How much can professional property managers earn with vacation rental upselling? Let’s calculate!
The missed opportunities of vacation rental upselling
Vacation rental upsells and cross-sells are a hugely underleveraged revenue stream for property managers.
Many vacation rental property managers turn away from upsells and leave this revenue source untapped. This happens because they are not present at the property during the guest stay. Another reason is the scarcity of dedicated technical solutions.
Let’s look at hotels that are able to increase their revenue per guests quite significantly thanks to upselling and cross selling activities and services. However, vacation rental managers are often struggling to find ways to offer additional products and services to their guests.
In addition to missed revenue, hospitality operators who stay away from upsells, also miss out on customer satisfaction opportunities. Aka Guest Experience.
Let’s talk numbers of vacation rental upselling
To understand the power of upsells as a revenue generator, it is paramount to look at the numbers carefully.
When it is easy to compare the booking value to a mid-stay cleaning and write this off, the math is actually not that simple.
Indeed, a professional property manager usually gets a cut of the booking value. On average, depending on the service you provide to owners and the competitiveness of your market, the gross margin of a property manager compared to what the guest pays is around 25%.
Let’s look at the economics of a 2000$ booking:
The ancillary revenue is 100% yours
The accommodation is only 30% of the travel budget. So the remaining 70% could become an incredible revenue source for your business.
Because of the hyper local component to the business, property managers are uniquely positioned to find the best local providers. Guests will also trust their recommendations.
A referral agreement with the top providers in your destination could lead to a significant increase in your gross margins. This ancillary revenue would be 100% yours!
A small slice of a bigger pie that significantly increases your revenue
Of course it is virtually impossible for vacation rental managers to capture 100% of this additional revenue. But a small slice of this pie will already have a significant impact on your financial performance and guest satisfaction.
Let’s be extremely conservative and only look at scenario A. You can add 46% to the gross margins you generate from a booking only with upselling. And this is only by referring local service and attraction providers to your guests.
Any opportunity to add 46% gross margins at a very low cost should be considered and put on top of your priority list.
Want to achieve this for your business? Here are a few tips to make your upselling and cross selling strategy as effective as possible.
The easy way to increase your vacation rental revenue
To achieve the same by growing your portfolio, you need to hire, train and onboard more staff. You will also need to review your internal procedures to ensure they can support this additional volume of work.
This is 10 times more demanding than striking deals with local services providers. They also want to sell their services during the best months of the year.