What’s the short-term rental industry without data? For property managers and owners that don’t track property management performance metrics, the future holds a lot of unaccomplished goals, a lack of progress, and flawed operations.
If you don’t know where to start, these analytics can seem intimidating or even irksome. That’s why we’ve gathered valuable tips from leaders in the industry to create a list of 15 property management performance metrics that we’re confident will drive your business to data-driven success!
What are property management performance metrics and why do you need to track them?
Property management performance metrics are measurable values that help you as a property manager or owner to:
- Track your performance and progress
- Make informed decisions
- Work towards business objectives
- Identify and understand trends
- Solve problems
From occupancy rates to referrals, it’s essential to track these metrics so that you can make decisions based on facts instead of feelings. You’ll be able to calculate the return on investment (ROI) of the actions that you take so that you can adjust your operations for maximum profit.
Best vacation property management performance metrics to track, by department
We’ve divided these 15 vacation property management performance metrics key performance indicators (KPIs) by department so that you can easily navigate them:
- Revenue Metrics
- Occupancy rate
- Average daily rate
- Average number of nights stayed
- Revenue per channel
- Value of transaction per channel
- Operations Metrics
- Homeowner churn rate
- Net operating income
- Percentage of bookings per channel
- Marketing Metrics
- Customer acquisition costs
- Website traffic
- Guest experience Metrics
- Guest messages sent per month/per channel
- Social media engagement
Occupancy rates (OR) are a key metric that can be used to adjust and compare prices. If your occupancy rates are too high in comparison to similar properties in the area, it might be an indicator that your prices are too low.
It’s important to keep in mind that your occupancy rate doesn’t take into account days that are intentionally blocked for repairs and other check-ups.
How to track it: To calculate your occupancy rate, divide the total number of nights booked by the total number of nights available and multiply the result by 100.
Average Daily Rate
The average daily rate (ADR) indicates what guests are paying for a specific period in your vacation rental property and is useful for identifying seasonal trends.
If numbers are too low, it may be a sign that your prices need to be adjusted. To increase your ADR, you can consider upselling or cross-selling additional services.
How to track it: To track your ADR, divide a unit’s total revenue generated by the number of nights it was rented.
Average Length of Stay
Also known as the Average Number of Nights Stayed, the ALOS is a metric that reveals the number of consecutive nights that guests book your property. Since the start of the pandemic, vacation rental statistics show that the overall ALOS for short-term rentals has increased due to remote work and staycations.
How to track it: Divide the total number of nights that a property was booked by the total number of reservations.
RevPAR (revenue per available room) is one of the most popular metrics in the hospitality industry for measuring performance. It uses your average daily rate and occupancy rate to calculate how much revenue your units are generating.
CEO of Lifty Life Connor Griffiths believes that many short-term rental managers and owners often make the mistake of tracking only their average daily rate or occupancy rate. According to him, “RevPAR provides a more holistic view on your performance and is critical to understanding your property, benchmarking against competitors, and analyzing weaknesses.”
How to track it: To calculate RevPAR, multiply your average daily rate by your occupancy rate.
Revenue per channel (including direct)
If you’re listing your properties on channels like Airbnb, Vrbo, and HomeAway and have your own direct booking website, it’s essential to track your rental revenue per channel.
All of these platforms require time and energy so by analyzing the revenue that they bring in through a vacation rental channel manager, you can make well-informed decisions and distribute your time more wisely. This metric is also helpful to understand year-over-year trends.
How to track it: View your earnings on both OTAs and vacation rental software to compare them.
Value of transaction per listing channel
Whereas revenue per channel indicates how much you’ve earned from a specific channel during a chosen time period, the value of transaction per listing channel lets you know how much revenue you’ve generated from one booking on a specific channel.
You can use this information to understand whether your rates are too high or too low depending on the competitive market.
How to track it: Divide the total revenue generated by a channel by the number of bookings received.
Homeowner churn rate
As a property manager, your homeowner churn rate lets you know how many clients you’re retaining versus how many you’re losing. It does this by measuring the number of homeowners that you’ve lost as clients by the total number of clients that you have.
Thibault Masson from Rental Scale-Up shares that “it costs so much money to find and acquire a homeowner that seeing them go is terrible. Making sure that a company is measuring how many homeowners are leaving is important, especially for large organizations.”
There are several reasons why your business might have a high churn rate. According to Masson, it may be because you’re disregarding property owners in a certain region or because competing property managers have stepped in.
Furthermore, if you’ve come across clients that are not on par with the kind of guest experience that you want to deliver, Masson recommends letting go of them and pursuing properties that are a better fit for your vacation rental business.
How to track it: Divide the total number of lost clients by the number of total clients and multiply the result by 100.
Net operating income
The net operating income (NOI) is the revenue that a property earns once the operating expenses have been deducted. It’s an important metric to examine your vacation rental profitability, which can be improved by reducing your operating costs and reviewing your business model.
How to track it: Subtract your operating expenses from your total revenue.
Percentage of bookings per channel (including direct booking)
Similar to the revenue per channel or value of transaction per listing, the percentage of bookings per channel can guide you towards issues that you may not have noticed before.
Have you spent less time maintaining a certain platform and now it’s underperforming? This metric is a clear sign to update your descriptions and photos to attract more clients and boost your percentage of bookings!
How to track it: Divide the number of bookings by the days in a specific period and multiply the result by 100.
Mark Simpson, Founder of Boostly, believes that the vacation rental industry lives and dies by the number of referrals a host gets from their guests. Referrals are essentially a method of word-of-mouth marketing in which customers recommend your business to others in their network.
Simpson rejoined his family business 10 years ago and one of the first things that he did was to create a referral program in which he emailed each guest at departure, asking them to share his business’ details with family and friends.
Whenever these referrals led to bookings, the guest would receive a present in the post. Simpson would track everything on a Google Sheet and apply the 80/20 rule each year to find out which 20% of his guests had referred the business, therefore generating 80% of his income. For Christmas, the 20% would always receive a special gift.
This method has a significant ROI and is the fast track to creating long-term ambassadors for your business.
How to track it: Organize a referral tracking spreadsheet to always stay on top of things.
Customer acquisition cost
The customer acquisition cost (CAC) does exactly that—it measures the cost of acquiring a new customer. These costs can be attributed to your marketing method, which typically ranges from content creation on social media to listing on a variety of channels.
Knowing the cost of acquiring a guest can help you improve your acquisition strategy to retain more clients.
How to track it: Divide your total revenue spent on marketing by the number of customers acquired.
You’ve spent time building a vacation rental website with direct booking strategies and now you’re left to wonder if your efforts are making an impact.
Your website traffic will let you know how many people are viewing your business within any given period. You can use this to track your performance and make improvements along the way.
How to track it: Through vacation rental software or tools like Google Analytics and SEMRush.
Guest messages sent per month/per channel
The number of messages that you send determines how much time you’re spending on each guest per channel and how much each message costs. This is key information for property managers and vacation rental owners who want to scale their businesses and grow their team.
How to track it: To optimize your messaging strategy, start automating emails and text messages.
Reviews generate trust and can be a deciding factor when it comes to booking accommodation. According to Connor Griffiths, “reviews are critical to the success of your property on OTAs such as Airbnb and Vrbo. They impact OTA SEO, revenue, occupancy, and nearly every other important metric.”
How to track it: Most OTAs and direct booking websites generate an overall rating based on reviews.
Social media engagement
Social media engagement is essentially a measurement of how people are interacting with your account through likes, comments, shares, clicks, and profile visits. It’s an extremely important number that will help you to optimize future posts and boost your performance over time.
How to track it: Most social media platforms will let you know your engagement rates. However, if you’d like to calculate it manually, just divide the total number of interactions received by the total number of followers and multiply the result by 100.
Before diving in headfirst and tracking all of these 15 vacation property management performance metrics and KPIs at once, start by picking a few from each category. Above all else, remember to take advantage of vacation rental software and other useful tools that will help you to scale your business and increase revenue.
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