⭐ Short-term rental: what price for a repeat business traveler (and contract conditions)
Some companies may request an annual negotiation to bring an employee into your property on a recurring basis: how to manage the situation? what price to ask and how to calculate it? what conditions should be put in the contract to protect you? we talk about it.
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Hello and welcome to the J'poster Complet channel, the channel which helps seasonal rental companies, professional sub-renters, and seasonal rental concierge services to become serene and ultra-profitable entrepreneurs.
Today, we are going to talk about a specific case that you might have encountered, whether you are a seasonal renter of a house, a gîte, or a guest house, or whether you are also an asset manager for others, therefore, that is to say seasonal rental concierge or professional sub-let. In both cases, you may have been approached by companies who wanted to make your accommodation available to long-term employees, who will tell you: “I need to have a contract with you for all the days of the week, for example, over the next six months, over the coming year. What is the price you give me? » In these cases, it's always a bit tricky to answer this: what do we do? Are we doing a negotiated loan or not? Should you increase your lifetime price or lower it? Are there specific contractual conditions to negotiate with the company to protect you? This is what we're talking about today, and I'm going to help you see things more clearly, and above all to negotiate the right things with the company, to ensure that you make a deal that is a win for you.
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Welcome everyone. I see you are arriving little by little. Someone says hello to me from Facebook.
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What I suggest to you is that we start on this subject of contractual negotiation with a company. The situation is exactly what I described. The company will tell you: “I need to know your pricing for housing an employee, or even several employees in your apartments, in your house, on a recurring basis, over the year or over two months, three months, six month. » In these cases, it's quite difficult to say to yourself: "How do I manage the situation in terms of the price and the contractual conditions?" » So, I'm going to give you the keys to properly managing these situations, and to ensure that you sign a deal with the company that will be profitable for your business, and that will not be disadvantageous, in the end, which will not be detrimental, from a financial point of view, to your activity.
The first nugget that I want to share with you in relation to this, and which is really super important, is to always, always, always first ask the budget of your interlocutor. And that's also true, moreover, if you have travelers who ask you for a negotiated price for 15 days or for three weeks. Why am I telling you this? Because in commercial negotiations, it is recognized that it is the first to give a price who loses the negotiation. And then beyond this theory, which is often quite true, there is still an important point: it is that when you hear the budget of the person opposite, you will probably have a good surprise. A surprise, either in one direction or the other, but which will allow you, if the person has a fairly high budget, to say to you: “I am not going to reduce the weight. » Perhaps you would have spontaneously suggested lower, and then you see that in fact, no, the person has a budget. So, it prevents you from going too low, leaving money on the table. Or, conversely, you see that the person has a budget which is perhaps below the price that you would have been ready to give, and in which case, that also gives you information on the capacity of the project to be converted. And it also allows you to prepare your price announcement, to correctly announce the price to customers. So step number one, have an idea of the person's budget to be able to allow them to give their price first, and for you to have a level of indication in relation to that.
Now, the question to determine the price is not going to be, as I sometimes see, to say: “The person has a budget of 50 euros per night. Do I want 50 euros per night or not? Do I care or not? Do I still make any money if I take this or not? » That's not good. This is precisely the mode of operation that we are going to completely abandon, because it is not the one that allows you to have the best financial performance, particularly compared to the past. So, there are two steps that we will follow to be able to resolve this situation. The first step will be to bring together the financial performance that we achieved last year over this period. You will have to look, in your reservation history, if, for example, the person asks you, from Monday to Friday, for the month of January and February, we go back last year in January – February, and we look with the stays that we had obtained, on nights Monday to Friday, how much money, in the end, on a dry stay, we had earned. Which allows us to know that on the dates requested by the client, we won, I'm talking nonsense, I'm going to make up figures, last year, we won, perhaps on an apartment, 3,000 euros for two months on weekdays. So we know that already the 3000 euros will be the floor for us. That is to say, if we ourselves know that we are capable of making these 3,000 euros, we have absolutely no valid reason to lower our ambitions, and agree to sell for less than that. Perhaps, just one valid reason could be, if for example, last year, there was an event that took place, which is important in the city, and we know that this year, it is shifted, for example to March, in these cases, yes, it can be interesting to say to yourself: “I don't have the event, so without an event, how much will I earn? » And that, again, is the floor. In any case, apart from this small exception which confirms the rule, having an idea of the past historical performance that we have done over the periods which are currently required of us, that gives us our low value.
Now, the high value will be the prices you currently have. So the second exercise which is important to do is to see currently, if you sold all the dates which are requested by the client or the prospect, at this stage, if you sold all the dates requested, you do the sum , what is the amount you get? So here, for example, we will continue with our January-February example. If every Monday, with check-ups on Friday over the four weeks of January and the four weeks of February, if all of this sold 100% at the indicated price, let's admit that January-February is a weak period, and that you are, at that moment at 40 euros. So you have to make 40 euros x 4 nights multiplied by eight weeks. Since I'm not very good at mental arithmetic, I don't know how much that is. Wait. Besides, my cell phone is right there, so as not to hide anything from you. So I'm going to do the calculation: 40 euros x 4 nights x 8 weeks, that gives us 1280. The example doesn't hold up well. I'm going to make a fictitious scenario, because that doesn't hold up very well. We will say that historically, last year, you sold 3,000 euros, and that there, when you add up your prices, it gives 5,000 euros. And so there you have a range between which it makes no sense to go. That is to say that under 3000 euros, there is no sense in going there, since you know that you will make at least 3000 euros. And above 5,000 euros, there is no sense in going there, since the person, if they already appear on booking.com, and they make their reservation, they will get 5,000 euros, so we cannot don't be dishonest either, and offer a price above that. So we now have a range within which we will be able to establish our negotiated price. And you know that in this range, you are a winner, because you are above what you did last year. And you are, therefore, still a little below. It is still necessary to offer a commercial gesture to customers for the volume commitment. And you are a little below your classic displayed price.
And so, this is where the client's budget comes into play. If the client's budget is within this range, wonderful! If the client's budget is above the range, I recommend that you just make a slight commercial gesture, because they may have already done the test on booking, to see how much it would cost them. So you still have to make a slight commercial gesture. But you don't have to go for something totally huge. And then, if the client's budget is lower than what you earned last year, so in our example, lower than the famous 3,000 euros, then, most likely, you have no interest in going there. Or, you better say to yourself: “I propose what the minimum price would be for me. » So either you say: “My minimum price is 3,000 euros” or “my minimum price is 3,000 euros, plus an increase of 10% or 20%”, because you have growth ambitions of turnover from one year to the next. But after that, that's all you're going to be able to do, because you think that even without this reservation, you're going to be able to perform.
So that's it for determining the price, and how to have, precisely, a range to do things correctly, and for it to be financially profitable for your business.
Now, you understand, when we say to ourselves that we are making a commercial gesture for the volume, for the fact that the person undertakes to stay a certain number of weeks, a certain number of days in our accommodation, the The challenge will be to say: “The volume must be respected, in the end, people must really come. » And so, this is where we begin on the subject of contractual conditions. It is very important that you protect yourself in the contractual conditions, to avoid having someone who initially had amazing projects, who predicts worlds and wonders for you, and who ultimately will perhaps only remain a week in the month, and after that, will end up canceling.
So there are two things that are really important to square together. The first thing is to check the cancellation conditions. That is to say, are cancellations possible, or is it that once a commitment is made, it can no longer be canceled? There are also payment terms, i.e. when you receive payment. These two elements, in fact, are very linked, it is essential to make your interlocutor responsible for the fact that you are going to block availability to make room for them. And that’s what we want to protect ourselves from. Because there is no question that we will block our entire year, if it is someone who says they intend to come all year. It is out of the question that we block it all year long so that in the end, the guy hardly ever comes. And I will go even further, it is out of the question that we block the whole year with an average price, due to negotiation, so that in the end, it only comes during the peak periods, or during the periods when there are events. And we didn't need him to fill those periods. So we have to make sure that we secure the fact that he will come to us, and that this price is really conditional on his arrival and his actual payment at the premises. So for that, it is very important to check the cancellation conditions and the method of payment. I think that if, for example, it is someone who comes over several weeks or several months, it could be interesting to ask for payment in advance, and for a given period. That way you know you have enough time to unlock. So if I take the example of a month, you can absolutely tell him: “At the beginning of the month, we confirm together your arrival on all the dates of the month. And after that, it is non-cancellable, non-refundable. » That is to say, the payment is due, and you request payment at that time, so that if it were to cancel, you still still have the month, except for the very first week. But you still have the month to fill out, and find a buyer on these dates.
Let me know if you have any questions about this. Are these situations that you have already encountered or not in your activity? Does the method of calculation mean anything to you? I would be happy to answer your questions. So there you have it, don’t hesitate to ask me your questions. I see that a lot of people have joined us, especially on Instagram.
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Listen, what I propose to you, if there are no questions, no more questions than that today, I suggest you see you Thursday for the next video on a totally different subject . As always, it will be a pleasure to see you at noon, and until then, take care of yourself. We'll meet again, if you wish, to continue debating all this, on the Facebook group seasonal rental prices and maximization of turnover. I wish you a very good day and see you Thursday.