Today, we will discuss with Marco Malafante, President and Co-Founder of The Red House Company.
“Red House” is the name of the very first property that we set up for tourist rental. After years of constant growth and development, the company now manages more than 40 prestigious properties. The objective of the company is to enhance real estate investments in the city of Venice, offering new service standards to both visitors and homeowners."
Marco, let's discuss together and share your feedback on using Pricelabs at The Red House Company.
First of all, who in your company was in charge of implementing PriceLabs?
Myself Marco Malafante owner and general manager of The Red House Co.
Can you tell us quickly what was the context of your company before using PriceLabs?
Before taking on PriceLabs we had a pricing system based on 4 seasons, and it was pretty static. We understood we were missing out on sophistication that the airlines and large hotel chains have on this front.
In terms of sophistication, we don't compare ourselves to local hotels and B&Bs, but to large sophisticated hotel chains. We are a company that aspires to become much bigger and we have structured ourselves as a company that can scale all its departments organically.
What were the goals you wanted to achieve by using a dynamic pricing tool?
When some of our competition started using dynamic pricing, we began losing money because other properties modulated the prices according to supply and demand and we were stuck in a fix price system. Using a dynamic pricing as well has allowed us to take back that profit.
We wanted to match the seasonality more effectively day by day and not quarterly, we wanted to maximize the weekly trend on every week knowing that every week is different.
Another important goal for us was to produce a sort of automated promotion that trigger 10 days before the dates available generating last minute deals with different minimum stay and price per property. Now we're able to automate that thanks to PriceLabs.
We also wanted to make special offers on the orphan dates, and PriceLabs helps us to do this with a dedicated section where we can decide property by property to apply discount and minimum stay on a given amount of available dates between the bookings.
What were the reasons that led you to try and use a dynamic pricing tool?
At the time the Channel Managers and PMS we used did not have dynamic pricing embedded, and the ones did tended to be dedicated to larger organization with impossibly high requests of percentage of the revenue as payments.
We didn't try dynamic pricing tools in the past because despite the fact that the dynamic pricing systems do increase revenue, the total cost was absolutely unacceptable.
How was the configuration of PriceLabs for your company?
It was extremely easy. We just had to transfer the pricing we had on seasonality for its minimum and its maximum number, then we spent few months monitoring where the base price should have been and we checked regularly the performance of the properties compared to the other similar apartments and the previous year performances.
Currently we adjust settings in PriceLabs every 2 to 3 months and only for a subset of properties, maybe 30% of our portfolio.
Which features in PriceLabs you like the most?
The fact that they monitor price and availability on the most important OTAs in the world - which represent the overall market trends.
This only make me feel safe by knowing that the trend of my pricing is checked and matched with the whole TAM (Total Available Market) and not by a simple math algorithm that do not take consideration of public, school, local and one off holidays.
There are events and there are seasons, there are repetitive situations or unique ones. The market feels this and if a tool is not strictly attached to it, you will never be able to maximise your revenue and profit from them all.
Monitoring these OTA does give you the right trend of the following month, season and year.
If you compare to your initial situation, without using PriceLabs, what benefits did you get? What concrete results do you see on a daily basis?
The improvement is measurable in different sections of the business:
- We can improve the occupancy
- We can offer specials for last minute and orphan dates
- We make our home owners happy by increasing occupancy in the low seasons dates at a very convenient price - though the margins for us are lower due to the lower price. These are enjoyed mostly by retired travelers, people looking to spend long periods in Venice, and young travelers that love to take last minute decisions.
On a daily basis our office has been relieved of the heavyweight work of having to manually modify pricing on several properties. Basically between seasonal changes, price adjustments and special deals on apartments that were suffering lack of bookings, we were spending a lot of time on adjusting prices in our channel manager.