It’s Sylvia posting here once again, and none too thrilled with the state of the economy, the status of the real estate market and the lethargy in the vacation rental environment. And that has me looking hard at the value of vacation rental marketing opportunities.
There are many ways a vacation rental promotional effort can be evaluated, but I think the analysis has to be both short and long term. One must consider the lifetime value of each guest, as opposed to the simple analysis of whether or not the new bookings generated covered the expense of the listing fee, which is so often the way owners and managers analyze the effectiveness. It’s not uncommon to spend $300-600 a listing now with many of the vacation rentals portals. For purposes of this discussion, let’s focus on VRBO where I am paying at the highest amount which is over $600 per annum.
So why do I renew when there are so many free sites out there? Well, it often comes down to considering the full picture, factoring in lifetime value of each guest. I can’t evaluate VRBO without considering the value a rental guest can bring over that rental guest’s lifetime in rental income for my properties. If I gain 5 new customers in a year from VRBO, I will consider that moderately worthwhile and renew my ad. But if out of those 5 customers, 3 of them become repeat customers and rebook every year for another week for 5 more years. Then that VRBO ad actually had much more value to me that if I just consider a single year’s income.
Taking this perspective over a 10-year cycle of renting my properties, the value grows. And considering referral potential, there is an even more exciting new calculation to factor in. If all 5 of those original rental guests each became word-of-mouth advocates my properties and were able to reach out and influence 2 bookings each through their friends, and friends of friends…. so 10 more bookings came in as a result. Well, then now the VRBO ad was that much more valuable. So how can an owner/manager increase the value of each guest, and each booking generated through sites like this?
Well, it would be great of there was a site or system for that!
Now there is. It’s why I look at the exciting long-term potential of Second Porch with even more enthusiasm. Second Porch recently launched the industry’s first “Search for homes within your social circle”. A traveler can now see all of the homes they are connected to socially through friends, and friends of friends with a single click. Second Porch also lets my past guests keep tabs on my properties too, since many of them can’t seem to remember where they stayed just a year later. This means I can now have a system to automate the referral power that word-of-mouth marketing has always offered, as well as a system to keep my past guests attached to my home, so they consider coming back. So as I start thinking ahead for 2011 marketing investments to reach my bookings targets, I will use VRBO, Flipkey, and a couple of other portals to drive some first time vacation rental guests. And, I will use Second Porch and it’s new Social Guestbook to make it easy for these guests to refer their friends who would love to find a trusted vacation home that easily. It makes so much sense for the traveler and is certain to really catch on as a smarter way to find a vacation rental since it removes the risk, the unpleasant surprises and the search effort.
I love when an industry gets a little smarter, easier and more logical. The vacation rental space continues to move forward, and offer owners and managers smart new ways to gain lodging market share.
VRBO is a trademark of HomeAway, Inc.
FlipKey is a copyright of FlipKey Inc.