A Guide to Direct Bookings to Take Control of Your Business During the STR Crisis

Updated on May 7, 2020

This is a guest post written by Maeva Cifuentes from Get Paid For Your Pad


Since COVID-19 shut down the hospitality industry, short-term rental operators have been suffering and the OTAs haven’t been much help. Guests continue to cancel in record numbers. Vacation rental owners are left to find their own means of survival. However, some operators have been able to recoup and rebuild their businesses. These hosts often have their own vacation rental websites where they accept direct bookings. This article will cover all you need to know about direct bookings. We will discuss how to manage revenue, how to increase traffic to your direct booking website, and how to protect yourself.

What Are Direct Bookings?

Direct bookings are when guests book your property through you or your website. Instead of relying on third-party platforms like Airbnb, you manage the entire process. In other words, you control everything from marketing to booking to payment. It also means you control the cancellation policy and how you manage guests. It’s useful for any kind of host: It means you aren’t building your house on someone else’s land. You don’t need a rental property calculator to tell you that less commissions means more money in your pocket. But it will take a little more work. If you haven’t already, now is the time to set up your vacation rental business plan.

What Do I Need For Successful Direct Bookings?

There are two main considerations when it comes to successful direct bookings:
  • The technical aspect
  • The human aspect
Figuring out the technicalities, while tedious, is easier to get right. It comes down to setting up the right systems. So, for instance, you need to draft the proper contracts, get the right revenue management tool in place and set up a payment portal. When drafting contracts, I recommend working with an attorney. You want to make sure all the legalities are done right. You’ll also want to look into any potential tools you may need. For instance, some hosts use DocuSign as a way for guests to virtually sign their contracts when they book. The more challenging part of direct bookings involves building trust and protecting yourself.

Having the right revenue management plan for direct bookings

In the face of this downturn, most short-term rental operators have found that they failed to manage their revenue management well. Maybe they paid too close attention to cash flow, and not enough on profitability. While yield management is an important piece of the puzzle, short-term rental hosts will need more powerful technology - overall revenue management. Revenue management uses sophisticated technology to predict guest behavior, forecasts demand, and optimize prices. Hotels all use it, and direct booking operators need to as well. If your revenue is managed properly using good technology, direct bookings are more cost-effective than using third-party OTAs.

Booking data from Pricelabs

You’ll have enough on your hands dealing with marketing and managing your website. Save your time and use a revenue management tool like Pricelabs to monitor booking data and update your prices accordingly. It’ll track changes in demand and adjust rates whenever events start to take place again.

How to Build Credibility with Guests

When it comes down to it, you want to appear as legitimate as possible to your potential guests. This means having your own website, where you can show guests your listings and calendars. It’s on you to show guests that you’re a legitimate vacation rental business. For example, if they message you after finding your website, you can send them a link to your Airbnb listing. This gives them the chance to check out your properties, descriptions, and reviews. The goal here is to show them that you have a solid track record. Another thing to keep in mind: Your direct booking website should match your Airbnb listing. You want to have the same photos and descriptions. This will help with alleviating any concerns your guests may have.

Leverage the Billboard Effect

This is when people see your listing on an OTA and then they Google it to see if they can get a better price direct booking with you. You need to have a unique name that is identical both on your direct booking website and on the OTA. You can also show guests your past reviews. It doesn’t matter if you’re new and only have nine guest reviews. The goal of this is to simply create some history. You want to communicate to your guests that you know what you’re doing and that you’ve had guests in the past.

How to Protect Yourself

A common worry of vacation rental owners is security. How do you know that the person coming to your house is who they say they are? How do you make sure you get paid? What do you do if they damage your property? These are all valid concerns, but there are ways to deal with these issues effectively. Airbnb attempts to deal with these problems with its $1 MM Host Guarantee. However, you shouldn’t rely on this policy. Several hosts have told me that it can be extremely frustrating getting even $50 for damages. In contrast, with direct bookings, you have total control over your own protection. It’s your house, so it’s on you to decide what you want to do. Here are some best practices:
  • Get Proof of ID Before any guest checks-in, you want to get proof of identification. The name and signature on the ID must match the ones on the credit card and the contract. This will reduce the likelihood of fraudulent charges. Again, because it’s your house, you can set your own rules when it comes to checking ID. You can ask for the ID of the paying guest. But, if it makes you more comfortable, you can also ask for the IDs of everyone staying in your property.
  • Install a Lockbox and Other Security Measures With a lockbox, you can control who enters your property. If a guest doesn’t want to give you their ID, for whatever reason, you don’t have to give them the door code. You can also install a doorbell camera to verify your guests’ identities. For instance, what do you do if a guest says he’s bringing two other people but three show up? You can block them from entering your vacation rental by changing the door code. Of course, in this scenario, the next step would be to contact the guest. You can ask them why there are extra people. You may be able to renegotiate the contract and charge a higher price.
  • Charge a Security Deposit and Enforce It Because it’s your home, you set the rules when it comes to the security deposit. You can ask guests for $500, $2,000, or whatever number makes you comfortable. The nice thing about controlling the deposit is that you can easily enforce it. If you have a $100 smoking fee and a guest smokes, the $100 is yours. You don't have to argue your case to a third-party platform.
  • Screen Your Guests You want to screen your guests. Asking the right questions is the easiest way to protect yourself. You can identify bad guests right away and prevent them from entering your property. Call them on the phone to ask them simple questions. Screen this as a customer service call. Most fraudsters won’t answer the phone.
  • Develop Your Cancellation Policy You can either model Airbnb's cancellation policies or create your own. Regardless of what you do, you have full control over how it's executed. If guests refuse to send proof of ID, you can cancel their reservation. And, based on your policy, you may not have to refund them. After all, it was in the contract that they agreed to when they booked your property. As long as you have a decent payment provider, there'll be little room for them to dispute the charge. Especially since you have proof that they broke the contract.

Most importantly, use the right tools

Using direct bookings is a great way to stop being dependent on OTAs and to grow your business on your own terms. But it’s important to have the right tools. Use a revenue management tool like Pricelabs with a PMS that suits your needs, and you’ll be on the right track to getting your business back.

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