COVID-19 has taken its toll all over the planet. All of us – to a greater or lesser extent – have been affected by an unforeseen pandemic that changed the world as we knew it. While we are not entirely out of the woods just yet, the recent surge of vaccines brought some light at the end of the tunnel.
The fact is that we will need to adapt to a new reality by assuming, for instance, face masks and hand sanitizers as an inherent part of our lives. As you wait for the distribution of the long-awaited vaccine, it is time you also think about the future of your business.
What areas should you focus on?
As I see it, there are four critical aspects of your rental activity that you need to consider, sooner rather than later: gain independence from Online Travel Agencies (OTAs), review your cancellation policy, embrace new technology, and enhance cleaning and disinfection procedures.
Why you should break free from the OTA’s
Whether you manage three holiday homes or a large rental agency, the future will most likely be different from what we were used to before the pandemic. The first step that I would encourage you to take is to become less dependent on online portals such as Airbnb, Booking.com, Expedia, and Tripadvisor (known in the industry as “OTAs”). I would especially recommend you avoid working with OTAs that only payout once the guests have checked in.
Why is that? – you may ask. Here are a few reasons. Many homeowners and hosts faced substantial financial trouble when the pandemic started in Europe in mid-March. In the midst of it all, most major OTA’s decided to unilaterally change previously agreed terms and conditions and existing cancellation policies. As a result, these portals refused to pay out reservations that you were contractually entitled to be paid for.
In particular, Airbnb seemed to have experienced a hard time figuring out how to react to the pandemic while other booking portals were reasonably consistent in their decisions. In the end, Airbnb CEO Brian Chesky ended up paying out 12.5% of the total amount we should have received in the first place. By doing that, he did somehow accept that we were entitled to something, just not all of it.
It is worth mentioning that later, Airbnb launched a successful IPO in December, promising a wide array of positive new initiatives for the future. One of the most exciting news is the creation of an Advisory Host Board, which will be allocated 9.2 million Airbnb shares to help us hosts in the future. Said board would be made up partly of 10-15 hosts to ensure that our voices are heard. It is worth noting that Airbnb’s board will be making the final decision on what the funds will be used towards. However, I do not believe that Airbnb’s successful listing will help us homeowners or agents – quite the contrary.
We learned the hard way during the pandemic that we all need cash flow to survive. Should we find ourselves again in a similar situation, it is vital to manage the booking fees or the outstanding balances that your customers have already paid. If the OTAs hold the money on your behalf, you will not get paid, which could cost your business in the long run. During the crisis, many hosts were forced to repay the money they had received in advance; if they did not, the booking portals would withdraw the money from the next payout.
This is not a new concept: without your home, these OTAs have no product to sell. This is an important fact that some giants like Airbnb seem to have forgotten entirely; at the end of the day, it is the holiday homeowners (and rental agencies) that supply the product and the recipe for their success. They refer to us as “partners,” though it was made abundantly clear during the coronavirus crisis that we were forgotten. Had our relationship been a marriage, it would have ended in a bitter divorce, with no possibility to see the kids.
Having said that, there is no point in seeing the OTAs as the enemy. We need to see them as a necessary partner. Their overall marketing and capacity to provide us with bookings are too important for any homeowner to ignore. However, you can still start distancing yourself from these booking portals. The idea is to generate more direct reservations through your own website, focusing on your own product and putting OTAs on the back burner. My advice is to use OTAs as a search engine and direct potential guests to find your homes on your own website, where they will find more competitive prices (no commissions). Over the next few weeks, I will follow up with more advice on how Solaga managed to be more independent from the OTAs, and we reached 43% direct bookings.
Keep your best cancellation policy for your own website
More than ever, choosing the right cancellation policy is of paramount importance. I do not think that you can expect bookings these days if you have a strict cancellation policy in place. In case you haven’t done so yet, I, therefore, recommend you opt for a more flexible approach.
At some point, all of us have probably received a phone call from our designated OTA’s contact person recommending we put in place a more flexible cancellation policy and drop nightly rates. Following their recommendations will most likely help you achieve the number of bookings you are aiming to get; this also means you will have more work and receive less income.
Remember that you can set the rules that you choose at the end of the day on the booking portals. I would personally recommend you run a stricter cancellation on the portals while running a more flexible one on your own website. This will make your product more attractive in the eyes of the customer.
Review your technology stack: What really saves you time and money?
There is no doubt that you will need to adjust your business model to generate more income. This means that you will need to make sure you are “top-notch” throughout your entire organization. This, among other things, entails only keeping the most reliable and productive members of your team and letting go of the rest. Once you have trimmed your staff down to the desired levels, you need to focus on technology. Of course, not all technology is beneficial – you need to find the one that fits into your business model.
For instance, I would highly recommend it as a standard feature in all homes to introduce smart lock features and noise detectors. At Solaga, we have already installed noise detectors, and we are in the process of getting smart locks installed.
There is also a wide range of software to help you with administrative tasks such as your guests’ registration. Technology is essential but never forget the human touch and personal service; this will provide you positive guest reviews. Many homeowners use rental software and channel managers. I would recommend that you look at your system and prices to establish if they are worth the investment or not. Ask yourself: do these systems really save me time and money?
Share your cleaning protocol on your website
It is undeniable that guests are significantly more focused on cleaning and disinfection protocols due to the sanitary crisis. In our case, we came up with a detailed cleaning protocol displayed on a dedicated page on our website. Our staff also attended an online course on disinfection; newly regulated products and personal protective equipment were also purchased to provide a safe environment for both guests and staff.
In light of what recently happened, guests will increasingly be demanding enhanced sanitary protocols. Of course, it is an extra cost but one that you can compensate for by raising the amount of your cleaning fee.