Understanding your booking window in Vacation Rentals
Vacation rental booking window (or booking lead time) is the period of time between when a reservation is made by the guest and their check-in date.
Understanding your booking window in the context of your market, a set of properties or a particular platform allows you to optimize your pricing and revenue management strategy effectively. However, many things influence booking lead time, and that’s before we talk about the impact of COVID-19! Read on to learn more…
How far do guests book in advance?
Booking characteristics will vary across markets, property types, channels and time. As a result, booking window can look very different from case to case. A vital part of a vacation rental property manager’s revenue management strategy is understanding the specific nuances of your booking window in order to strategically optimise rates and pacing to maximise revenue.
Let’s take a look at some of the trends we see in booking window.
Booking Window Trends Over Time
First, we consider the historical trend in vacation rental booking window.First, we consider the historical trend in vacation rental booking window.
This graph shows the change in median number of days a reservation was made before the check-in date between 2015-2018.
Between 2015 and 2018, booking lead time has consistently decreased. In fact, the number of days between a vacation rental booking and check in worldwide has dropped 50% from 79 to 39 days. Despite this decline vacation rentals are still booked much further in advance than hotels.
How do the property & market impact booking window?
Before we get into the market and demand swings, the property itself will impact its booking window.
Vacation Rental type & size
|Vacation Rental Type
Both the property type and the bedroom count with affect how far in advance a property is booked. In 2019, guests looking for a one-bedroom property booked 34 days in advance, and for every added bedroom, the booking window increased 12 days on average. Typically, larger parties looking for larger, more leisure-prone accommodation book earlier (think beach villa). Indeed, the type of market that your short term rental is situated in will also play a role.
Urban vs. leisure Vacation Rentals
In a previous analysis, on guests’ length of stay in short-term rentals, we saw a stark contrast between urban (3 nights) and leisure (8 nights) destinations.
Here also there is a clear disparity between the booking characteristics of urban and leisure destinations. Urban guests tend to book 37% closer to check in than their coastal counterparts.
Since 2015, guests have booked their trip to Marbella almost 3 months before check-in date, whilst guests have taken a more last minute approach in Madrid, booking around 25 days in advance.
This trend continues across the Atlantic. In Kissimmee, Florida, Disney lovers were eager to book their vacation rental early on, 54 days in advance on average. Conversely, guests staying in Seattle, Washington, often booked their property less than 2 weeks before their stay.
Impact of COVID-19 on Current Booking Window
We can see that as booking confidence depressed through 2020, so did booking lead time, which was down as much at 38% on 2019. The trend continued through the early part of 2021, but has been normalising to 2019 level towards the end of the first quarter.
The importance of booking window & pacing on vacation rental revenue management strategy
Across the world, prices vary hugely as a check in approaches, as demand and the urgency for occupancy fluctuate. This makes booking window an important metric in revenue management.
In short, by understanding booking window by property or segment, property managers can ensure that they capitalize on peak demand; adjusting price to pace bookings to a target occupancy or revenue.
Pacing curves illustrate the full booking or occupancy evolution around our peak, average booking time. The ability to visualize how segment occupancy is accumulating towards check in allows you to continually optimize rates and strategy according to targets and real demand.
Depending on pacing, prices may attuned to demand or be kept artificially high before peak average booking window. Rates generally decrease as that peak passes and the vacant date gets closer, as property managers seek to maximise occupancy.
Understanding your booking window – the more specifically the better – allows property managers to project pacing targets and maximise revenue.
Data insights such as pacing are available in our Destination Insight dashboard, read more about the benefits here:
What does this mean in practice?
For example, if your average booking window is 30 days, keep your rates higher before the 30 day booking window but ensure that your rates are competitive through peak booking time. After your peak booking time, consider progressively discounting prices for vacant nights to maximise your chances of securing occupancy and maintaining high RevPAR. This pillar will serve you well, and keeping eyes on pacing curves will equip you to make proactive alterations according to real performance.
Booking window also varies with different distribution channels. For example, in 2019 Booking.com reservations were made 52 days in advance on average, while HomeAway guests typically booked 72 days ahead. Therefore, pricing should be specific to your booking channel also.
Shrinking booking windows also have operational impacts. Your cleaning, maintenance and check in procedures should all be adaptable to more last minute bookings. This will enable you to maximise occupancy and RevPAR more readily.
Our analysis shows that there are a variety of factors that affect booking windows, and property segment booking lead time is very distinct. Understanding your guests’ booking habits will position you to implement the most effective strategy. This can be helpful for property managers, destinations and more.