One of the agreements when listing your property on a vacation rental website is that all the marketing will be done by the website, while you get to showcase your property and pay percentage of every booking to the website in return. This is a pretty fair deal, but sometime when repeat customers come into play and the connection has already been made, the percentage fees can become a headache.
When you repeat customer, especially during peak season periods, they will almost certainly expect a discount. Sometimes you may find yourself refusing them the discount because the peak season is the one time you get to recoup your investment. This is particularly true in place such as Japan or in Europe when winter seasons generally see little tourism at all.
As you can imagine, you do not want to annoy your regular guest or show you do not appreciate them. However, you need to consider the fact that you are already paying 20% to the website your property is listed. So, what is solution here?
Start Your Own Branded Vacation Rental Website
Let’s begin with a real-life scenario of a guy that runs over 60 vacation rentals in Tokyo. The problem this guy was having was that he had been operating in Japan for so long that he had build up quite the loyal following of guests.
As an experienced host that had an office in the city, a team of building managers on call, and an online support team, you can imagine that anyone that stayed in one of his properties were paying less than hotel but getting hotel quality support. Therefore, it stands to reason that anyone wanting to return to Tokyo will want to come back to familiar surroundings and to a place where they knew they would be looked after.
The problem was that nearly every property had three or four regular guests. Some tourists and many of them business personnel. These people were consistently repeat booking, and they knew that the host would give them a special deal. However, during times such as Cherry Blossom, summer, or over Christmas and New Year many of these loyal guests wanted to come.
With such a long winter in Tokyo with very low occupancy rates, it is these times that the host needs to charge three to four times the normal price. Plus, you have to take into consideration that during the peak periods every property was running at around 99% occupancy give or take the odd gap day.
Starting His Own Vacation Rental Website Was the Solution
In order to compromise with regular guests, the host used a Lodgify vacation rental website builder tool. Lodgify is a company that specialises in offering a fully functional website with a complete booking engine, payment software, and a channel manager. The channel manager allows the host to sync his website calendar with all the other website his properties are listed on in order to avoid double bookings.
The way in which he used the website was very clever indeed. As he was already paying the free vacation rental websites a 20% fee on every booking, he was able to wipe that fee off. For example, a booking of 80,000 Yen per day costs 16,000.
However, he could offer that very same property to one of his regular guests using his Lodgify vacation rental website at 80,000, but then tell them that because they are a regular, he can give them a 20% discount if they book via his own branded site. In the end he would get the same money, so you start to wonder what the tactic was.
He Helped His Customers Pay Less
Well it is simple. If you have not already guessed it, the guest gets to pay less and avoid the 3% booking fees many of these websites add on to the guest’s payment. The problem he has solved here is that he is helping his guests pay less money and giving them an exclusive website to book on for the future.
In the end the guest pays a flat 64,000 Yen per night as opposed to 80,000 plus a 3% booking fee bringing up the guest’s total to 82,400 Yen.
Extending the Deal Over Off Peak Seasons& Increasing the Business’s Bottom Line
This 20% off deal is extended further to the guests during off peak seasons. Regular guests would always receive a discounted rate booking via the original vacation rental website that applies the 3% fees. However, now they were diverted to the new branded Lodgify website they would be able to retain that special rate with a further 10% knocked off.
For instance, the same property that was 80,000 Yen per night in the peak period is now 30,000 Yen a night. The regular customer will get a rate of 27,000 Yen a night as a special deal. Now as the website takes 20%, the host received just 21,600 Yen per night. With his new branded website there is no 20% fee, so he charges the guest 25,000 Yen per night, which is 2,000 Yen less than the guest was paying, plus he/she saves 3% on the booking fee once again.
If you do the math, the host is making 3,400 extra per night. If you consider 6 months at 25% occupancy, this is an additional 150,000+ Yen per property, and he has more than 60. The new site brings in roughly 9.1 million Yen more over the off-peak period.
With nearly all the regular guests in the off-peak seasons being business personnel, there is still a decent occupancy rate now, which has grown since he began his new branded website. He makes more money over the winter months than he did, word of mouth has spread to other businesses that use his services, so now he is up to around 35% in off-peak.
This makes him no additional but saves regular guests money!