Vacation rental News
8 Property Management KPIs That Will Help Your Business Excel
There’s nothing more discouraging than giving your all to a business that won’t grow or improve no matter what you do. Fortunately, property management KPIs provide a straightforward solution to identifying issues within your short-term rental company and solving them strategically.
In this article, we’ll go over what property management KPIs are, why they’re important, and which 8 of them can help you to smash your goals. The best part is that you’re not alone—we’ve also included practical tools that can help you to track specific KPIs in an instant!
What are property management KPIs?
Property management KPIs are key performance indicators that point out inefficiencies or problems within your company. Similar to vacation rental metrics, these performance measurements can help you evaluate your operations and overcome challenges.
When making decisions or changes, property management KPIs are fundamental to making the right choices. Without them, you’d likely make empty and uninformed assumptions that may even be detrimental to your property management business.
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Why are property management KPIs important?
A scenario that happens far too often in the hospitality industry is one where property managers dedicate a chunk of time to set clear goals and priorities for their vacation rental business without understanding which property management KPIs they need to track.
As time passes, despite their hard work and effort throughout several months, they find it increasingly difficult to establish whether their actions have been successful or not and wonder why they can’t seem to achieve vacation rental profitability.
That’s where property management KPIs come into play. These metrics allow you to:
- Track your performance and progress
- Hold yourself accountable
- Access real-time data when making decisions
- Analyze patterns that can ultimately affect your business
But, wait—ever heard of a KPI overload? While we can’t stress enough how crucial property management KPIs are, it’s also important to mention that you don’t need to track every metric that exists. Not only would that be extremely time-consuming and overwhelming, but it’s also likely that you’d lose sight of the performance metrics that actually matter.
8 Property management KPIs to track for achieving success
Here are 8 property management KPIs that are worth tracking if you want to increase your profitability and scale your business.
Occupancy rates point out possible trends throughout the year and can also be used to compare your business to other properties in the rental market.
If one of your property’s occupancy rates is significantly lower than similar rentals in the area, it may be a sign that you need to adjust your rent price or up your online marketing strategy. On the other hand, if your occupancy rate is suspiciously high, you may be selling yourself short.
Vacation rental software like Avantio can generate your occupancy rates per accommodation, year, and month. The more data you have, the easier it will be to notice trends and make changes before it’s too late.
How to calculate it: Divide the number of days that your property has been rented by the total number of days that it’s available.
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Sales profit margin per accommodation and booking
This KPI indicates how profitable a rental property is by analyzing the revenue that it generates minus its total expenses.
Without maintaining a healthy profit margin, it’s impossible to grow your business or understand when changes need to be made. If your results are nearing negative numbers, it’s time to increase your bookings and cut down on operating expenses.
To do so, you can:
- Use dynamic pricing
- Upsell additional services such as yoga classes, grocery deliveries, and local cooking classes
- Invest in cost-effective smart technology
You can also set up routine maintenance checks to avoid expensive repairs down the line.
How to calculate it: Subtract your total expenses by the revenue generated.
Number of bookings
While this may be one of the most basic KPIs out there, there are several reasons why it’s helpful to know exactly how many bookings you receive per month, year, country, and portal. Here’s why:
- You want to re-distribute your attention to focus more on the properties that are more profitable
- You’re deciding whether to drop or add a specific property to your portfolio
- You want to increase your marketing efforts and direct booking strategies to drive more bookings in underperforming properties
- You want to compare trends over months or years to get a better understanding of your current situation
This KPI should always be on your radar, and even more so when it’s so simple to track with vacation rental software.
How to calculate it: Most OTAs and vacation rental software tools automatically calculate the number of bookings you have over any given period.
Renewal of Revenue (ROR)
After going above and beyond to enhance your guest experience and provide the best customer service in town, it’s logical to keep an eye on your renewal of revenue (ROR) to find out how many repeat guests you receive on average and what your retention rate is.
Your renewal of revenue indicates which customers have booked with you for a second time and how much revenue they have generated. If your renewal of revenue is too low, then it may be time to dedicate more energy to building a relationship with renters through:
- Personalized welcome letters or baskets
- Consistent communication (which can be facilitated through automated text messages and emails)
- Exclusive packages and deals
Reviews are a great way to receive constructive feedback from visitors and responding to them can make your clients feel heard. By improving flaws and staying in contact with past guests, you may be able to significantly increase your renewal of revenue.
How to calculate it: Divide your total number of renewed clients by the number of clients who were available or up for renewal. Multiply the result by 100.
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Property Acquisition Cost
This valuable measurement lets you know if your efforts are leading to results and also indicates whether you can reduce your acquisition costs for more profitability. To reduce your property acquisition cost, you can rethink your marketing strategy and optimize it in a way that improves your business.
Let’s say you’re spending multiple hours per week contacting property owners from all over the country and meeting up with them in person. While you may choose to do this task manually, this can become extremely inefficient if you’re juggling multiple responsibilities while speaking to potential clients.
With message automation and email templates, you can cut the time spent communicating with clients in half. Keep in mind that this doesn’t mean that you need to have a robotic or distant communication strategy. Instead, you can personalize your templates, be more attentive without increasing your work hours, and impress potential clients with your professionalism.
How to calculate it: Divide the total amount of money spent on acquiring new properties by the number of properties acquired.
Cost of unit turnover
The time between one guest’s check-out and another guest’s check-in is known as the unit or tenant turnover, which is typically crunch time for cleaning, laundry, and maintenance.
Being aware of the cost of unit turnover is essential for ensuring your business’s profitability as the costs eventually add up, especially if you have a high turnover rate. To reduce the cost of unit turnover, the best thing you can do is to increase your average length of stay. Here are a few ways to do this:
- Offering discounts for extended stays
- Creating a pleasant workspace in the property for remote workers
- Make the rental feel like home
The longer guests stay in your rental, the lower your vacancy rate will be and the less wear and tear your property will experience.
How to calculate it: Add cleaning, laundry, and maintenance fees to calculate your total unit turnover cost.
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How long does it take for your property to get booked? Compare your average days-to-lease to the market average to find out whether you need to boost your marketing efforts, be present in more online travel agencies, or enhance the process of securing bookings.
Technology plays a big part in your average days-to-lease. If you’re still using a traditional booking or check-in process, it’s likely that people will be less inclined to seal the deal. On the other hand, if you simplify these procedures and allow travelers to do everything from the comfort of their own home, your rental will become far more appealing.
How to calculate it: Take a given period and add the days between bookings. Then divide them by the number of bookings over that time.
Repair and maintenance fees
Repair and maintenance costs can be a serious cash drain for property owners and managers. This is a KPI that needs to be strongly considered as these fees can become unpredictable and costly without the right preparation.
Having a high volume of guests can take a serious toll on furnishings and appliances that may be intended for less frequent usage. While this is a compelling reason to invest in high-quality equipment that can forego more rigorous usage, keeping track of these property management fees can help you budget for future expenses.
It can be difficult to prepare for when a piece of equipment (like a boiler) malfunctions or breaks, but it can be accounted for financially so that the impact is not as severe. Regular inspections and maintenance are crucial in being able to delegate resources and funds appropriately and to provide a consistent and safe experience for your guests.
How to calculate it: Keep an organized spreadsheet of your repair and maintenance fees and add them.
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Tools to track property management KPIs
Now that you know what to look out for, here are 3 of the top tools that can be used for measuring property management KPIs efficiently.
Looking for an all-in-one vacation rental software that will track the right KPIs that you need for a prosperous business? Avantio is a leader in the industry that provides you with access to its VRMS, which also happens to track KPIs like occupancy rates and sales by user.
A big plus is that as property management software, Avantio also includes a vacation rental channel manager for those looking to increase their exposure on channels like Airbnb, Booking.com, and Expedia.
With Avantio, you can:
- Personalize conditions per channel and property
- Access a booking and occupation statistics dashboard
- View customizable management reports for growth opportunities, profitability, and more
Want to grow your property management business with a data-driven approach?
Use Avantio to track your property management KPIs and ensure growth.
KeyData is a data and analytics source that has made its way in the hospitality industry—and for good reason!
The platform compiles key data and vacation rental statistics in one place so that you can easily generate reports. You can compare your performance to local and regional competitors through a real-time dashboard as well as look back at your property management company’s historical performance data.
If you’ve heard of dynamic pricing, then you’ve probably heard of PriceLabs. Aside from helping property managers increase their income with dynamic solutions, Price Labs also analyzes your booking patterns and provides actionable market insights.
There are two critical actions that you can take to increase your KPI tracking efficiency: avoid vanity metrics with little value and choose a suitable software or tool to work with. Once you’ve achieved these steps, you’ll be on the way to a goal-oriented property management business in no time!