The future of automatic pricing in travel
In what can be viewed as a sign of the times, revenue management for home rentals won the day at EyeforTravel’s recent startup and innovation awards in Las Vegas
It was a startup that automatically generates and uploads pricing for rental properties on Airbnb, VRBO and Flipkey that beat off the competition to take home the top prize at the recent 2016 EyeforTravel North America conference at the Palm Hotel in Las Vegas earlier this month.
Described as the most popular revenue management and dynamic pricing software for the $100bn rental and home-sharing market, Beyond Pricing was nominated by a panel of judges led by Travelocity founder Terry Jones and voted by the audience.
Andrew Hennigan caught up with co-founder and CEO Ian McHenry after the conference to find out more about what he believes is propelling the industry forward.
EFT: How prevalent is automatic pricing for rentals? Is it going to become standard practice for renters anytime soon?
IM: Revenue management is just starting to catch on in the vacation and short-term rental space. Similar to how it took a while for hotels to adopt a more sophisticated approach after airlines pioneering the practice, vacation rentals took a long time to really focus on revenue management. When Beyond Pricing started three years ago, no one was really doing it in the space. In just the last year, it's become the top priority for most vacation rental property managers, software providers, and listing sites.
Revenue management is just starting to catch on in the vacation and short-term rental space
Part of the challenge of RM for vacation rentals was that getting the data to drive automated pricing decisions was difficult. Doing everything manually was too time-consuming for an industry where the average manager only has 100 or so listings and there are practically no brands, as you have in the hotel space. Automated pricing almost makes more sense in vacation rentals because of the smaller number of managers and the limited resources they have.
EFT: What are the main trends for the automatic pricing business today?
IM: In both vacation rentals and hotels, there are two major trends in pricing.
A move towards forward-looking, predictive analytics to predict price, rather than simply relying on historical rates and pacing; and
What Duetto has dubbed ‘open pricing’, which is basically yielding for individual room types. In the vacation rental space, we've always had to yield for single units because of the uniqueness of our inventory. We've actually led the way versus hotels when it comes to yield for unique room types, out of necessity.
EFT: Are there any trends in the rental business that you see helping the automatic pricing model – or vice versa?
IM: Having smaller economic units, in other words owners and managers that are much smaller and limited in resources, versus hotel owners and managers and brands, means they have a greater need for automation in vacation rentals when it comes to pricing, but also to other aspects of the business. Half of all vacation rental inventory is still managed by individual owners who have a single unit. Imagine hotels where every room is managed by a different person - this kind of dynamic means that owners look towards automation more so than hotels in some cases. Smart locks are a good example. Arguably, vacation rental owners adopted these faster than hotels did.
EFT: Are there other businesses that you believe could benefit from this kind approach? Could you expand into these areas using your data and algorithms?
IM: Beyond Pricing is really good at dynamically pricing individual units and unique units. This is a big problem for small hotels which don't really have enough units to use traditional pricing; they could definitely benefit from our approach. Hotel suites’ products, too, have typically been poorly priced because they haven't been yielded for individually, and this is something we're exploring.
EFT: What’s the future for Beyond Pricing?
IM: We continue to grow rapidly with over 50,000 listings in over 250 global markets and over $150 million of bookings priced. Besides continuing to add more property managers, we're also connecting to more software solutions and listing sites so that we can work with as broad a swathe of the vacation rental space as possible. We're also starting to work more with condo hotels who have individual owners behind each unit and should be yielding for each unit individually. We're pretty excited about that.