closing yourself off.

Nobody can find you.

Even with homeowners, when they're
coming in and trying to stay during

peak times, we have to understand,
Hey, that's great that you want to come

in during the 4th of July, , you're
going to displace X amount of dollars.

And that's the bread and butter
of when, , most companies make

their money during peak season.

So it's important to understand that.

And to your point, Steve, it's important
that the reservationists know that too.

So when that owner is calling, they can
have that educated conversation with them

to let them know what they're displacing.

Speaker 2: Desiree, thank you so much
for coming on so much to learn from you.

Always these top 10
terms are just fantastic.

And It's so valuable to our
partners and thank you for

everything you do for Costco.

So appreciative.

Speaker 3: Absolutely.

Thank you, Steve.

Thank you for having me.

And I look forward to having more
revenue management talks with you.

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Speaker: Created by.