How does your property occupancy compare to your competitors?
Does it depend on location? Time of year? Is a couple of guests staying for a month better than a large party of guests staying only a couple of days?
The truth is that what is an acceptable level of occupancy for your property will vary based on a huge amount of factors. And what is true one season may no longer be applicable the following year.
However, there’s always been one way to judge how well you’re doing in any aspect of your business: analysing your competitors!
This article will explain why it’s important to investigate your competition occupancy, how to do it, and more importantly, how to use this information to improve your business!
What is vacation property occupancy?
Vacation property occupancy is simply a measure of how many potentially available dates are booked during a given period. If all 30 nights in September are booked by guests, congratulations, you’ve got a 100% occupancy rate!
That’s the simplest metric, anyway.
Most vacation rental properties are not available 365 days a year. Maybe you need to close the property for a couple of weeks for maintenance, or maybe you’re using the property yourself. Perhaps your contract prevents rentals on certain dates. In these cases, those dates shouldn’t count towards your occupancy measure because those dates were never available to guests in the first place. Including such dates in your analysis would lead to misleading info and could cause you to jump to incorrect conclusions about the quality of your property marketing or demand.
Right now we’re just going to focus on calendar occupancy. If you charge by the number of guests, you might only consider your property to be “full” if every bed is booked. However, for most vacation rental properties looking at the calendar occupancy in terms of empty nights vs occupied nights is enough to give you a decent idea of how you’re doing.
How do I check my property occupancy?
Checking your property occupancy is really simple, especially if you’re using a digital calendar. In fact, if you’re using Your.Rentals to manage your vacation rental calendar, you can easily see your property occupancy for an entire twelve month period with the Insights feature, so this is all figured out for you.
However if you need to calculate it manually it’s still really easy. First, decide on the period you want to look at. Since single bookings can often run to over a week, it’s probably best to look at a minimum of a month at a time to get meaningful data. Of course, you might also be interested in the occupancy of a whole season, or even a year or more.
Then, figure out how many available nights there are during this period. Remember to exclude nights that can’t be booked by guests. Then add up the number of occupied nights. Finally, simply divide the number of booked nights by the total number of potentially available nights during the period you’re interested in, and turn that into a percentage.
For example, if you want to look at the occupancy of next October, you’ve got a potential of 31 nights that could be booked. However, let’s say that three of those nights are unavailable because you’re planning on making some small repairs. So we’re left with a potential of 28 nights, of which 14 are already booked. That means that you’ve got an occupancy rate of 50% to look forward to.
How do I compare my property occupancy to my competitors?
But is a 50% occupancy rate actually good? That’s where comparison comes in. Maybe if the period you’re looking at is nine months away, you’d be really happy to know that half of your dates are already booked. But what if it’s next month? Should you be worried?
Well, as we’ve said before when it comes to setting your pricing, your best source of inspiration should be your direct competitors. Properties in a similar location, offering similar amenities, to a similar number of guests are your best benchmarks for how you should be performing.
So how do you actually check your competitors’ occupancy? One way is to go onto their website or OTA and try to book the property. That should give you a rough idea of how easy it is to find available nights, but it won’t tell you the whole story. If you aren’t able to book a date you won’t know if it’s because a guest has beaten you to the punch or if the property was never actually available to begin with. And if you’re in a busy location, you’ll have to do this for every property in your area.
The best way to easily find out your area occupancy is to use an Analytics tool like the one available in Your.Rentals. This uses data from AirDNA to enable you to view the average occupancy rate of similar property listings in your area, across a variety of websites. You can then directly compare this to your own occupancy, and see how you’re performing in relation to those around you.
How do I use occupancy comparison to improve my business?
So what do you do with this information? What does your competitors’ occupancy actually tell you, and how can you use their occupancy rates to improve your business?
For one thing it helps you set your pricing. If your neighbours are fully booked for the next few months but you’re not, perhaps you need to consider if your property is priced competitively. On the other hand, if you’re seeing bookings flowing in already but your competitors are still waiting by the phone, maybe you’re undercharging.
It also lets you know where you might want to focus your marketing spend. If you’re seeing disappointing numbers for a particular period, you might want to consider running some promotions or campaigns, whereas if you’re nearly fully booked anyway you can probably ease off on your Facebook Ads cost.
You can also use this data to get a more holistic overview of your market. You might think that your April occupancy rate of 60% was disappointing, but by comparing it to other properties you might see that actually, April represented a temporary dip in demand across the market as a whole.
Assessing market demand will also help you to make plans for the future. If you’re seeing occupancy rates decrease over time, that could mean that either the area or properties are less attractive than they used to be, or that your market is becoming saturated. That might affect where you choose to invest as you grow your property portfolio.
Since data is only good if it’s actionable, Your.Rentals also helps you identify Opportunities to improve your business. That means that not only can you see the occupancy rates of properties around you, you’ll also be able to take specific actions to improve your listing performance and therefore booking conversion. Whether it’s adding more photos, setting some seasonal pricing or switching to Instant Booking (our number one tip for increasing bookings!), Your.Rentals can show you how to beat your competition using real data.
Understanding your occupancy is vital to measuring your performance as a vacation rental manager. But it’s also important to know how your property compares to similar properties in your area so that you can identify actionable opportunities to improve your booking conversion and grow your business. Measure, compare and take action to improve your occupancy on a regular basis and you can stay one step ahead of your competition!