Mr. Kall

Reservations / Online Pricing / Booking Engines

Common Challenges with Booking Online Hotel Condo Units

By Rob Kall, President, Bookt LLC

The lodging industry is always evolving and many new concepts have emerged to meet new market demands. In the last ten years the model of the Condo Hotel has gained worldwide popularity, especially during the last real estate boom. Condo hotels are typically categorized as a property where condo ownership and traditional hotel amenities are combined. There is also the older, more traditional condo rental community, where an onsite or offsite rental company manages a large number of units and rents them for their owners. This article tries to pin point some of the challenges and the best practices related to the booking of rental units owned by a 3rd party online.

What’s the Same?

Regardless what type of lodging you are trying to sell online, some golden rules apply: Always make sure your website’s home page has an emotional reason to visit your destination, e.g. a beautiful and engaging photo slideshow of your property and the surroundings. Equally important, make sure you have an easy call to action above the fold (the part of the website you see without scrolling), such as a simple quick search. Make sure your booking engine is fully integrated into your site. It shouldn’t rely on “scary” popups, complicated framing or has any other quirks that would make an online booker’s experience more complicated than it would be on one of the common OTA sites like Orbitz or Expedia. When evaluating your site, pay attention to things like bounce rate (how many people leave your site after seeing just one page), total monthly visitors and online conversion.

Generic vs. Unit Specific Search & Booking

When renting condo units, many times, you are not renting your hotel’s own units but someone else’s. In the United States we often refer to this as vacation rentals; in Europe terms like Holiday Apartments or Holiday Lets are common. Besides the fact that the variability of your inventory tends to be much greater (as opposed to a hotel, which most of the time only classifies a handful of room categories), you also have to account for the fact that these units are actually owned by a large and diverse group of condo owners. They are really the people who are renting out the unit and you are just collecting the rent on their behalf, while being entitled to a commission. This arrangement has significant accounting implications. Those are however largely outside the scope of this article, which will remain focused on the online booking aspects.

As mentioned above, Condo inventory tends to be more diverse then what hotels usually have. So how should you manage that online? There are two options: Either you go the hotel route, group similar units together (by attributes like number of bedrooms and view) and display a generic unit of each category on your site. Or, the alternative is to list each and every individual unit, its rates, prices and availability. So which works best? As always, the answer is “that depends”. If you deal with a recently built complex, with a rental program that requires certain minimum standards in terms of furnishing and equipment, and the guest can reasonably expect to have a very similar experience if he rents unit 302 or 304, then by all means go the generic route. It’s simpler to manage, most booking engines will support it better and it’s easier to distribute the inventory to additional channels like OTAs and the GDS.

On the other hand, if you deal with an older building, with many units renovated at different times, a wide variety of furnishings etc, do list each unit. Yes - you do run the risk that the website visitor may be slightly confused with all the similar offerings, so make sure to make each unit unique. Add at least 10 photos to each unit and list all amenities that sets the unit apart. Another fact that tends to strongly increase online conversion is to post user reviews for each unit on your site (a site like flipkey.com is specially designed to help you collect these reviews). Posting guest reviews also has the benefit that you can share negative feedback on a unit with the owner and hopefully prompt an upgrade of outdated furnishings etc.

The Owner Factor

It’s also very important to realize that one group of people will carefully review your website more than almost anyone else: the unit owners. If your site is not up to date, has incorrect information or is just plain ugly and old looking, expect calls and complaints. But there is also another concern: Fairness. Whose listing comes up first in a search result for 2 bedroom units? You may not have given it much thought, but I bet your owners have. In my experience, the best way to overcome this is to use a booking engine that displays all your units in a random sort order.

That leads me to my next topic. Many times unit owners will demand a “fair” distribution of your online bookings and from your reservationists. Many will insist on some kind of “next in line” system. I strongly advise against that. It’s next to impossible to really be fair with some kind of queue system since the circumstances for each booking are always different. What specific amenities and unit size is needed? What other units are also available? For each reservation and client profile this will vary, and looking through some kind of queue is next to impossible. Instead, a fair way to distribute the bookings is to look at all matching available units for a specific reservation request and then randomly pick one (there are systems that do this automatically). In the short term that may mean that one owner will get slightly more bookings, but in the long term, based on the law of averages, things will even out.

Complicated Rules and How to Deal with Them

While I know you don’t want to hear about all the complications, unfortunately you do have to deal with them if you are in the business of renting condo units. The first are limitations from outside forces like municipalities may place on you. They typically concern things like minimum stays and noise restrictions. Based on our experience, those rules are usually fairly uniform and tend to apply equally to you and your competitors. Make sure that your booking engine and website supports these factors of doing business. E.g., if your site does not offer anything shorter than weekly rentals, don’t let the user search for a two day rental and then be disappointed when nothing comes up. Other potential complications are related to pricing and discounting. Unlike a hotel, you can’t set just any price you want and employ effective yield management strategies unless you write your rental owner agreements in ways that support these common practices. The third area of possible complexity is related to commissions and your fees. In addition to the accounting issues mentioned above, it’s also important that marketing costs – for example – are accounted for in your agreements. E.g., if you are entitled to a 30% commission on collected rent and pay out a 25% fee to an OTA, your margins could easily be squeezed. Again, by educating the owners about the benefits of 3rd party distribution and building a tiered commission structures or specific advertising fees, you put yourself in a situation where you and your condo owner can both maximize occupancy and protect your margins. Always remind your owners that a satisfied guest may come back and book directly the next time.

Wrap Up

So it may seem to the traditional Hotelier that renting condo units is laden with possible complications and pitfalls, but let’s not forget that is also has tremendous benefits. One of them: no mortgage. The fact that these units are owned by someone else means that your operating expenses are bound to be lower than a traditional hotel. Also, let’s not forget that for larger groups of travelers, renting a 2 or 3 bedroom condo with a kitchen may be preferred over renting 3 individual hotel rooms and having to pay for each meal at a restaurant. My personal advice would be to consider the Condo Hotel as viable rental inventory and then emphasize all the above benefits, while making the process of researching and renting a condo unit online as similar and easy as it is to booking a hotel.

I’d love to get your feedback. What works for your company? What doesn’t? Have questions? Need advice? Email me and let’s chat. Maybe I could even include your comments and ideas in my next article – coming soon.

Rob Kall, President of Bookt LLC, is a 'technopreneur' at heart. Drawing upon his 12+ years of experience in developing and implementing real estate and property websites he founded Bookt in 2007 to fill a void in the global vacation rental industry. Mr. Kall is a master of emerging web technologies, especially as applied to the travel industry, as well as behavioral targeting and engagement, deciphering marketing trends into widgets and applications, and online distribution hubs beyond the GDS. Mr. Kall holds a Bachelors in Computer Science from University of Boras, Sweden. Mr. Kall can be contacted at 800-941-0868 or rob@bookt.com Extended Bio...

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