Vacation rentals operated by professional property managers earn more daily revenue and have higher occupancy rates than those managed by homeowners, according to findings by the Ross School of Business at the University of Michigan.
The reason? Pricing inefficiencies:
In particular, properties managed by professional hosts earn 16.9% more in daily revenue, have 15.5% higher occupancy rates, and are 13.6% less likely to exit the market compared with properties owned by nonprofessional hosts, even after controlling for property and market characteristics.
The performance difference found in the study makes sense. Homeowners who are managing their property themselves do not have the time, inclination or know-how to responsively set prices based on the demand created by holidays and events the way a professional company does.
This study found that dynamic pricing itself results in high occupancy rates and higher daily revenue. Since property managers are more likely to employ dynamic pricing than homeowners, the properties they manage are more successful. Being more responsive to demand allows professional property managers to obtain, on average, 16.9% higher daily revenue.
TurnKey employs an advanced pricing model as outlined in the Ross School of Business study. “We have employed dynamic pricing since day one,” says John Banczak, the co-founder of TurnKey Vacation Rentals. “As a finance major coming out of college, my first job was in revenue management at Northwest and KLM Airlines. I spent four years learning airline yield management from what many consider to be the best leaders in the business.” Banczak went on to manage the dynamic airline pricing set at Hotwire and later developed the pricing tools for the award-winning property management software, RezOvation. He has been a presenter at the PROS Revenue Management Conference, for the Professional Association of Innkeepers, and at the HomeAway Software for Professionals conference.
TurnKey’s pricing is the best in the business for this reason: “TurnKey focuses on demand and future customer conversion, building proprietary models that look at the future, where most vacation rental pricing modeling is only occupancy-based or focused on past performance,” says Banczak. “We find opportunities and problem pricing areas well in advance – with time to implement a change and make a difference before it is too late.”
Banczak also believes the following drive TurnKey’s high occupancy rates:
- Professional listings with high-quality descriptions and photos to pique guest interest
- An abundance of positive reviews that reinforce our commitment to service
- A marketing strategy that includes listing our properties on over 20 top travel websites to reach guests
- Fast inquiry responses to guests seeking to book our properties
TurnKey uses an “all of the above” strategy to generate revenue and ensure high occupancy.