The following post was written by Terry Whyte of Anna Maria Island Condo Rentals, an owner and property manager in Florida and North Carolina. Like many of us, Terry decided to explore the world of VR software with little guidance. So by documenting what he learned, Terry hopes to help anyone in the same position. He shared his top findings in VRMB's Keystone Awards.
As the great debate regarding vacation rental software continues, I am going to try and provide my knowledge and experience with the hope that it answers questions and provides the necessary framework for anyone looking to transition from spreadsheets to software or possibly change/upgrade software providers.
Technology fascinates me. But in the vacation rental world, I've come to understand that software can help anyone regardless of the number of properties owned or managed (including owners with one single property). Regardless of their interest in technology.
There is expensive software and inexpensive software -- it’s important to note that expensive software does not always do everything better than inexpensive software. One of the biggest things that I have learned is that humans have strengths and weakness and so does every VR software.
My one hope is that no one looks at themselves and says, “I only have one property so I do not need software.” Software is simply the most efficient tool and my belief is that the only reason most people have not progressed further into this world of efficiency is because they do not know how. This was me at one time and was I inefficient. Remember vacation rentals are in their infancy and the landscape can be a bit treacherous to navigate.
As a disclaimer before I begin, I'd like to make clear that I am not endorsing and particular software because a perfect software does not exist. My knowledge is garnered from my experience with various companies, extensive research, and all features detailed below are what I consider must-haves when evaluating software. This is what makes my assessment different from others.
Part 1. The 3 Pieces of the Puzzle
One of the most frustrating learning curves I went through was in discovering that "booking software" is a very vague term and that actually, when people use that phrase (or a phrase like it) they are lumping three different components or utilities into one. Let's begin by understanding the three components...
1. Online Travel Agents (OTA)
An OTA or in the simplest term is a website commonly referred to as a channel. The channel is where owner’s/managers list their properties for rental and where traveler’s go to search for inventory. Responsibility of the channel is to book accommodations, provide a payment method, send the booking directly to the PMS or Channel Manager (more on this later). Obvious channels are Booking.com, Expedia, Airbnb, HomeAway and TripAdvisor. Defined as a single Channel many Channels are gateways to the most powerful travel websites in the world. E.I.) Expedia’s portfolio consists of Hotels.com, Hotwire, HomeAway, Travelocity, Trivago and more. Booking.com’s portfolio is equally impressive.
2. Channel Manager
A Channel Manager is the middle man/women between the PMS and the Channel. Responsible for pushing critical data received from the PMS including rates, availability, photos and text to the Channels connected and continually syncing bookings received in the PMS across all channels to eliminate double bookings and pushing rate changes.
3. Property Management System (PMS)
The PMS is the center of a property owner/mangers universe. All data originates in the PMS and is pushed either directly to a Channel or to the Channel Manager (more on this later). Basic functions of a good PMS include storing rates, availability, amenities, photos, text, property location, property specifics including lock codes, programming codes, wi-fi names, wi-fi password, all property specific details, cleaning module, creating work orders, reporting, notifications, reminders, automations, payment gateway, owner portal, guest portal, owner statements and much more….
Part 2. The Transition Glossary
I think the consensus is unanimous that a website represents the single most important component of a VR business. That is why the first step in selecting software — software that ensures your website visitor does not have to leave your website to go book on some other platform — is critical.
The first moment in the booking process is when people are on your website and click into the booking sequence. Without software, visitors actually navigate away from your website (which opens up the chance of losing the booking to other competitors). With software, and what is commonly referred to as "a widget," the visitor stays on your site and sees an interface — be it an interactive calendar or simple form — that allows them to seal the deal on the spot. With some softwares this seamless transition with the widget is not so seamless. It is critical at this point to look at the company's portfolio and see what the widget looks like once inserted into a website. I have seen too many that go horribly wrong.
Here's is a glossary-like breakdown of elements that you might want to consider when making the transition.
Channel Management
Probably 1% of all owners/managers are 100% listing site independent. With the continued saturation in the VR industry, channel management/distribution will be critical to anyone’s success moving forward and this will give owners/managers the safeguard to work on independence which can take several years to accomplish.
Almost all new software (including inexpensive options) understands the importance of channel management and does a good job of managing channels. I strongly recommend choosing a PMS that is an extremely strong Channel Manager in itself connecting directly to a multitude of Channels, mitigating dependence on an external Channel Managers. Good software is expensive and typically external Channel Managers charge 3-5% for every booking received that goes through the Channel Managers software. This highlights the necessity of the PMS connecting directly to the Channel. One of the most critical questions you can ask is "how many and which specific channels does the PMS connect directly to?"
Further, none of today’s booking software is perfect and you will likely experience connectivity issues between your PMS and different channels. When you bring in third parties, I have found those issues are compounded.
Eliminating external Channel Managers is not a realistic or endorsed. Good Channel Managers provide a gateway to niche Channels and some of less obvious but hugely relevant Channels in the travel world including Agoda, Despegar, C-Trip, Hotel Beds, Tourico and many more. Good Channel Managers to choose from include Rentals United, MyBookingPal, RedAwning and Beds24.
Efficiency
Efficiency benefits a single property owner the exact same way it benefits a property manager with a thousand properties. The single biggest strength of software is the ability to update rates, photos, text and availability all in one location. All changes made within the software are automatically pushed to your website and all channels with a single click. When considering a software, ask whether updating all these items takes place in one interface or whether it’s done in various places. The answer may be the difference between having your weekends off and being stuck behind your desk.
Rates
In my research, I have observed that one of the biggest challenges facing the vacation rental industry and the hotel industry is market saturation and price sensitivity. Accordingly, I would like to spend some time here talking about creating "rate sets" and assigning rate sets and where that priority fits into choosing the right software.
Rate setting is where VR software really flexes its muscles and this is a critical feature when choosing the right one. Having the ability to create multiple rates sets, assign different rates sets to different properties and push these rate sets to different channels is priceless. Comprehensive rate sets include the season, date band, wholesale rate, floor/discount rate, minimum nights and check-in date.
I have 27 different rate sets all with different date bands, different rates, different minimum stays, flexible check-in/out days and different floor rates that I can assign to any property and push to any channel of choice — all from one interface. Commissions for different channels range from 3% to 18%. Having the flexibility to assign different rate sets to different Channels to offset commissions is critical. In the illustration below I am in my Airbnb Channel. You can see how I can choose any property, choose from 27 rate sets and assign the rate set to the Channel.
When offering specials and last minute deals…instead of having to edit the date range, the daily rate, the daily floor rate, set arrival and departure dates (this can be too time consuming), I simply pick and choose which properties I want to offer, change the rate set by assigning a different rate set and decide which of my 21 channels I am going to push these rates and properties to. After the rate is created, it takes less than a minute to make the changes. Additionally, in regards to rates it is important to note the only rate any OTA will pull from a PMS is the daily rate or the floor rate which ever is assigned. No OTA pulls weekly or monthly rates.
Sort Order
All OTAs crawl a PMS once per day normally around midnight updating photos and text. However, OTAs crawl booking software at least once per hour updating rates and availability. Calendars are updated constantly throughout the day giving page listings on OTAs such as HomeAway and TripAvisor advantage in sort order…this compared to owners and managers who have to do everything manually.
Cleaning Module
Probably the single most time-consuming mistake I found myself making in regards to cleaning was emailing cleaning schedules. With cancellations, last minute deals, late checkouts, early check-ins and human error…this became a recipe for disaster. Good software should include a strong cleaning module allowing you to create a user name and password to access the cleaning module, assign a cleaner to a property, provide the cleaner with the cleaning date, their personal lock code, next guests arrival date, address, directions link, time started, time completed and add comments. I cannot tell you how much time and energy this has helped me save.
Work Orders
Not unlike the cleaning module, the right software should also allow you to create a work order, including a single work order, weekly, monthly maintenance work orders which can then be assigned to a vender, sent to the vender, and when complete, send to the owner account.
Overview/Dashboard
Most softwares have a good overview interface built in — this is the headquarters of your vacation rental business. Simplified daily, weekly and monthly arrivals, departures, cleaning, work orders and payments due all in one central location. It will quickly become your most visited webpage online — so make sure you like the look, feel, and comprehensiveness of this feature.
Owner Portal
If you are managing properties for anyone other than yourself, I have learned that the right software can provide a great way to communicate with owners. All I do now is create a username, password and grant as much or as little information as I desire for my property owners (if you are a single property owner, you can provide this access to freelancers, contractors, or assistants). The way I set mine up is when a booking comes in, the respective owner receives an email notification that a booking has been made, they can then log on, see the dates and the net amount coming to them. You can also grant owners permission to enter their own bookings and block dates for personal use. I do not enable this feature but have observed that others find it useful.
Guest Portal
This is where booking software allows you to really communicate with your guests. In this portal you can generate a user name, password and grant the guest assess to their vacation from the minute they book until departure including details regarding the rate, amount paid and amount due.
Additionally the guest portal can double as the place to share everything from a travel guide to a digital welcome package containing every bit of information the guest will need for their entire stay including directions, lock codes, wi-fi name, wi-fi password, electronic instructions, restaurant suggestions, things to do suggestions, check out instructions, it is almost endless. Keep in mind this is property specific and this is time consuming. But once it’s set up, it will change your life!
Management Company Specifics
This factor of booking software is mostly for property managers and it is defined by all pertinent information regarding property details such as lock codes for guests, cleaners, venders, programming codes for locks, emergency back-up codes, property phone number and wi-fi codes. If you only have one property, this could just act as a central and simple way to stay organized.
Reporting
Reporting functionality in VR software options can be almost limitless and unbelievably valuable. Reporting can include arrivals, departures, dates booked, dates cancelled, payments made, payments due, payments overdue, payments summary, owner balances, occupied properties, open properties, booking details, specific extras, monthly account balances, agent booking summary, commissions, occupancy report, rental analysis by property – by week – by month – by year. Reports can be easily produced, shared or downloaded via PDF. Great if you plan to grow your business and need snapshots at your progress along the way.
Notifications / Reminders / Automations
I have found that most software companies have a place where you set up your automated emails ranging anywhere from booking confirmations, balance due reminders, frequently asked questions, pre-arrival instructions, check out instructions, post departure communication and retargeting. Notifications or reminders could be achieved using other applications, but I find it extremely time-saving and convenient to do so in one central place with the right booking software.
Guest Personal Details
In the booking summary most vacation rental professionals collect information such as birthdays, wedding dates, spouse name, family members, hobbies, interests, special requirements and pet details if applicable. This can be invaluable for retargeting and the best softwares include some level of personal detail-keeping front and center. This allows you to make special gestures for guests and your team to be on the same page.
Booking Status
I have various booking statuses such as critical importance, contract sent, contract received, deposit receive, balance received, security deposit received, directions sent, security deposit returned. Booking statuses help me keep track of all my future, current, and past guests at a moments notice...and no matter how many properties you have, this will free up your brain space in order to focus on more meaningful things.
Quote Settings
The right booking software can offer currency adjustments, tax settings, cleaning charges, commissions, deposit amount, enable instant book and display terms and conditions. This is helpful if you host guests from another country or have particular nuances in the way you charge.
Credit Card Processing and Tracking
With the demand for instant book and millennials playing a much bigger role in the travel world, it is not that far away when the only form of payment will be via credit card. The best booking software’s out there do all this seamlessly and this function alone can make a booking software's fee worth it's weight.
Insurance
Offering cancellation insurance through affiliate companies like CSA, Travel Guard and RedSky can make you stand out from your competition — it also helps provide your guests with a convenient peace of mind and you with an additional source of revenue. The only caveat is that insurance companies demand detailed reporting such as guests name, full address, date booked, number of nights booked, trip cost, premium charged, commission earned and premium remitted. If your software does not have a direct integration with the provider here...you are in for a reporting nightmare. This is why it’s worth asking if these integrations exist (before it’s too late).
Accounting
In most cases (but not all) the biggest difference between expensive and inexpensive software lies in the accounting functionality, which primarily includes owner statements, disbursing owner payments, vender payments, tax reporting, issuing 1099’s and 1042’s. When software does not offer a good accounting module the industry standard is Quickbooks and almost every vender uses Quickbooks. Everyone has a year-end so accounting is important and when choosing a software, "you get what you pay for."
Part 3. All Things Considered, Here's How To Choose
Now that you have all the elements that can be featured in various booking softwares in front of you, and you know roughly what is important to you (and what is not) you'll be faced with some more serious decisions. In this short section, I'll share my best advice for making that final call.
Comparisons
When searching for software, the single best approach is live demos with handful of select companies. The first thing you will notice is that not one software is remotely similar to any other software in both looks and functionality. They are all so vastly different and the challenge of choosing can be overwhelming. Which is why drilling down to the components you want (our list above is a good start) is a way to cut through the confusion. I would recommend pulling 3-5 that you would like to live demo and reaching out to make that happen.
When you navigate onto a property management softwares website they normally have a short animated video which is absolutely no help. They do this because they want to get you into a screen share demonstration.
There is a solution to this. Almost every software has very good training videos which you gain access to after you have signed on the dotted line. However, in my experience, almost everyone of their videos is available for free on YouTube.
On every PMS website on the top menu bar you will see a “features tab.” Click on that tab and you will get a drop down box displaying all features offered. Make note of every feature and then go over to YouTube and search for the companies training videos, there is a good chance you will find it. Take special notes of what ever feature is designed to do and how it can help you. The real benefit here is if you are familiar with the company's software before your live demo it will much easier to follow and understand the demo. YouTube is how I acquired that knowledge.
Cost
The costs of these softwares can range from less the $50.00 per month to as high as $350.00 per month. Often the number of properties that you will be connecting to the software determines your monthly rate. Additionally, it is not uncommon to pay 1% of the nightly rate (excluding taxes and fees) for every booking generated from a channel. Bookings made through your website are generally exempt from this fee. But not always.
Set-up Fees
These can range from no fee to (the most expensive I have seen is) $5,000.00. These fees are normally negotiable by up to 50%. It is worth noting because this is your leverage, that pretty much every PMS is built for the hotel industry. With so many new good softwares coming on line some companies will wave the entire setup fee just to get your account.
Data Migration
A critical question to ask: "Who is responsible for transferring all my data onto your platform and at what cost?" This can be extremely expensive and time consuming. I am not knowledgeable enough about the dos and don’ts here. But you will want to ask what the process of moving over all your existing information/data looks like — if your experience is like mine, the responses will vary.
Part 4. What Software Can Do For You
I compete in the Florida market which has two seasons. Peak season Dec. 25-Aug. 15 and low season Aug. 16-Dec. 24. Before switching to software I could keep a property like The Beach Palms at or near 100% capacity in peak season. In low season my goal was to produce two weeks rental per month but I was only able to deliver one week per month. After switching to software this is what that same properties calendar looks like and the last booking I took for this property was July 16. “This is what software can do for you.” It has freed up my time to do more marketing, optimized my rates, and ultimately made my job much more enjoyable.
Part 5. Predictions
The vacation rental industry is predicted to grow to a $167.9 billion industry by 2019. Special acknowledgement and homage paid to the three pioneers of the vacation rental movement who are in no particular order Matt Landau, Heather Bayer and Alan Egan.
My prediction, there will be a new software come to market built specifically for vacation rentals or a hybrid vacation rental/hotel platform that will be so far superior to any software anyone has ever seen and it will shake the travel software world to its core.
It is hard to get through a day now not hearing Artificial Intelligence is coming, it will be as big as the internet and it will change the world as we know it. Artificial Intelligence is already here, see Siri, see Alexa. Now is the time to embrace technology. Read what Jay Walker Priceline founder and current CEO of Upside recently had to say about technology:
"This is really the end of the age of automation; [online travel booking sites are] a Model T Ford with a Ferrari engine,” “There’s no question that the phone and mobile changes everything, then you add augmented reality, artificial intelligence, and big data… this version of online travel is going to seem like a dial phone."
Not all of the above elements are going to be important to everyone. It is my hope that you can pick and choose what is important to you and use it as a guide and prepare yourself to ask the right questions at the right time.
I am happy to answer any questions or comments in the comments section below!
Matt's Takeaway
Choosing the right vacation rental software is a daunting task. And Terry's write-up is as comprehensive and unbiased as they come. My big takeaway is to understand the elements like ingredients in a recipe. And then put them together to match your taste. There's no perfect software out there just yet. So give extra weight to the people and the company values behind the software. And accept that some software is better than no software for the time being and prepare to reassess in 1-2 years time.