How far do guests book in advance and what does this mean for property managers?
A booking window is the period of time between when a reservation is made by the guest and their check-in date.
Booking characteristics can 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 property manager’s revenue management strategy is understanding specific booking windows and strategically discounting or marking-up rates, optimising and pacing bookings to maximise revenue.
Let’s take a look at some of the trends we see in booking window.
Trends Over Time
Booking lead time across all markets worldwide has declined in recent years. In 2015, guests tended to book further in advance, booking 79 days before their check-in date on average. By 2018, this number had decreased by 50%, with the average booking lead time declining to 39 days.
Larger short-term rentals are typically booked further in advance: there is a direct correlation between the number of bedrooms in a property and the average booking lead time it experiences. In recent years, guests looking for a one-bedroom property booked 41 days in advance, and for every added bedroom, the booking window increased 8 days on average.
Urban vs. Leisure
In our last post, on guests’ length of stay in short-term rentals, we saw a stark contrast between the length of stay in urban and leisure destinations. We found that guests tend to stay approximately 3 nights in urban destinations and 8 nights in leisure destinations. We have further analysed the market differences by taking a look at the booking windows of 2 distinct markets in both Spain and the US.
There is a clear disparity between the booking characteristics in urban and leisure destinations.
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, booking an average of 54 days in advance. Conversely, guests staying in Seattle, Washington, often booked their property less than 2 weeks before their stay.
The importance of booking window and your vacation rental revenue management strategy
Whilst the methodology for calculating booking curves and tracking booking pace differs from hotels due to the binary nature of occupancy in our inventory, the principle is still relevant in the short-term rental sector. In understanding the pattern of booking frequency by property or segment, property managers can ensure that they capitalize on peak demand, and pace their bookings to target occupancy.
This pace will determine the appropriate pricing strategy in order to maximise revenue for a specific date. Prices may be kept artificially high, or relative to demand before it peaks. Rates generally decrease as that peak passes and the vacant date gets closer as property managers lower their rates in order to maximise occupancy. Property managers should work out specific pacing in order to aim for their target occupancy. Understanding the peak demand for your short-term rental, or when reservations are most commonly made in relation to your booking window, will allow you to make more informed pricing decisions.
For example, if your average booking window is 30 days, keep your rates higher before the 30 day booking window and ensure your rates are competitive during peak booking time. After your peak booking time, consider progressively discounting prices for vacant nights to maximise your chances of securing bookings and maintaining high RevPAR.
Other factors to consider
Maintenance and cleaning
We have seen from the data analysis on the ‘Average Booking Window Over Time’ that booking windows have halved over recent years. Shorter booking windows can have implications operationally – take the time to ensure that operational processes such as maintenance and cleaning for your inventory are efficient, so you are prepared to receive bookings at shorter notice. In the event of a first guest stay following a period of vacancy, it is essential to make sure that the property is properly inspected and cleaned, independent of the last check-out, so consider a system for flagging these instances. It would be a shame to have to turn down guests if the property is not up to scratch, and an even greater shame to receive negative reviews from disappointed guests that will impact your listing.
While personable check-ins are much preferred and beneficial, if frequent last minute bookings hinder this, at least keep in mind the efficiency and ease of the check-in process for the guest. Consider investing in keyless entry systems, remote welcome systems through apps or physical devices in the property and easy communication solutions. Be sure to follow up proactively with the guest following check-in to solve any issues too.
Transparent’s insights of guests booking-pattern analysis show that there are a variety of factors that affect booking windows, and audience behaviour is very distinct. The average booking window for your properties and in your market will help you understand your guests’ booking habits and how your revenue strategy should reflect this.