Exposure to New Guests

By Michelle Marquis, Chief Revenue Officer at Lexicon Travel Technologies 

To be sure, growth isn’t the goal of every vacation rental business. If you’re a small shop with a handful of properties and a steady stream of profitable bookings, then you probably can’t grow much or don’t really need to. That’s fine. No one ever said you have to build an empire. 

Even if your goal is to stay level, though, you’re going to need new customers at some point. Regular guests move away, pass away, travel less, have kids, or vacation someplace else. Word of mouth isn’t enough, which is why you advertise and promote. 

But it’s easy to become insular in your thinking. If guests have historically come from the nearest metro area, then sure, you could focus your efforts there. But why would you when you can cast the net so much wider? 

As we’ve pointed out in previous articles, OTAs are a great way to bring fresh eyes to your area, your style of property, and your specific brand. You don’t have to target them because they will self-target. You don’t have to pay for the exposure, and you have almost complete control over your message. If your listings are of high quality and your pricing is competitive, you WILL get new guests, sometimes from faraway lands. You need to be ready. 

The True Cost of a New Guest 

It costs more to acquire a new guest than it does to keep an existing one. If you have a steady stream of regulars, taking good care of them is much easier than trying to replace that dependable revenue. When it has to be done, it hurts. No one likes spending the time or money needed to bring new guests to your doorstep. At times it can feel like you’re spending more than you’re making. 

But look at it this way: A generally acceptable acquisition cost of a new guest is 20%, which is to say that every $1 earned from a new guest costs you $.20. Said another way, that’s an ROI of 5:1, which is pretty darn good. An average return of 20% in the stock market would be outstanding, right?  

Well, it so happens that OTAs charge in the vicinity of 20% for any business they send your way, but not until the guest books. Since the listing is free, that means you’re paying the same acquisition cost as usual for a new guest but without risk. And if you have a dynamic pricing strategy that maximizes revenue, that acquisition cost could get even lower. 

The point is that recruiting new guests doesn’t have to be expensive or time-consuming. But it does require some concessions. 

• Don’t expect direct bookings, especially with foreign guests. Chances are, your current booking engine doesn’t have a multi-currency feature, nor does your website likely have a variety of accurate translations. As noted earlier, OTAs are set up to handle a variety of visitors. Thus, they are adding value that you aren’t equipped to provide yourself. 
  
  
• Don’t expect all bookings to look the same. As guest preferences have shifted from looking for just “a hotel” to looking for “a nice place to stay,” you should expect the average length of stay to decrease somewhat. Minimum-stay requirements exceeding two or three days could dissuade Millennial travelers from booking with you. Obviously, there are cleaning and other costs to consider but if your conversion rate is low (many lookers, few buyers), it’s something to look at. 
  
  
• Abandon your notions of the “ideal” guest. New guests can come in all shapes, sizes, colors, identities, and cultural values. Not everyone is comfortable with that. But if you’re looking to grow, you can’t afford a narrow view of what new guests should act or look like. Keep an open mind. Your new guests might even be of higher quality than you’re used to, and that’s a good thing, right? 

The World Is Your Oyster 

Putting aside the sheer volume of visitors to sites like Booking.com and Expedia, let’s take a moment to look at the mindset of a new guest who’s completely unfamiliar with you, your brand, and maybe even your part of the world. 

Booking.com doesn’t have as high a cachet in the US that it enjoys in the rest of the world, though the US is its second-highest traffic source. The company claims, “The Booking.com website and mobile apps are available in over 40 languages, offer 29,152,986 total reported listings, and cover 154,106 destinations in 227 countries and territories worldwide … Every day, more than 1,550,000 room nights are reserved on our platform.” 

The OTAs are smart. They don’t share information about their algorithms or analytics but it’s safe to assume that everything they do is designed to maximize revenue. Knowing that, the fact that most OTA platforms now support vacation rentals as a property type should get you pretty jazzed. That means an awful lot of computing power and data analysis is dedicated to pushing VR. OTAs aren’t just for hotels and flights anymore. 

With nearly 30 million listings, it might seem impossible to stand out enough to earn anyone’s favor. But bear in mind that many listings don’t pass the sniff test. A crisp, professional listing gives you a big leg up on the competition and, importantly, reassures customers that you’re legit. The further they must travel to you, the higher the stakes for them. No one visiting the US from Denmark is going to book a place that sounds sketchy. They’re going to rely on your description and social proof like reviews, particularly reviews from other foreigners. 

New Guests: Not Necessarily Like the Old Guests 

If you’ve never traveled abroad, you should — especially if you view guests from outside the US as your biggest growth opportunity. Hospitality practices can vary widely from one country to another, particularly when it comes to East vs. West. 

This article about “hot” vs. “cold” cultures, aimed specifically at hospitality, is an excellent primer on the topic. Our friends at eHotelier made similar cultural comparisons. While OTAs will continue to drive new domestic business your way, too, they have simplified foreign travel to such an extent that, travel time and customs notwithstanding, there is little difference anymore between booking a domestic or foreign trip. That means whatever hurdles once existed between your rental company and the global travel marketplace are almost nonexistent. 

Take some time to learn about the different cultural expectations of foreign visitors, even from Western countries. Not only will it help you communicate more clearly and thoroughly, but it could help you see potential issues from a new prospective. 

Summary 

For property managers who want to maintain or grow existing revenues, the staggering reach and ease of OTA sites has made it easier than ever to acquire new or “replacement” guests, many of whom might hail from a foreign country. If you embrace this fact, you stand to grow both your revenue and your reputation, all without spending more than you normally would to bring people to your brand. This is a huge opportunity for VR. 

Big-name hotel and resort brands have a presence all over the world, including the countries and regions from where your new guests might come. They, like younger domestic travelers, are interested in a novel and personalized experience.  

If you can project the same (or more!) level of professionalism, reputation, amenities, and comfort as a Hilton or Wyndham, along with some of those personal touches you’ve cultivated over the years, then you are setting the stage for the precise experience new guests are looking for. And if you go the extra mile for them — respecting not only cultural and value differences but the challenge of traveling far from home — then you will earn the kind of reviews that signal openness and hospitality. 

But not all new business has to come from abroad. OTAs have democratized the booking process to such a degree that new customers are just as likely to hail from the next town over. You’ll never be all things to all people (and it’s foolish to even try) but now’s the time to start thinking of your VR brand as a global business. Your next guest already is.