‘Forward Bookings’ is the term the accommodation industry uses to describe future bookings that a property has secured, but the guests haven’t arrived yet. Every property owner likes to have lots of forward bookings because they provide a guarantee of future income, but there are lots of factors that influence how many forward bookings a property may have at any point in time. Assuming you have an attractive property, you are being marketed on all of the main booking platforms, and your prices are competitive, the main factors that influence forward bookings are as follows:
ECONOMIC CONDITIONS
When interest rates, inflation and cost of living pressures are low, consumer confidence is surging, money is freely available to families and the holiday letting industry is booming. Similarly, when the economy is struggling and families with mortgages are hurting, holiday bookings slow right down. In many ways, the holiday industry is a pretty accurate barometer of the economy. Strong economy – lots of bookings. Struggling economy – less bookings. While experienced holiday letting owners are well versed and well prepared for the ups and downs of holiday letting, inexperienced owners will often panic when bookings fall away, start blaming the professional property manager and demand them to start changing everything to get them bookings. The properties most likely to suffer the most from poor economic conditions are large houses and expensive apartments. Property owners sometimes cannot see the connection between the 6 o’clock news which has detailed cost of living pressures and the financial difficulties people have been struggling with for the last couple of years, and their property’s lack of forward bookings. This can be particularly true for owners who are quite affluent or are paid regularly by government of bigger businesses, and may be more insulated than most from challenging economic conditions. When the Reserve Bank increases interest rates, their objective is to take money out of people’s pockets to slow down expenditure and decrease inflation. This is designed to negatively affect people financially, and to slow or stop their discretionary spending on things such as holidays. Simply put, families with less money go on holidays less when interest rates are high. When economic conditions improve and interest rates drop, people have more money to spend and holiday bookings will be booming again. This cycle will always be in play, and holiday property owners need to be aware of, and make their own provision for downturns.
Some other factors that influence forward bookings (but to a much lesser extent) include:
TIME ON THE MARKET
It is pretty obvious that the longer your property has been advertised, the more likely it will have forward bookings. This is especially true for properties that have been available for years, as they typically build up a strong following of return guests, so long as they remain consistently available for guests to book – see ‘Owner Bookings’ section below. Many people also book holidays a long time in advance, especially for Christmas holidays. Properties that come on the market just before Christmas will struggle to achieve bookings because the vast majority of Christmas holiday makers will have made their bookings up to 12 months earlier, and your property hasn’t been around long enough to secure return guests. So time on the market and consistent availability matters (a lot), and property owners should factor this into their planning, and expect bookings to be slow at first or after extended periods on non-availability.
SEASONS
Each holiday destination has high and low seasons. In Queensland, the higher seasons are Spring and Summer. The lowest season is the period between February to Easter, and again around November. Naturally, the high season at the snow resorts is over Winter and Spring. High seasons in capital cities are generated by major events such as sporting finals, tennis tournaments, grand prix racing, horse races etc. Forward bookings are at their strongest in all holiday destinations prior to high seasons, assuming your property has been advertised long enough to secure guests who typically book well in advance. They are at their lowest levels straight after high seasons, because people have spent their money and are generally back at work again.
MARKETING
Holiday accommodation is a very competitive industry. It still amazes us that some owners do not market their properties on all of the well known platforms that dominate the industry. These include Booking.com, AirBnB, Stayz, HomeAway, Trivago and more. These platforms account for the vast majority of non-direct bookings and so it makes sense to have your property advertised on all of them. Similarly, some owners do not invest in professional photography. Research shows time and again that most holiday guests will scroll through pages of online properties before selecting a property to stay in. When doing so, guests will look at the lead photo (the one that first shows up on the main website page) for less than one second before either clicking on it or discarding it. If they do click on your property, the decision to book the property or not is determined by the photos. People rarely read all (or any) of the written description. If you have high quality professional photos, you are in with a fighting chance against all of the other properties. If you have amateur photos taken with your iPhone, you will loose bookings time and again. At the end of the day, you will make less money and have less forward bookings if you are not marketed on all of the major websites, and don’t have professional photography.
AVAILABILITY
It is common for holiday guests to just want a weekend away, so they are after accommodation on Friday and Saturday night and drive home on Sunday. This is the most popular form of booking and particularly true for holiday destinations within a couple of hours’ drive from a capital city. However, many holiday owners do not want bookings for less than 3 days. We are not sure how this number was arrived at, but it is common throughout the industry. The end results is hundreds (probably thousands) of holiday properties vacant over weekends, earning nothing. It makes much more sense for these property owners to accept 2 night bookings, but charge the same price as a 3 night stay. Guests will still make bookings, and you will make the same amount as a 3 night booking with your property being used 1 day less. Property owners need to consider these options, and instruct their property managers if they wish to make a change.
OWNER BOOKINGS
Owners have every right to make bookings in their own holiday property, and for many owners, this is the primary reason they have a holiday property in the first place. At the same time, many guests like to constantly return to a property they have enjoyed in the past, but if they can’t get in because the owner has it booked, they are highly likely to find a different property they can confidently rebook year after year. Similarly, some booking platforms such as Booking.com won’t display properties on their website if they believe the property is not available enough nights per year for guests. Return guests are a strong source of forward bookings for many properties, and owners need to weigh up their personal use versus guest availability if they are keen to maximise their incomes.
So, which properties secure the most forward bookings?
All properties will struggle to generate forward bookings during difficult economic times. However, good properties that have been around for a while, have built up a strong return guest following, are advertised on all the main platforms, are flexible in their minimum night restrictions and are available most of the time, will consistently secure more than their share of forward bookings in any market.