On New Year’s Eve, merrymakers around the world will be dressed to the nines, yearning to celebrate the start of a new decade. The excitement of the ball drop certainly brings an influx of tourism—but it also brings an influx of risk. While partygoers get ready to ring in the new year, short-term rental operators are prepping for one of the largest operational hurdles of the year.
Ringing in the revenue
While you might be hesitant to host on New Year’s Eve, it can be incredibly lucrative. For many short-term rental operators caught in the dregs of a dreary slow season, December 31 comes as a saviour.
As short-term rental listings increase in number and popularity, so does the opportunity for significant revenue growth. Every night, Airbnb hosts more than 2 million guests, a number that nearly doubles come New Year’s Eve. With heightened demand for vacation rentals, operators are increasing their rates every year.
Guesty, a property management software company, reported that the average daily rate (ADR) for 2018 increased by almost 40% on New Year’s Eve. With this golden opportunity, your team can toast to the highest-grossing day of the calendar year.
Some cities, like Las Vegas, see their ADRs increase by more than 100%, according to Transparent, a short-term rental data intelligence company. Whether it’s New Year’s Eve or another major holiday, learn about the popular booking dates in your city before setting your pricing.
Wheelhouse, an intelligent pricing software, also weighed in with stats from almost 200 different markets across North America. Based on various pricing factors and booking trends, they found that the highest-demand markets can be priced double or even triple the average.
While it’s important to note the high demand, not all cities are go-to destinations for New Year’s Eve. In lower-demand markets, Wheelhouse suggests that rates are likely to stay closer to the average. But it’s quite uncommon to see them drop anywhere below the average—after all, it is New Year’s Eve.
Assess the demand in your region and manage your expectations accordingly. Of course, Las Vegas is a holiday hotspot, but North Las Vegas has been ranked by CNBC as the worst in the U.S. for New Year’s Eve. Do a little research before marking up your property. If your property is located in a dead zone, make sure your rates are competitive.
Facing the risks
While the holiday spike is great for business, it brings increased risk to operators and their communities. Whether you’re a small-time host or a seasoned veteran, the sudden flood of guests is difficult to manage, making you more vulnerable to negligence and targeted attacks.
The first step is learning about the risks you face as a hospitality provider. In other words, figure out what types of guests threaten your business over the holidays. It’s always easier to manage the risks when you understand them.
The reality is this: more demand = more threats. In fact, according to NoiseAware, a noise monitoring system for the short-term rental industry, New Year’s Eve sees more noise alerts than any other day of the year. On average, there are 60 times more alerts registered to NoiseAware’s system on New Year’s Eve in comparison to an average weeknight, and close to 40 times more when compared to a typical weekend night.
Stats like these make New Year’s Eve a daunting time in the short-term rental business, especially when you take into account the potential for lost revenue from troublesome year-end guests. If you accept bad guests you’re exposing your company to threats like property damage and fraud, but if you decline the bookings, you lose out on revenue that goes straight to your competitors. How do you find the balance?
The best way is to learn how to quickly spot bad guests through thoughtful safety and security procedures. This will allow you to maximize occupancy while reducing the risk. Never compromise on safety for the sake of a big payout.
To stay protected, start by profiling your ideal guest. Whether that’s a family on vacation or a pair of business executives, you need to outline your target demographic. That way, you can develop a security procedure catered to them specifically.
Securing your dream guests
Trusting your guests gives you the ultimate peace of mind over the holidays, so focus on securing the good ones. To do this, tailor your operations and marketing strategy around your dream guests.
Market to the guests you want
Let’s go back to the beginning. When setting up your online property listing, do so with your target guest in mind. Create a professional property listing that highlights the best features of your space, paying close attention to the amenities that might attract your ideal guest. Be completely transparent with what you’re offering and where you’re located to ensure the guest knows exactly what they’ve booked. To get you and the guest on the same page, be prompt and thorough with your communication.
Determine your risk tolerance
Whether this follows a zero-tolerance policy in terms of parties and gatherings or if you’re more lenient and let the occasional pre-drink sneak by, define your comfort zone. Then, inform and educate your team to make sure no one deviates from the standard. Relaxing on your policies makes you more vulnerable to harmful risks.
Set the right price
Assess the competition in your market and set your pricing accordingly. If you have a large property portfolio, consider investing in a tool to help you manage your pricing. You’ll be able to see trends in ADR and occupancy, allowing you to compare your performance against the market or your competitors.
You can also determine more competitive rates by examining past bookings. If last year you sold out too quickly, this year, you may have some leeway to play with your pricing. Try increasing your rates and hold out for those jaw-dropping reservations.
Why settle for a one-night booking when you can get one that spans the whole week? To encourage longer stays, pay extra attention to the dates before and after New Year’s Eve. Make sure they’re affordable for someone looking to book longer. Consider setting up promotions for multiple-day stays or even paid ads if you have the budget.
Screen your guests
The luxury of guest screening is the ability to remove booking restrictions from your booking channels. With confidence in your procedures, you can accept a wider variety of bookings with minimal risk. This way, you can open your properties up to all guests under all circumstances, even one-night stays on New Year’s Eve.
Increase visibility on your booking channels and rely on guest screening to filter out high-risk reservations. Develop a process that involves ID collection, a rental agreement and credit card validation. To streamline this process and guarantee your property stays safe throughout the holidays, use Autohost.
By using Autohost, property managers can secure top-paying guests, while discouraging troublemakers. In fact, one of Autohost’s first clients found that single-night New Year's Eve reservations, when compared to the rest of December’s bookings, were 30% more likely to get cancelled after strict screening. This can reopen the calendar for more legitimate guests.
The operators were able to screen on their terms, enforcing house rules and guest verifications. They would decline guests who raised too many red flags and after reiterating that "this is not a party house", other guests would volunteer to cancel. As a result, the company operated at full occupancy, charging high rates, while only hosting the best guests.
Getting peace of mind
The holidays should be spent relaxing with family and friends, so don’t waste time and energy worrying about your properties. Put yourself in the driver’s seat this year.
Make sure you have control over your guest screening. Flag riskier guests, then decide whether or not to confirm the reservation. Cancel every reservation that seems suspicious or do in-person check-ins for higher-risk guests. No matter what, cover your bases by preparing for worst-case scenarios. Even the best operators in the business have a backup plan.
Before hosting anyone, install noise sensors in your suite. That way, if there’s a spike in volume from a pre-drink verging on a party, you will be notified. Even with dependable guest screening, it’s important to have your team on high-alert during popular events and holidays.
After the guest has settled in, reach out to them via email or SMS. This can be an automated message set up through your property management system or sent directly from a member of your team. By checking in with the guest, you can get the reassurance you need. For the trustworthy guests, send them a message to make sure they’re enjoying their stay. If it’s a guest you’re unsure of, reiterate the house rules so they know you’re not playing around.
Don’t spend New Year’s Day cleaning up a mess from the night before. Start 2020 off right and safeguard your business. Your team, your neighbours and your wallet will thank you.
Happy holidays! ✨
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