Basics of Revenue Management and Hiring a Revenue Manager for your Vacation Rental Business

what does a revenue manager do

Revenue management is a crucial aspect of any business, including the vacation rental industry. It involves optimizing pricing strategies to maximize revenue while ensuring your rental property is consistently booked to capacity. To achieve this, you need to deeply understand your market, target audience, and competitive landscape.

One way to ensure effective revenue management for your vacation rental business is by hiring a revenue manager. A revenue manager is responsible for analyzing market trends, identifying pricing opportunities, and creating strategies to drive revenue growth. They are also responsible for ensuring that your rental property is marketed effectively and that you target the right audience. 

What is revenue management? 

Revenue management basically analyzes the vacation rental performance and market data to draw insights and set a strong pricing strategy. It includes selecting the optimum price for each booking based on various performance metrics. 

Revenue management may include pricing, product selection, expense reduction, marketing, and recurring fees. However, some factors are more crucial than others when developing a pricing strategy.

Why do you need a solid revenue management strategy? 

A solid revenue management strategy can increase revenue by helping you identify improvement areas in your strategies by analyzing past performance, market data, and other information. 

For example, you can analyze your own data to identify high and low-demand periods. Then, you can adjust your prices to gain more revenue during higher-demand months and more bookings during lower-demand periods. 

Choosing the right revenue management strategy strengthens your business’s finances and has an edge over your competitors. Also, having a good strategy helps you make informed data-backed decisions instead of guesswork. 

Now that we know about revenue management, let’s try to understand who is a revenue manager and how they can help your vacation rental business. 

Who is a revenue manager, and how can they help?

A revenue manager uses performance data, competitor rates, local market information, and important vacation rental KPIs to optimize property availability and price to maximize your revenue. They can do this manually or with the help of a revenue management tool. Usually, revenue managers combine their market experience and the data provided by revenue management software to design a pricing strategy. 

A revenue management tool anticipates the demand days in advance. This means that during high seasons you do not have to stress about adjusting the nightly rates of your property to optimize revenue. Instead, the tool will automatically do that for you. 

Why is a revenue manager important if a tool can adjust prices automatically?

If you are a property manager, your primary goal in working with homeowners is to grow their revenue and establish a successful business model. As a result, you need to prioritize revenue management and have a dedicated person to take care of this aspect of your business. 

As a vacation rental business owner, a revenue manager can help them release the burden of managing one of the most important and time-consuming aspects of their business. This gives them more time to focus on other aspects of their business, like marketing, hosting, maintaining guest relations, etc.  

The revenue manager will adjust prices and maximize occupancy during high and low-demand seasons to maximize revenue. He can also help with marketing, OTA management, coordination, and fiscal management, and more.

What to look for in a vacation rental revenue manager?

A successful vacation rental revenue manager will have the following traits: 

1. Data-oriented and critical thinker. 

A revenue manager reveres data and acknowledges its significance in understanding the market. They also comprehend the importance of thinking from the guest’s point of view and know how to balance the two aspects when creating a pricing strategy. 

2. Someone with vacation rental industry experience. 

A successful revenue manager is insightful and has an eye for demand, market trends, and the unique characteristics of individual properties that help them make an informed pricing strategy. They know how to keep up with industry trends and implement them in their pricing strategy that will help them increase revenue. 

3. They know the market well and stay updated. 

Even though a revenue management tool can give you data about the demand trends, only a revenue manager can properly utilize that information by adjusting the tool to work for your business. 

The importance of data in revenue management

It is impossible to develop a good pricing strategy without studying historical data about the property’s performance along with market demand and supply trends. 

The volume and accuracy of the data greatly determine the agility of your revenue management strategy. Experts in the vacation rental industry use different types of data. 

  • Scraped data is data that is sourced from various relevant platforms such as Airbnb,, etc. For example,  PriceLabs scraps data from Airbnb and Vrbo to provide accurate information about your market. 
  • Authoritative data includes all the data stored in your property management system. 
  • Lagging data, also known as historical data, are measurable data points that provide insight into past performance. These data points change only after established trends or patterns have emerged. Examples of lagging data in the vacation rental industry include occupancy rates, revenue per available room (RevPAR), and average daily rate (ADR).. 
  • Leading data, also known as forward-looking data, are measurable data points that help you make future predictions. These data points are used to identify trends that are emerging or to forecast future performance. Examples of leading data in the vacation rental industry include website traffic, click-through rates, and conversion rates.

Start by analyzing your listing’s data

To create a strong pricing strategy, it’s important to understand how your property has been performing. Data from your property management system is the best source. 

Valuable data will have:

  • Average check-ins and check-outs in a given time period
  • The average number of guests staying per property per night
  • Depending on how long you’ve been in business, your reservations data can show you the differences in reservations over various time periods, from year-over-year to week-over-week.

These data points can help your revenue manager design your pricing strategies. You will also need current market trends data using a revenue management tool. 

Vacation rental KPIs to analyze

  • Average Daily Rent (ADR): This is the average nightly rate for a property (or a cluster of properties), calculated by the total rental revenue divided by the total nights booked.
  • Occupancy Rate: Occupancy rate is the percentage of the total number of nights that have been rented over a specific period.
  • Occupancy rate = (Number of nights booked / total available nights)*100The number of occupied nights for a property or a group of properties. 
  • Revenue Per Available Room Night (RevPAR): RevPAR stands for revenue per available rental. Its goal is to increase the overall revenue of a rental property. When a property’s RevPAR increases, the average occupancy rate or rental rate also grows.
  • RevPAR = occupancy x ADR 
  • It excludes nights that aren’t bookable by guests for operational reasons, like an owner hold or maintenance blocks.

Hotels track very similar KPIs for their revenue management. The big difference? In vacation rental management, gross revenue omits the amount owed to homeowners each month. It is because that amount is not a part of overall profits.  

How does the revenue management tool work?

A revenue management software, like PriceLabs, analyzes market data days in advance to provide you with price recommendations while offering you various customizations to enable the implementation of your strategy with ease and control. This helps optimize bookings while saving time, so you never miss out on opportunities to earn more.

You can set up base, minimum and maximum prices, set different stay restrictions, study the booking trends and keep a track of your property’s performance metrics to keep upgrading it. 

If you want to learn more about how we can help you manage your revenue, you can reach out to us, and our team will be there to help you out.

Tips for choosing a revenue management tool

Here are some points to remember while choosing a tool that might come in handy:

  • Know what you want from your revenue management tool. Identify the revenue goals you want to achieve with the tool. Do you want to automate your daily prices to focus on strategic tasks? Or do you want to optimize your occupancy and nightly rates to increase your revenue? It can also be both. Having clear goals lets you prioritize the features you want in a revenue management tool.  
  • Check if the software provides flexible price syncs. You need a tool that allows you to refresh and update your prices with one easy click. 
  • Check if the software is consistent with its technology updates and adopts modern revenue management methods. You don’t need outdated software that does not provide relevant services and data. 
  • Their customer support services should be great. If you are new to a tool or just trying to understand an update, you can’t afford to wait for hours to get a customer care executive to respond to your queries. The software should also be able to provide you with good support to learn the software. 

Revenue management is one of the essential aspects of vacation rental management. Therefore, it is only natural to want the best revenue manager to handle this aspect of your business. This article elucidates all there is to know about revenue management and looking for a revenue manager, whether a person or a tool. 

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