We receive many requests each day from our 73 domains and over 100 ads. We also enjoy a substantial amount of repeat business.
Due to limited availability, only about 1 in 15 requests can be filled. To better serve our guests we are interested in building a list of property owners and resorts that are willing to rent unused last minute accommodations at a discount.
At this point, our requirements are that you have an on-line calendar or the ability to enter requested dates into your calendar to check availability. We will only send you guests who are willing to pay your asking price so all the referrals will be qualified. All we ask is a standard referral fee in the event you do book the accommodation. All of our reservations less than 40 days in advance are non-refundable. You may choose to offer refundable or non-refundable options.
Many years ago, I majored in Business School at the University of Washington with a minor in marketing and finance. All the schooling I received as well as my experience has taught me that it is always better to make a small profit than none at all.
When choosing what actual variable costs renting out a room, the following are valid:
1. Actual cost of maid service, utilities.
2. Physical depreciation due to wear and tear of the building, interior as well as furniture and linens.
3. In the event that you don't have full time paid staff, then the cost of your time making the reservation and checking the guest in and out.
Fixed costs, costs that you pay whether you rent the room or not, are not valid in the analysis. Property taxes, interest, insurance, exterior maintenance, full time salaries, etc.
The biggest problem with renting at discounted prices is that if you advertise those prices anywhere, some of your guests will be unwilling to pay the higher prices. Even with Hotwire, which does the same thing, guest can find the hotels "Hotwire" price online. We don't post your discounted rates anywhere.
The key to maximizing profits is to rent at full market value to as many guests as possible while renting at lower prices, still making a profit, to those who won't pay the higher prices.
I have put together a profit and loss analysis that analyses your potential gains. you can see it below and access a working version here.
My suggestion is to have a 2 or three tiered rate system.
1. Regular rates for that season.
2. Rates for under 60 days when full occupancy isn't expected. (Example 25% discount)
3. Rates for under 30 days when full occupancy isn't expected. (Example 35-50% discount)
Please read on before you think you can't profit from this type of structure.
|Variable and Fixed costs||Units||30|
|1. Fixed cost of operation||$ 950,000||$2,603||$87|
|2. Variable cost of operation||$25|
|A||Typical average revenue per unit||$150|
|B||Annual income at 80% occupancy||$ 1,314,000|
|C||Fixed cost of operations||$ 950,000|
|D||Variable cost of operations at 80% occupancy||$ 273,750|
|E||Total cost of operations||$ 1,223,750|
|G||Additional 5% occupancy ($80/night net of fees)||$ 43,800|
|H||Additional costs||$ 13,688|
|I||Additional net profit||$ 30,113|
|J||Increase in profit||33%|
|1. Fixed costs are costs that would be paid even if no guests stayed.|
|2. Actual additional costs incurred when a guest stays (4 day stay, no maid service)|
|B = A times 365 days times 30 times 80%|
|D = #2 times 365 days times 30 units|
|E = C plus D|
|F- B minus E|
|G = $80 times 365 times 30 units times 5%|
|H = $25 times 365 times 30 units times 5%|
|I = G minus H|
|J = I divided by F|
|Try putting in your own numbers (spreadsheet here)|
|Number of units||30|
|Annual cost of operation||950,000|
|Daily additional costs when guest stays||$25|
|Typical average revenue per unit||$150|
|Experienced possible increase in occupancy||5%|
|Discounted last minute rental price||$80|
|The Benefit to receiving leads from us.|
|I'm confident that you will increase your profit by renting otherwise vacant rooms at substantial discounts. The benefit to receiving leads from us rather than offering discounts directly is that none of your regular guests will know what discounted prices you are offering for last minute vacancies.|
|When we can't fill a request, we will check availability calendars for those on our referral list. When finding availability, we will send you and the guest information about the other. The guest will receive your contact information along with your rates and you will receive the guests contact information.|
|Payment and Our policy|
|Since we are not booking the room for the guest, we are satisfied with a reasonable referral fee. We can receive payment by check, PAYPAL or Credit card. No contract necessary. Non-payment will result in no future referrals. If your policy requires the use of a travel agent, we can book your room through our travel service for a standard commission.|