This guest post is by Inner Circle leader Mark Driskell, owner and president of Mountain Time Vacation Rentals based out of Fort Collins, Colorado. He brings with him 20 years of experience in tech as an engineer and commercial real estate PM with Intel.
I’m fascinated by technology and knew it could help us accelerate the growth and stabilization our vacation rental business. Over the past three years I conducted a PMS software selection across 10 applications similar to what I had done in the corporate world. The goal was to find one application to do everything, but what I found was a bit discouraging.
Watch Mark pose this question at VRMA
This video is part of the Inner Circle Knowledge Library. Become an Inner Circle member today and gain access to the entire community.
Many of the “cutting edge” software features advertised by the sales teams were far from perfect and in some cases hardly functional or still in development. That said, the benefits of switching to our first PMS have been undeniable and dramatically improved our overall business despite the imperfections.
The good news is that the software landscape is changing rapidly with an influx of new investment. This investment is driving new and improved products at a much faster rate along with increased competition. While most professional managers would admit that there is no perfect PMS on the market today the options are getting much better. If you are looking to make a switch to a new PMS or even your first PMS, I’d recommend keeping these points in mind.
5 Pitfalls to Consider When Selecting Your Next PMS
1. Coming Soon!
Have you ever heard something like “Of course we offer that feature, just not now, but probably in December... of 202ish, or so... I think?” Some call this "vaporware" for applications and features that don't yet exist but advertised as "right around the corner".
Pro Tip: Assume it doesn't exist until it is fully functional and live. Otherwise, you might be waiting a very long time for that feature you were banking on.
It’s also important to create a list upfront and distinguish between the “must have” vs. “nice to have” features. “Must Have” features are foundational to the operation of your business and may include things such as Trust Accounting and Owner Statements. “Nice to Have” features are desirable but you can operate just fine without them. I’ve noticed a lot of PMs rule out otherwise great options because they were lacking desirable features. Distinguish between desirable and critical features and be willing to “settle” on a solution that has the best balance.
2. Hidden Fees
Many vendors advertise a flat fixed rate on their website but then add on a plethora of additional fees, so ask about all of these candidly up front.
- Channel Fee (1-3% of bookings to maintain an API connection with each channel like Airbnb & VRBO)
- Website Fee ($250/mth to host your website and maintain your booking engine for direct bookings)
- Startup or Data Import Fee ($5,000 to help transition all your listing data, images, and automations to the new application)
- Training Fee ($999 to train you and your staff on the new application)
- Text/Data Fee (assessed per text sent to guest)
- ESign Doc Fee ($1 assessed per booking when using digital signatures)
- Many times these fees can be 2-3x the base software rate advertised depending on your booking revenue. These fees are negotiable and should be minimized to get the most out of your software budget.
3. Varying Quality of Features
Most vendors suggest they offer all the key features you will ever need, but a closer look will reveal many of those features can be very glitchy and even abandoned by most clients upon release. Make sure to ask how many clients are actively using this “super cool new feature”? Then ask if you can speak with those PMs.
4. PMS Fixed Price vs. Introductory Rate
Many of you may already be using a PMS and received the unfortunate news that your 2019 “special" rate is over. Your new 2020 “special” offer comes with a 200% price increase. Yikes! Request a fixed rate upfront if possible or negotiate a tiered pricing structure with a not to exceed cap.
5. Mobile Friendly or Mobile Foe?
Some applications look great on the desktop but aren't optimized for mobile. With so much traffic going mobile it’s critical to have a mobile friendly application for your housekeepers, maintenance staff, guests, owners, and reservation agents. Make sure you’re able to demo the mobile application on all devices as well as the desktop version when comparing options and features.
Because the software space is so dynamic right now, a lot of the good new solutions are receiving more business than planned/expected. Which is straining the capacity of their resources and is exposed worst in customer service, where they are scrambling to hire/train/tend to demand. We’ve had lots of feedback that even some winners of our Keystone Awards were experiencing uncharacteristic customer service failures.
The podcast interview I did (above) with Terry Whyte provides a comprehensive understanding of the landscape.
How To Select a PMS Without Going Crazy
Selecting a new PMS can be a daunting task for most business owners. However, it’s probably one of the best opportunities to dramatically transform your company. Follow these suggestions to get the most out of your search.
Get Educated. First and foremost understand the key features of a PMS and how each of them will be used within your business (i.e. 2 way direct vs. 1 way direct integration for channel management, housekeeping/maintenance modules automations, unified inbox and CRM management, permission controls and security). I would highly recommend starting with this article from Inner Circle member Terry Whyte --> https://www.vrmb.com/choose-software/
Demo 3-4 good solutions, not 20! Identify a few good solutions for your size company. With a little online research you should be able to rule out several options quickly without scheduling a lengthy demo. A basic PMS solution for 0-50 properties should run you <$500/mth, while an advanced PMS can cost anywhere from $1000 to $10,000/mth. Check out the Keystone Awards 2019 for a primer.
Talk with other PMs, Not Just the Software Providers Meet with 2-3 other PMs who are using the software solutions you're considering.
Ask how long they have been using the software? Are there any red flags to be aware of? How quickly does the software provider address issues?
Dive In and Get Started Now! If this is your first PMS just know that there are some great low cost solutions available right now and improving every month. Pick one and get going. You will most likely change in 1-2 years if starting small and growing fast. In general, the advanced enterprise level PMS solutions tend to be cost prohibitive until you scale closer to 50+ properties. Gaining experience on a basic PMS will prepare you for operating more efficiently when you are ready to switch to a more advanced platform.
In personal relationships, “settling” is looked down upon: it suggests that the person was a good enough fit, but not optimal. In PMS selection, get educated like Mark says, demo 3-4 solutions, talk with other users, but be willing to “settle” on the solution that has the best overall mix, recognizing full well that in a few years you will be in a position to switch. Accepting the temporary pitfalls of your selection (and not letting them weigh you down emotionally or logistically) is key to moving forward.
Vacation rental software is relatively new, highly complex, and rapidly changing to meet the unique demands of owners, guests, and OTAs. It’s important to recognize that while no perfect solution exists today, there are many excellent options to choose from. The issues you will inevitably uncover today will continue to improve with new products and features over time. The key is to be agile and ready to make a switch when the opportunity presents itself.