About Booking agents competitors

The good and the bad in holiday cottage letting Pt 2. 
For quality and value holiday cottages
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This is second of two parts. In this I take a swipe at some hard selling practices apparently used by some booking agencies. These practices appear to be very much the fashion and seem to mirror, in some respects, developments in the Banking sector.  Booking agents competitors vary hugely in competence and quality of service.

The Bad… as we see it:

A recent very difficult negotiation with some really pleasant owners resulted an e-mail that is copied below. A few minor changes have been made to ensure anonymity.

The owners had been visited by sales people from various cottage booking agencies but thought that we might be worth considering. However, our style is a little different from the current quite high pressure selling techniques used to win business from home owners.

From a common near-by. It reminds you what holidays are for and, in the end, how unimportant all this sort of thing is compared to looking after body and heart

The key to success is as much if not, more, having the right owners and holiday lets to sell as it is to attract guests. If you have a high quality but practically priced selection of cottages to let, you have a business. The owners must be treated with exactly the same respect as the guests. It is this respect that seems not to be reflected in the selling methods used by some agencies as they seek to get the best for their web sites. Rather than edit the e-mail, I thought to publish it in full because it was written in haste on a Sunday night when I thought we had lost the contract as I responded to the disappointment expressed in a message from them.

As it turned out, we retained the contract which was hugely appreciated by us and seemed to validate our way of doing business. In a world where many people have had enough of pressure selling, it still takes some nerve to go against the flow and use an approach that many would think is hopelessly out of date.

Any way, with one or two minor changes, here it is, ‘warts and all’:

Dear *****,

**** and others tend to band properties and these bands do not always take notice of areas. This leaves owners, often, with over priced properties. They also use confusion pricing where they set prices high and then, rather like some well know Sofa retailers, offer 20 – 35% discounts as the season progresses. These discounts are normally ‘part of the deal’ and owners have to accept price cuts accordingly.

In some cases, owners find that nearly half their bookings or more end up heavily discounted with ‘special offers’. We tend not to do this as such practices attract a poorer quality of ‘deal’ orientated guest and cloak the reality of what the market will stand on rates.

From the same common

Some larger booking agencies will promise high net income but will never put this in writing. Should the rates we suggest be radically too low, the market will reveal that fact quickly and we can then raise them to meet what the market demands. This flexible and effective approach to setting rates is not offered by larger agencies because it does not fit into their method of getting new members and it requires significant work on their part to implement.

You are right, the rates for occupy 14 would be significantly higher than for occupy 8. The market is very transparent and highly competitive. If you went in at twice the suggested rates for occupy 8, you would end up with a long period of inching down to meet market rates. Yes, we do like to think we are aiming at a high end niche… but it would be a mistake to assume the temperature of the water before dipping a foot in the water in to test the temperature. This is a common error and we have seen others learning the hard way.

The determination of prices is not only on quality but location. Had your house been in the Cotswolds or by the coast, the rates you mention would be practical. But this area is largely unknown and is still developing. Location is as important as quality, if not more so.

Less expensive does not mean ‘down market’ guests unless you go to the £400 per week level or lower for a large let such as yours. These people are expected to pay out on an automated system several hundred pounds in advance, without any contact, on pictures alone. The trouble often comes from better off people expecting the Earth and insisting on nothing less. These people are as likely to cause bother upset and damage as moderately wealthy individuals and they are unlikely to pick rural n Herefordshire / S Shropshire as a destination preferring more established destinations.

From the same common

Those who want to pay very small sums can prove difficult, but these people will not be willing to pay the rates. We have had no incidents of serious problems for any lets since starting with the exception of one with the dog that happened at a reduced rate of £280 a week in a holiday let near Leominster where no security deposit was requested by the owners. It was an experience which taught us quite a bit and that cottage is one of the four we are about to leave us for quality and performance reasons.

The present market is weak and the major agencies are trying to keep rates up but are failing, so they are using the confusion pricing method to counter this and to maintain the illusion necessary to attract new owners. Because they control so much of the UK market some agents might be trying to ration cottages by price to keep rates high. Once signed up some booking agents hold owners by, sometimes, 12 month break clauses unlike our much more equitable arrangements.

The simple system of sounding out the market and raising rates to meet demand works well. We have done this successfully, elsewhere, and it puts the market in the driving seat; it is there, anyway, so trying to buck the market is not a recipe for success. These agencies would be closer to the mark if it were occupy 14, hot tub and fully converted to meet the expectations of holiday letting but, even then, these estimates have the feeling of pressure selling.

Estimates are always made on a conservative basis, we use no confusion pricing and, certainly, we do not expect owners to discount ‘as and when’. We do not use banding and are very shy of issuing income expectations beyond saying we will maximise income by adjusting rates upwards to meet the market.

For occupy 11 and above we are weak for complex marketing reasons to do with the way Google and other Internet selling methods work. In this sector, the best agent to use, although the most expensive, least friendly and least flexible is ******. I am no friend of this agency and it grieves me to advise you of this. As we grow stronger we hope to serve the higher occupancy niche as well as the others we now already successfully serve.

Using an agent is a minefield. We like to think the way we sell marks us out as offering a transparent and open approach which will ensure you will get the most from the market. We have expanded from nothing to 70 cottages in two and a half years consistently taking business from ***** and ********* as well as assisting ‘go it alone’ cottage owners. This strongly indicates that we must be doing something right.

If we can get the rates up quickly then the sooner the better. We should know, sometime around the beginning of spring 2013, how demand is shaping up. If bookings are coming in fast then I would advise an immediate rise to the suggested target. It is possible we could well exceed the target rate quite quickly. I have made mistakes estimating what the right rates should be, as mentioned, but suggesting a substantial income on what appears to be an optimistic sales led approach without feeling out the market is not our style.

Whenever we start working with new owners, it is always a process of discovery. Owners have the final say in what is to be charged. We recommend and advise. If, for instance, we felt by the end of February that a 20% increase was a good idea but you felt a 30% increase was appropriate then we would do what was required. This sort of flexibility is not available with most other agents. I have been proven soundly wrong on rates in one case and, if given the chance, would be delighted to be proven wrong again and again.

This is a difficult area to discuss and I deeply appreciate your patience with us. If you feel we are not quite right for you, although disappointed, I can tell you that visit was a great way to spend a morning!
Regards etc:

Times are changing; we strongly believe that sales methods must change with them. Our style has developed over the last three years and is in tune with the times. People will not put up with out of date pressure selling any more.

Featuring a cottage soon to join us. Again, on that glorious common

For quality and value holiday cottages
01568 612467 for more.
info@countryholidaylets.co.uk. Useful for new cottage owners:
http://www.countryholidaylets.co.uk/about-us/landlords-homeowners-info-pack

Not one of my better days

From Country Holiday Lets For quality and value cottages

Ring 01568 612467 for more information. E-mail: info@countryholidaylets.co.uk
Useful information if you are starting out as a cottage owner:
http://www.countryholidaylets.co.uk/about-us/landlords-homeowners-info-pack

A TRIP OUT
It is always pleasant going out to see owners with the possibility of signing them up but not every trip is successful. When we lose out to Hoseasons or some other legacy agency this can be a bit of a blow, sometimes we do not get the business nor does anybody else which is not so bad. But when we lose out to uneconomic almost suicidal competition, it can get quite upsetting.

Fortunately, these experiences are uncommon. However, when they do happen, the impact they make can linger almost as long as the real pleasure of setting up a productive, long term relationship with an owner.

A BAD PITCH OR A HOPELESS ATTEMPT?
I should not have risen to the bait but when you visit and spend two or three hours of a day to be sent away later implying ‘you did not cut it’, it is hard not to remain sanguine.

Booking agents can have a poor name, mainly due to the control and historically poor value offered by some large legacy operations. Some take 35% and more from rental income for their services, expecting exclusivity and very long notice terms.

We noted this and now charge between 17 and 20% plus vat. We do not expect exclusivity and work hard in parallel with many owners. We took a look at what the some agencies were offering and based a business model on something better by offering more for less. There is only so far you can go in doing this before the business model simply will not work. Some agencies must think that our approach is, simply, impractical; so it was instructive to be faced with competition that thinks it can offer a service which we, in turn, think is unfeasible. I cannot say I enjoyed the experience.

THE PITCH AND FOLLOW UP
I drove down to a pretty village about 6 miles East of Hereford. The visit took about 1/2 an hour but, as it proceeded, it was clear that another agent had already visited by the tone, questions and responses as we discussed business.

I left feeling that this one would not come off. Indeed, about a week later I rang and discovered that my intuitions were correct. The other agent had won the day. It felt, perhaps unjustly, that as we do not also offer to lay down our lives and give something for nothing, we were not only offering poor value but were suspect.

Feeling out the matter, already knowing that we had no chance, whatsoever, I pointed out that we spend well over £20,000 pa on pay per click alone. We are not a part-time operation and we put our money where our mouth is.

The ‘competition’ spends nothing on pay per click whilst, at the same time, offering suicidally low rates combined with an equally suicidal policy of no booking fee charges.

It was a bruising but very revealing conversation. The owner said that PPC does not work. When it was pointed out that all major agencies use PPC they argued that they were not going to use a major agency… which did not, of course, address the point.

Wild attempts to undercut can wreck a market. It gives potential customers the impression that they can get something for nothing. This untutored style can wreck good long term relationships with suppliers. It was clear that even if the competition failed, the owner was not going to come back to us. More importantly, even if they did come back to us, the basis of a working and positive relationship would not be there.

With this in mind, the only thing left was to sound them out to discover more about their objections. This was quite unpleasant but it did get results, not least, in identifying ‘the competition’. Behind all this was an apparent ignorance of how the market works or a wish to get something for nothing. On the other hand, the owner was intelligent and appeared competent and capable. It was odd and confusing to be confronted by such a contradiction.

THE ECONOMICS
The attitude was interesting. The ‘competition’ charges 15% gross of revenue, charges no booking fee to guests and is happy for owners to cherry pick availability periods. They are, of course, non-exclusive. As they are small, they are not registered for vat so giving them a 20% edge which is brutally stripped away, once they reach the threshold. In effect, their only income would then reduce to 12.5% of rental collected.

Assuming a one person business with overheads of, say, £15,000 and and pay of, say, £18,000 including all expenses, the annual rental collected at 12.5% would have to be £264,000. At an average of £400 rental for each booking, you would need 660 bookings a year. Doing this as a one person business with total costs of £33,000 and virtually no marketing budget appears close to impossible.

It is true that some services do not suit and that is the way I like to see the situation. I think that the unpleasant feeling was the implication that the competition was an honest good value service where we were dishonest and poor value. The proof will be in results. Services offering deals that cannot be refused with economics close to suicidal cannot last for ever.

The only comfort is that we judge cottages more on the quality of those who own and manage them than on the buildings themselves.Even though this is some comfort, it would be untrue to say that losing a pitch is ever anything less than upsetting.

Going for the cheapest can be as damaging as the losses suppliers experience when they take on poor business. To this extent, both parties would be far richer had they had never met. However much I say this to myself… it was still very disappointing not to ‘get a result’, not least, because the owner impressed me despite not thinking we were not right for them.

I did rise to the bait but, fortunately, we were not caught on the hook of a doomed business relationship.

From www.countryholidaylets.co.uk

Ring 01568 612467 for more information. E-mail: info@countryholidaylets.co.uk
Useful information if you are starting out as a cottage owner:
http://www.countryholidaylets.co.uk/about-us/landlords-homeowners-info-pack