If you’re looking to get direct bookings and work for your own profit rather than helping OTAs – Online Travel Agencies – gain more fame, you need to invest in creating a direct booking website for your vacation rental business in the first place. Potential guests get their first impression from your website. However, at the same time, your website should pay off its costs, which means that you need to know how to calculate the ROI of your direct booking website.
Knowing how to calculate ROI – Return on Investment – helps indicate if your direct booking website costs are justified by the number of customers it is generating. Moreover, you can determine if it’s worth keeping your website up and running or maybe it’s time to re-evaluate your website strategy. In this blog, we are going discuss the importance of direct booking websites and how to calculate their ROI.
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What Is ROI?
Return on Investment, better known as ROI, is what businesses use as a key performance indicator (KPI) to figure out whether an expenditure is profitable. In other words, it’s the ratio of net income to investment expenses at a particular point in time. It’s excellent for measuring success over time and taking the guesswork out of making future business decisions. The ability to calculate return on investment is extremely valuable for any business, regardless of size or industry.
After all, knowing if you’re getting your money’s worth is a basic concept that both individuals and businesses need to grasp to succeed financially. By calculating ROI, you can better understand how well your business is doing and which areas could use improvement to help you achieve your goals. In terms of running a vacation rental business, it’s crucial to know exactly how much revenue you can expect to gain by optimising your direct bookings.
An investment’s ROI varies depending on its time horizon and the investor’s perspective. For example, if you want to maximise profits as quickly as possible, you might go for short-term investments with high returns. Long-term investments with lower returns, but lower risk, may be a better option if you’re trying to create a steady income over years.
Why Does It Matter to Calculate ROI?
There are several objectives for implementing a direct booking website for your vacation rental business, such as reducing working hours and saving time, increasing the accuracy of operations, and optimising the guest experience. The most common objective, nevertheless, is growing revenue through increasing direct bookings on your website. After all, you don’t have to pay commissions to third-party booking platforms, right?
ROI is not for websites only. ROI on technology means the proportion of the net gain after bringing that technology to your business to the cost of implementing that technology. It’s also important to know how to calculate the ROI on rental property. However, we’re taking the discussion to the short-term rental industry in this blog and want to show you how to calculate returns on investment for direct booking websites.
Calculating your marketing ROI gives you valuable insights you can use to advance your marketing strategy. These are just a few things you’ll learn by measuring your direct booking website’s ROI:
- Where to spend your money: Measuring ROI in marketing can help you figure out where to spend your money. When you realise one segment of your marketing strategy isn’t yielding much of a profit, you can better allocate your funds.
- How to pivot your marketing strategy: Calculating marketing ROI can also help you adjust your strategy based on guest behaviour. It doesn’t always have to be about revenue – for example, if you want to boost your social media following, you can calculate ROI.
- Which tools to help your marketing succeed: Using a marketing tool that increases profitability for your business will make you feel more confident about spending your money and time there.
What Is the Best Way to Get A Direct Booking Website?
Imagine subscribing for a PMS which also includes a direct booking website that:
- does not charge you per booking for direct bookings;
- allows you to fully track your traffic with the help of tools such as Google Tag Manager and Google Ads;
- enables you to add custom pages or to blog through the system;
- is offered as part of the whole package with no extra charge.
Wouldn’t go for that? A direct booking website decreases your costs, enabling you to calculate your ROI and devise strategies to grow your vacation rental business. To know more about this ideal package, check out Zeevou’s direct booking website before asking for a one-on-one friendly demo with one of our dedicated Partner Welcoming Managers.
Furthermore, let’s not forget about the KPIs which are fundamental measures and metrics demonstrating profitability and transparency of your business. KPIs can enhance your business’s efficiency by clarifying and communicating your goals and focus points to everyone in the company and closing the gaps for misunderstandings and incongruencies. Check out 6 Most Effective Property Management Key Performance Indicators!
How to Calculate the ROI of Your Direct Booking Website
At first glance, ROI calculation is relatively easy. Simply divide the gains from your investment by your implementation cost and you have your answer as a percentage or ratio. If you reach a positive number, you gained a return on your investment; if it’s negative, you lost money through your investment. This is the formula:
ROI = Net Gain / Implementation Cost
- Costs: To calculate the ROI, you need to know the overall cost of your vacation rental website, which consists of its initial setup cost plus the maintenance cost.
- Gains: To calculate your website ROI, you need to know if your website is generating enough leads and if you can convert those who have initially visited your website.
As you might also imagine, checking your website’s visitors by monitoring your website traffic and calculating the conversion rate of leads through Google Analytics makes the story a bit complicated.
On the other hand, projecting a realistic ROI for a direct booking website can be a bit more complex than a simple maths equation. When calculating ROI, it’s important not to leave out any of the many factors such as the number of your overall bookings you consider getting directly, occupancy rate, average daily rate, number of properties, etc.
It is worth mentioning that E-commerce websites also help property managers track their profits gained from letting a room through their direct booking websites. Unlike brick-and-mortar stores, e-commerce sites let people trade their goods, services, and digital products online. That being the case, short-term rental businesses increase their occupancy rate using this platform. E-commerce ROI compares the amount you spent on your marketing initiative to the amount you earned from it.
What Is the Role of Booking Engines in ROI Calculation?
This calculation, however, is relatively more straightforward in vacation rental businesses, thanks to integrated booking engines. The gained amount from your invested money is equal to the bookings made through your Online Booking Engine, which is different from the bookings made through OTAs. Comparing these two numbers helps to get an overview and see if your website has been useful or not.
How to Increase the ROI of Your Direct Booking Website
It’s all about the conversion. You need to make sure that your website is converting as much as possible. There are many factors that can affect this, but if you want to increase the amount of money that you make from each booking, then it’s important that you look at the conversion rate on your direct booking website.
Besides that, you should consider updating your listings regularly. That increases the number of ideal guests who see and book your properties. You can set perfect pricing and offer a great guest experience. Also, you can optimise your landing pages in Google Search Console, maximise revenue with upsell opportunities and use social media marketing tools to run promotions and drive traffic to your direct booking website.
How to Measure the Profitability of Your Promotions
Part of your investments is the promotions, the ROI of which you can also calculate. A/B testing is a way to understand which advertisements have been more effective for your vacation rental website. A/B testing means dividing the audience into two segments and showing A to the first group and B to the other and at the end, checking which one performs better. Some ROI Calculators help roughly calculate yours.
How to Ramp Up Your Rank on Google Search Engine
Investing in the implementation of a direct booking website per se is not going to increase direct bookings. Search engine marketing is also a slow process, so it needs a lot of work to get some tangible results. The next steps will be as follows:
- Content Creation: The truth is, not all kinds of content is going to be attractive for Google. The content of your vacation rental website must include some essential qualities to appear in search results, such as professional photos of the rooms, together with honest and unbiased reviews.
You need to keep creating useful and engaging content for your direct booking website to improve its visibility over time. Try to get expert advice to find relevant keywords and check their search volume using tools like Google Adwords. You need to check and optimise your content to appear at the top of search results pages. Google Analytics and Google Webmaster Tools are just a couple of examples to help you with your website optimisation.
Another option could be Pay-Per-Click (PPC) advertising platforms, which is costly and also very competitive. Digital marketing experts recommend paying for advertising your brand instead. Unfortunately, OTAs such as Booking.com, Expedia, and Airbnb might bid on your brand name, and in this game. You need to combat the giants’ digital marketing strategies to claim your own brand, and win part of the play!
- A Mobile Optimised Website: It is a must as today we look for everything on the go through our smartphones and tablets. You should offer promotions and pay Google to take advantage of paid traffic, as well as appear in organic search.
- Monthly Email Campaigns: This could also be used to distribute your promotions to your leads and convert them to customers by showcasing your tempting offers or property renovations.
Bottom Line
In the end, the key question is: “How is it best for our direct booking website to grasp a return on its investment of time, effort and money?” Practically, every business decision for your short-term rental business requires the knowledge of ROI. You need to know how much revenue your direct booking website is sending your way, and which efforts are yielding better returns than the rest. If you don’t track your campaigns and results, how will you know whether or not they’re worthwhile?
