The following is a guest post by Inner Circle leader Sallie Mitchell. Sallie and her husband own Casa Mar Azul in San Pancho, Mexico. If you've ever wondered where to draw the line on improvements and how to keep your rates competitive and profitable, this will provide great food for thought.
As we upgrade our properties, add amenities, bestow presents, pile on guest services and arrange local experiences in the name of differentiation, engagement and superior hosting, are we starting an arms race to create impossibly spoiled guests?
Could our lavishness backfire?
There’s a point when we must increase our rates to reflect our superlativeness—and the effort and expense to source, manage and provide everything. But when we raise our rates, how do we remain price competitive, especially to our previous guests whom we’ve trained to regard superior hosting as normal?
When prospective guests search the online travel agencies, will filters catch our welcome gift baskets stuffed with regional products, cashmere bathrobes, and soirées with a local chef/surfing champion/bagpipe player—thereby justifying rates higher than nearby properties with the same number of bedrooms?
Will our previous (and now spoiled) guests value our new offerings enough to fork over more money and re-book?
Are we outsmarting ourselves?
My vacation rental story in a nutshell
In 2014, my husband and I bought an ocean-view casa on the Pacific coast of Mexico for our eventual retirement. We lost our minds again in 2016 and, on a different level of our property, designed, built and furnished a two-bedroom/two-bathroom vacation rental casa. Our objective was to create the sensation of staying in a personal resort for two to four adults.
My career has been in communications strategy and copywriting across multiple industries, including tourism. I also lived and worked at a 20-cottage dive resort in the Bahamas for two years, where I dived and dined with guests, learning why they picked that particular resort—and why they returned year after year.
Before we broke ground on the new casa, I was very clear on who our ideal guests are and what they most desire from their tropical beach vacation. That influenced every decision from the hot water heater location to the number and placement of electrical outlets.
At first we rented both houses, but now that we’re living in the original casa for six months a year, we only rent the new casa.
The local rental season lasts 20 weeks, or 140 nights. This season, our third for renting, we booked 22 weeks for a total of 154 nights.
“We wondered if we only got croissants for our first stay”
During the six months when we live in Mexico, we bring guests fresh croissants their first morning. We buy croissants for ourselves, and thought it would be a nice touch for guests.
This season, Kevin and Maggie returned for their second 10-night stay. My husband was on a business trip when they arrived, and I was recovering from knee surgery and couldn’t yet manage the stairs. Croissant delivery for Morning One was impossible.
By their second morning, my husband was home. He went to the bakery, brought back still-warm croissants, and delivered them. Maggie happily greeted and thanked him (Kevin was already in the hammock).
A few days later when I was visiting with them, Maggie said, “On our first morning, when no one knocked on the door, we wondered if we only got croissants for our first stay.”
Our friendly gesture was now regarded as a guest policy.
“On our first morning, when no one knocked on the door, we wondered if we only got croissants for our first stay.” When gestures become guest policy.
Does this idea pass the “3 ways” test?
There’s a lot of talk in the vacation rental industry about how to differentiate our properties from the competition to move from “same-same” to “This is the one I want!” Fresh croissants may not be the sole reason why our guests re-book, yet we do provide layers of thoughtful touches that add up to “we can’t wait to come back.”
Some ideas-brought-to-life that our guests love are downright cheap—locally embroidered cloth bookmarks (we provide books), cotton swabs, night lights, five sleeping pillows per king bed, yoga mats and blocks, bug spray.
Other things guests rave about are pricey—luxury mattresses topped with three inches of natural latex foam to support and cradle, pool water heated to 88F/31C degrees to avoid that stomach clench when you reach the second step.
The three most expensive things that attract and retain guests at our property are (1) ocean views from every room, (2) beach proximity and (3) the indoor-outdoor design of the house. All of these factors, from cotton swabs to lying in bed, looking at the ocean and listening to the waves, differentiate our property from our competitors.
And like many hosts, wanting to enchant our guests (and stay well ahead of competitors), I come up with a dozen ideas a month on how to further enrich their stays.
So how do I discern which ideas get green lights, and which get rejected?
I learned from business leader and executive coach Jay Abraham there are only three ways to grow a business:
- Increase the number of clients (e.g., increase guest retention rate, convert more prospective guests into paying guests, add rooms/properties)
- Increase the average transaction value (raise rates, create vacation packages with profitable margins, upsell extra services/amenities/activities)
- Increase the frequency of repurchase (repeat bookings, longer stays, off-season occupancy).
If an idea can’t measurably accomplish at least one of these three ways to grow, it isn’t an improvement. It’s an added expense.
In addition to these Three Ways, I also consider my hassle factor. For instance, I went back and forth on buying a barbecue because:
- The salty ocean air corrodes everything made of metal so it would need replacing every two years
- I couldn’t rely on staff to properly clean it
- Getting those little propane tanks is an aggravating 90-minute drive round trip
- Most guests dine out for dinner, and...
- In three seasons of renting, only two guests have said they missed having a grill—and they’ve both re-booked.
Adding a barbecue would not increase the transaction value. It might increase the number of guests and the frequency of repurchase, but the hassle factor was a deal breaker for me. It made this idea an expense, not an improvement. I decided No.
I really enjoyed a different way of looking at this decision from fellow Inner Circle member Heather Schade who asked, “Do I need to leave a box of chocolates for each guest? Fill the fridge, leave a case of beer? The last time I filled the fridge, I was certain to let the guests know this was special & not usual, so that they don’t “expect” the same treatment from their next host… it was something that came from my heart, I felt inspired to do.
“I want to do what comes from the heart,” Heather argues, “not have to fulfill an expectation... which becomes a hosting burden.”
Our guest engagement might be all wrong
There are lively hosting discussions about how to engage guests to deepen connection, which is key for enriching guest experiences, minimizing property damage, earning positive reviews, and getting repeat bookings and referrals.
Engagement also makes hosting personally rewarding.Yet we might be approaching guest engagement all wrong.
A well-funded Silicon Valley startup decided to go above and beyond in employee benefits and perks to attract and keep top talent. Makes sense, right? After a year of lavish treatment, Human Resources found employees did not feel grateful and engaged, they felt entitled to even more.
According to a Fast Company article, Stop Trying to Bribe Your Employees and Do This Instead[1. “Stop Trying to Bribe Your Employees and Do This Instead” , Feb. 11, 2015]:
“The short-sighted solution to improving worker engagement has been to focus on making employees happy. Companies started obsessing on the best ways to incentivize employees with perks and benefits to make them feel good at work. The thought was: offer them enough incentives and they’ll be happy.
Unfortunately, studies show extrinsic motivation, or giving rewards to drive behavior, is a terrible motivator... this focus on extrinsic motivation has actually created the increased dissatisfaction and disengagement we are now seeing.
The more a company tries to bribe their employees into being happy, the less engaged they become...
Intrinsic motivation is what drives a person to do something without any expected reward or external motivation. They are guided and rewarded by their own incentive.
Once you know what drives employees to do great work, you can understand and create the kind of work environment needed to support them in the development and maintenance of their internal motivation for work."
Yes, that article is about employees, but there are lessons for us. Before layering on more amenities, services and experiences, let’s ask ourselves:
- “What do our ideal guests yearn for at our destination and property?” and
- “Why would our ideal prospective guest choose our property over every other choice available to them (including hotels and even other destinations)?”
Then let’s focus on those intrinsic motivators.
Let’s zero in on what guests really want instead of sweating over including dental floss
Some property owners are already spot on—designed-for-you golf retreats for men, 10-bedroom houses furnished for multiple generation gatherings, off-the-grid yurts with organic heirloom gardens and Crèvecoeur chickens for those desperate to experience honest simplicity.
Our ideal guests ache for a connection with nature (with high thread count sheets), reconnection with each other, and permission to come to a full stop for deep rest. No one says this out loud, but that’s their intrinsic motivation.
All of the how-can-we-improve-on-excellence discussions among striving property owners can result in straying from what our guests intrinsically seek, our mission to fulfill their yearnings (and thereby differentiate ourselves), and making sure improvements and additions are profitable.
I agree we should provide guests with more than the basics, and add touches and services that wow and delight. But these don’t have to be expensive and can even be free.
"We should provide guests with more than the basics, and add touches/services that wow and delight. But these don’t have to be expensive and can even be free."
I’m stunned that our college-educated, well-traveled guests get giddy about cotton cosmetic pads and magnifying mirrors in the bathrooms. They love that our property manager enters her Mexican cell phone number into their phones so they can text or call her without figuring out international prefixes or overcoming dyslexia.
“I think the little tricks help set our properties apart from others in the big listing sites,” cited Sheron Sherlock of Scurlock Farms. “Using a digital handshake to introduce ourselves means a lot to people who inquire. If a telephone number is given, I have found that a personal phone call made as soon as possible is greatly appreciated by people! From the responses I have received, my impression is most never receive a call!”
As I read posts and listen to podcasts about extraordinary guest amenities and services, then entertain how I could apply these ideas for our guests, I remind myself I’m not the Make-A-Wish Vacation Foundation.
Just because the Shanghai Four Seasons offers a Pillow Menu, or the Robb Report rhapsodizes about a chi-chi resort’s massages with dragon fruit oil spiked with CBD, doesn’t mean I need to turn myself inside out to match a $1,500 per night hotel’s services.
I’m a profit-seeking vacation rental business owner with a $285 nightly rate, and sometimes enough is enough.
What do you think?
If we continually set the bar higher and higher to dazzle guests and out-compete other properties, we create Guestzillas, shrink our profit margin (or leave behind valued guests as our rates increase), get migraines—and miss sight of providing what our ideal guests intrinsically want. We start an arms race no one can win. Or, we can:
- Exceed guest expectations without going overboard
- Satisfy their intrinsic desires
- Screen ideas for improvement against the three ways to grow a business (and the hassle factor), and
- Set competitive and profitable rates.
Everyone could win.
What do you think?