Boosting & Managing Your Revenue Successfully

Hey everyone. Today we're talking about revenue and tips and shares on how you can get more of that revenue and how important it is to be managing that revenue. So you're listening to the Boost podcast. If this is your first time here, this is the podcast that gives hosts the tools, the tactics, the training, and most of all the confidence on how you can go out here and get more direct bookings. My name is Liam Carolan and Mark Simpson's co host and this is the Spotlight series. So this is where we bring in a special guest and we really shine the Boostly spotlight onto that guest and their business and their businesses that you, if you're in short term rental, you need to know about these people and they've got awesome stories to share. So today we've got Jordan Locke. Jordan Locke, you can go and check out the business@revpartyconsulting.com and that's what we're, we're talking about today. So welcome along Jordan. Thank you for joining us.

Hey, thanks for having me.

So Jordan, just take us through and introduce the business yourself. So tell us a little bit more. What is RevParty Consulting?

Yeah, so RevParty Consulting is a revenue management and data analytics consulting firm. We really started in revenue management data analytics and now we kind of touch anything that has to do with revenue and revenue optimization because the problem is just so complex and has so many layers. So we tend to help. It can be smaller hosts, it can be larger portfolios. With the revenue management, we do everything from small project based engagements that last a couple weeks or a couple months where we help get in, get out and we do a third party revenue management as well. So completely outsourced. So regardless of where you're at on your revenue journey or how your company is structured, we work with all sorts of people to help them make more revenue and save time.

Is there different stages that you see where hosts are at? Is there like stages where you can kind of box people in and go, do you know what, this person's in this stage, this person's at this stage. Do you tend to find that or is it just more of a free for all?

No, I think people do kind of follow specific steps in their revenue management journey, kind of influenced by their past experience a little bit. But generally you'll have hosts that are just starting out and they do some research into kind of the basics behind pricing and revenue management. They start determining when their high season and low season is, maybe where some of those compression dates are and big events. Right. And they're kind of scratching the surface. Usually after that, people do a little more research they want to do, be a little more involved. And that's typically when they start using tools. Right. So they'll use the Price Labs wheelhouse beyond and really try to automate that. And that's either to save time while they revenue manage, order revenue manage in more detail. Then the third step is either you've gotten so big you're building out a team in house, or you're really starting to see the ROI on revenue management and you want to go to the next level. And that's typically kind of where revparty comes in. And so that's when we help by taking over revenue management or helping them level up their strategy and tactics, or maybe deep diving on some sort of survey or analysis that they haven't done before, that just unlocks new opportunities. And so usually in that third bucket is where we start working with most of our clients.

What mistakes do you see happen many times for hosts?

I think one of the mistakes people make especially early on in their journey is thing that's just way too complicated to really grasp and start taking action on. And it's true, there's lots of math and science and experience and just tons of stuff that goes into revenue management. Right. That's why I do it full time. But essentially people are really good at picking up patterns and drawing conclusions from those patterns. And so even if you're not a numbers person necessarily, or a full time revenue manager, if you start looking at your trends and patterns, you see in your own booking data and start drawing conclusions from that, a lot of times you can make really small tweaks really early on that have a huge revenue impact. And I think the second thing that I see all the time, no matter where people are at in their revenue management journey, is people tend to think that during a high season, high demand season, when lots of revenues coming in, like, that's when you really have to focus up on revenue management. And I would say the opposite is true. I think, you know, a really good revenue management strategy, a really good revenue manager really makes you more money in that slow season or when the market has low occupancy or low demand because the market tends to compress and kind of equalize in periods of high demand. So a revenue manager is important during times when it's well, but they're even more important when times are rough.

What would you say to somebody who doesn't know if they need a revenue manager?

I would say the first thing is probably size. And that's the same thing that really goes into any aspect of short term rentals or vacation rentals. Right. As you scale, some things are easy to kind of outsource or systemize and some aren't. And revenue management is very much the same way. So usually you want to see 10 to 20 properties at least before you super, super deep dive into revenue management, because that's when you'll start to see the return.

And are there any figures? I mean, there's ones which come to mind for me, but I want to check that my thinking is right. Are there certain figures when it comes down to revenue management that everybody should just be paying attention to and if so, what are they and why?

Yes. So RevPAR is when you'll hear a lot of times, right, we've incorporated into our name, it's so important. It's probably the most sound metric that incorporates revenue, occupancy and rate all into one. So you definitely need to pay attention to that. At RevParty, we really focus on indexing RevPAR. So that's taking your portfolio's revpar and comparing it to your market or comp set revpar. And that's because that controls for market fluctuations like increasing supply and demand, inflation, all the big things you probably can't control. And so we use the indexing a lot to incorporate that and really tell if we're improving our revenue management or if it's getting worse, even if the market's going up or down no matter what.

What is Revpar in General?

Yeah, so RevPAR stands for Revenue revenue per available room. You can hear it multiple different ways as rev pan, rev pow. Sometimes owner nights are included, as long as they're not. So it's really important you check the definitions in this industry so far. But essentially it's your occupancy for a time period times your average rate for that same time period. And so what that does is we know just from general economics in high school, as price goes up, your demand is likely going to go down and there's a trade off there. And what we want to determine is given that trade off, where's kind of the best landing spot. And so what RevPAR does is it incorporates that how much you sell, the occupancy times the rate, which is your price. And it lets you know, is that trade off improving your revenue performance or not? I think Revpar also allows you to compare multiple things your business on kind of the same basis. Right. So when I've worked with portfolios and been More operationally involved. You have things to do with like owner block nights and you're blocking for maintenance and improvements. Maybe you had cancellations or, you know, a listing went down for a little bit. All these things influence your revenue and what you can sell. And you can break all of that down on a revpar basis as well. And then you know exactly what's calling your causing your leakage and really where you can improve and see the revenue improvement really easily.

One of the things, and I've made this mistake myself, which is I see revenue coming in in the summer and I'm like, ah, times are great. This is fantastic. And then in the winter, I'm, I'm like banging my head just going, oh God, what, what can we do to get more, more revenue? And after reading there's a great book by Mike McCallowitz called Profit First, I, I now am very much like, put money aside, make sure I do this. And that's got rid of it to a degree. But I'm sure there's going to be a lot of people and, and for everyone listening, go and check out that book Profit First. But I'm gonna, I'm sure there's going to be a lot of people who don't necessarily understand the, the importance of budgeting for that. Does Rove par consulting help with that side of things?

So we definitely can. I feel that revenue recognition is always something people are dealing with in this industry because of the various OTAs and locations. How your accounting works might vary, but you know, we do a very bottoms up approach. And so lots of times we do revenue forecasting, projections, and we're incorporating that. We're looking at when does the cash flow come in, where do you, should you expect it, how do you budget for that on an annual basis? So, you know, that's, that's more on the side of not so much of how do I make more revenue, but like when is it coming in and how do I use it? And so we help with, with that too. What we found is just revenue touches so many buckets. There's really lots of ways to help and lots of way to use that information. And so we really expand and kind of touch it all.

What did you do before this and how did revparty consulting come. Come around? You know, how did it, how did it perform?

Yeah, for sure. It's not the, not the smoothest story, I would say so. You know, way back in the day, as served time in the army, I got out, finished my degree, and then after that I went to economic consulting, which was for multimillion dollar court cases, people suing each other over oil, gas, ip. And so that really exposed me to kind of commercial strategy and pricing. I did oil and gas, I did processing chips, I did toilet O rings, I did water balloons. Tons of commercial experiments there. And then after that I kind of stayed in pricing. So then I went to Amazon and Whole Foods and helped with their complete repricing. And then I went to a VC backed startup in short term rentals and founded their revenue management program. And so that's really what opened up this whole vacation rental revenue management area of expertise. I think at the time, beyond price Labs, Wheelhouse weren't as popular, weren't as developed. And so a lot of this stuff we were completely making up and building in house also was a startup, right? So you wear lots of hats. So it wasn't just how can I project revenue better? It's can I use this to also project housekeeping schedules so we can save money and not burn as much cash. So yeah, that's really what got me started in vacation rentals. And after that I realized there was just a huge gap of knowledge at the time and lots of people, you know, could really benefit from this. Even if you see a 2% increase, you know, in revenue and you have a large portfolio, that's a lot of money, that takes a lot of time for people to do. And so like we've seen really good revenue improvement from this. So typically people, when they use a tool, they'll see about a 20% lift in revenue if they weren't doing anything before. All the clients we've worked with that we're using a dynamic pricing tool, they typically see at least a 25% increase in revenue after that. And so you really do see just monumental jumps as people go along their journey, having a blast.

Going to get it on the Bruce Lee podcast. Bruce Lee, like Bruce Lee because it's.

So hard and the tea is loose leaf Making up those rhymes. Don't write it, just do it loosely.