STRA Episode 17: How to Deal With Slow Season

The Short Term Rental Authority Podcast

STRA Episode 17: How to Deal With Slow Season

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[00:00:05] Hey everyone. Welcome back to the podcast. We are John n Wendy Williams with the Short-term Rental Authority, your authority on all things short-term rental related to help make you the best operator ever. And today we are going to be talking about how to deal with slow season. Yeah.

[00:00:27] I wanna feel like a a, the majority of us are probably dealing with slow season right now. Being the time of year it is. And being in the northern hemisphere, right? Yes. But his chili, hence the Christmas sweater. Yes. Which is hilarious, by the way. So if you're listening to this on the audio and you wanna see Wendy's, well, Christmas sweater, go check it out on YouTube.

[00:00:48] It's over there and you can see it. See it in, all of it's, it's fabulous. So, , there's that. . But yeah, so slow season. How do we deal with slow season? How do we deal with slow season? Well, so I think it would be important to talk about maybe what is slow season and. , if you are just getting started, how do you know when your slow season is?

[00:01:18] Right? So in this business it's rare that, well, it just never happens. You're not gonna make the same amount every month. It's not like long-term rentals. It's much more like a seasonal type business. And we say seasonal, we don't mean. Winter, spring, summer, and fall , right? We mean January, February, March, April, may, you have 12 seasons.

[00:01:40] Actually, it's seasonal by month. Every month is a little different. And for us, just as an example in, in the Charlotte market, June, July, August are our best month. So it's, it's summer. People are traveling, especially the customer type. We serve families with children and pet. [00:02:00] There's a lot more of those during the summer and then September for us, it kind of drops off a cliff a little bit, mainly because people go back to school.

[00:02:10] Right. That wasn't true during Covid, by the way. That's true. That's there was no school. That's true. So September wasn't actually a slow season for us. Yeah, during that time, but during normal times. September, it falls off October. It's not that great. November, it picks up a little bit because we have, you know, the Thanksgiving holiday and some holiday stuff going on in December.

[00:02:29] We have some holiday stuff going on, so it's a little better, but then again in January it drops off and in fact, January is probably our worst month every year. I would say that's true. For similar reasons. Everybody's now back from winter break and they've gone back to work and gone back to school and the holidays are over and they've spent all their money.

[00:02:47] Right? , so that's January. And then, you know, gradually as spring approaches, it gets a little better. And then we have this great summer, right? So we know what's coming because we've been in the market for a while. We know it's coming. Every January is gonna be the way it is. Every July is gonna be the way it is.

[00:03:04] And so we've had to adapt and deal with it. And this is just the story of how we've been able to do it. And by the way, it's not, it's, those aren't always the same months as you were alluding to. So we have people that we've coached then, for example, Phoenix, Arizona. Where it's exactly the opposite.

[00:03:22] Their slow season is summer because it's a thousand degrees there. Right. As hot as Hades. Right. And their, their high season is actually more winter. Right. Because that's where people go to escape from winter . Right, right. So they have like a snowbird season and all that. Right. So it, and depending on your market, your, your months might be reversed from us, might be different whatever.

[00:03:44] But it's important to realize where you currently. And what you're anticipating coming up in the next 12 months. Right? So how do you, how do you predict that if you are going into a new market? That would be a, a good question. Like you, [00:04:00] you, or either you're just getting started, right? So one of those, one of the ways you can do it, frankly, is talk to other operators in your area.

[00:04:07] And and they'll be able to tell you. Okay. Yeah, because we could tell you that here in Charlotte, July is a great month. J January is not right. That's, that's a very valid way of doing it. If you want to use more of like a data tool, that's something that an air DNA is good for. So we've talked about air DNA before in, in some depth and how it can be useful and it can be not useful depending on how you.

[00:04:34] but that is the, one of the things that I find it to be pretty accurate on is at least the trend. So you can see, oh yes, July's a high month, January's a low month, and you can kind of see that trend graph and you can get an idea of, okay, here's my high season, here's my low season probably for what I'm doing in any particular area.

[00:04:55] And that's in the seasonality tab. If you're on air dna. It's actually right at the top. Is it? There's no tab for it. It's, it's right at the top and it'll say, it'll have some generic statistics about your area, and one of those is a graph that shows you not only high and low resume, but high and low occupancy for the year.

[00:05:15] And that's even if you're not using the free version. So you just put your zip code in and it'll tell you for that zip code, here's the, OR city. You could put Charlotte in and it'll tell you for that city or town what the trend is. So that's. You can get that free. Yes. So that is free data information.

[00:05:34] Yeah. And then you have to, if you want the actual numbers, you have to pay for it. But as we've discussed before, the actual numbers aren't usually correct anyway. So, and if you're just looking for the seasonality, you don't need to pay for it. So that's, that's a data driven way to go say, okay, what's high season?

[00:05:52] What flow season? So you wouldn't go to the seasonality tab, I don't think there is a seasonality tab. Oh. There used to be, didn't [00:06:00] there? There is, yeah. I mean, I just went over it with the, with one of our students. Oh, I don't know. I never, I never go to that tab. Really? Oh, I go there all the time. Oh, okay.

[00:06:10] Yeah. Well, it's right at the top. You don't need to, oh, I didn't know that. I always play the seasonality tab. . Okay, well, perhaps, maybe there's a tab and I just haven't done it. Right. But there you go. But that, that is a data driven way to go figure. Just realize that the actual number it gives you, you take that with a grain of salt, right?

[00:06:30] But you can see the trend, right? That, but that's really what you're looking for is. If I, if I know that in advance, then I can prepare myself. Right. So what are, what are some of the ways that you can prepare yourself for that that you know is coming your, the winter is coming, right? , right? What's that?

[00:06:53] Maybe game it Throne for show. Thank you. Yeah, it's. Not Game of Throne. Is it? Game of Thrones? It is Game of Thrones. Yeah. Winter is coming. Winter is coming. Ugh. It was the best show ever. But anyway. So how do you prepare yourself If you know that winter is coming, what do you do about it? So, well, first of all, knowledge is power, right?

[00:07:14] So even knowing that you are ahead of the game I think a another way to prepare yourself for that would be to get your money in order. And the way that we get our money in order is by using a money management system called Profit First. Mm-hmm. . And it's based on a book called Profit First. Profit First to Buy Michael Michael Witz.

[00:07:43] And there's a. And because nobody can spell his last name. That's Macit is his last name. Oh, macit. Yes. Yes. But if you go to mike motorbike.com. Mike motorbike.com That's right. You can, you can find his information there as well. Yeah. So it's a, it's a great book and it's a, it's a good system. [00:08:00] Yeah. So, so the, the Profit first system is, It's kind of like the envelope system.

[00:08:08] If you follow, what's his name? Dave Ramsey. Dave Ramsey. But it's for your business. So you allocate a certain percentage of all your money that comes in, right? So all your money that comes in from all the different OTAs, you got Airbnb, vrbo, and drug bookings, or wherever your money comes from. All goes into the centralized account and then you divvy it out.

[00:08:34] A certain percentage goes in this account, a certain percentage goes in this account, a certain percentage goes in this account. So you, you have some money divvied up into all the, the different accounts, if you will. So mm-hmm. . So it's really a, it's a cash flow management system and it's designed to, basically work with human behavior.

[00:08:58] Cuz what we tend to do is when we, when we need to spend on something, we go to our checking account, we look at it and say, is there money in there? ? If the answer is yes, we buy the thing and if there's not, we don't buy the thing, right? The problem is, if you only have the one account, there's money in there that should be allocated for other.

[00:09:18] and just because it's in there doesn't mean that it's available for spending on this new thing. Right? So the whole idea is your, each account has a purpose. So there's one account that's just for the things that are involved with the unit. Meaning it could be your mortgage, your rent it's your utilities, it's your insurance.

[00:09:36] It's, it's all those things. And we actually call that our unit support, unit support account. Yep. Because that's really what it is. And if you read the book, that's, they're gonna call it your op opex account op Short for Operating Expenses. Yes. So it's, it's the count where most things come out of.

[00:09:52] Right? And the key to figuring out, well, okay, what percentage do I put in that account is to start to [00:10:00] look at your business, not on a month to month basis, but start looking at it on a yearly basis. Right. So you need to look at, on a 12 month basis, on average, how much of income do I spend on keeping the units running right?

[00:10:17] And that's gonna come up to a percentage on a yearly basis, and it's probably gonna be somewhere around 70%, somewhere around there. Meaning if you bring in 10 grand, you're probably spending seven to keep the unit up and running. On an average basis. Right. But what that means is in July, you actually are putting more money in that account than you need to.

[00:10:41] At least for us, because that's our high season, because our income's higher, but our expenses stay about the same. Mm-hmm. . But then in January what happens is that extra money is there because on average is an average, and it means we actually solved a January's cashflow problem back in July. . Right. So that's actually the key where you get, where I see people get stuck and they say, oh, please help is this time of year they say, Hey, I've got no money.

[00:11:10] I've got no bookings. Right? What am I gonna do? What am I gonna do? Well, and it's hard to fix that problem now because it actually needed to be fixed for five months ago. Yep. Right? And so it's that cash management system and looking at your business on an annual. and coming and coming up with those percentages accurately, that will help you actually survive slow season.

[00:11:37] So slow season for us isn't that big a deal because, well, we prepared for it back in July. Right, right. And that's just having a system in place of bank accounts and each account having a purpose. Right. Well, I mean that that helps you. The, the sooner you get started, the sooner that will be helpful. Yes, that's true.

[00:11:59] Right. [00:12:00] So, so when should you start doing that? Immediately. Yesterday? Yes. I mean, even if you are going through a, a rough patch, a slow season, then you know, you still should go ahead and, and start that, that managing your money that way because it will help. And the, in the next low season. Right. So Right.

[00:12:25] And there's a lot to say about that. That's not meant to be a whole get started ASAP explaining how to do that. No, but that's not, there's a more to it, but Profit first is the, maybe we should do a whole nother podcast. We probably should. That's a really good idea. Yeah. Cause we could talk about that for an hour.

[00:12:39] I think so, for sure. Yeah. Excellent. So that's one way that you. You know, navigate through the, through the slow season. And I, I think that another way to to help you through that is not just managing your money, but also managing your calendar as well. Mm-hmm. and you are the master at calendar management.

[00:13:07] So, and, and what I mean by that, A lot of times the, the way that we get through those January and February months is by getting longer bookings. Right. And that seems like a, oh, we'll just go get longer bookings. Right. Well, how do I do that? Right. Right. That comes to the question, you know, because you're the master at Yeah.

[00:13:34] It's partially canor management and it's partially again, knowing your financials. So this is one of those things when. What you really need to know is what does a night cost you? Oh man, this is a golden nugget. So what we were talking about earlier is, hey, you know, my expenses are this. Well, if you take those expenses, meaning everything that it costs to have that unit, if nobody even stays there, [00:14:00] meaning you still gotta pay rent, right?

[00:14:01] You still gotta pay mortgage, you still gotta pay utilities, you still gotta pay insurance. You still got software you're paying for probably. Netflix, YouTube, you know, whatever you pay on a monthly basis. So it doesn't include cleaning because that only occurs if somebody stays and that's passed through expense anyway, but includes all those things.

[00:14:20] And then what you do is as a very rough thing you can do is divide that by 30. Cause that's how many average days there are in a month, right? So say I had. A place that you know, my rent's 1500 and I've got another, you know, $300, $400 worth of expenses. Let's just call it $500 worth of expenses. So I can make the, the math easy.

[00:14:42] That would be $2,000. So 1500 in rent, another 500 in expenses, $2,000 that I would take and divide by 30. And now I know, okay, this place costs me x amount of dollars per day or per. . Right? And that's important to know because when I go to price, what I in high season is easy because you're just gonna get it booked anyway.

[00:15:06] In slow season. What I really need to know is how low can I go and how, how, how much of a discount can I give? How, how much can I mark this place down? And that, that's actually the most important number. Because the first rule is don't lose money . That's what, so if I know what a night costs me, then I also know what it costs me if it's vacant.

[00:15:27] And I also know what I'm making if I sell it. And I'm even willing to sell it at cost to avoid losing the, so say it costs me $50 a night to have the place, I'd rather sell it for 50, then not sell it at all. Right. And that's one of those things that happens in slow season cuz you were alluding to calendar management.

[00:15:46] Okay. Yeah, I'm getting some bookings, but it's only the weekends. So I'm getting Friday and Saturday booked. This is a very common thing. Oh man. But I can't seem to sell Monday through Thursday, and even though you're making money on Friday and Saturday, you're [00:16:00] losing it all by these days sitting vacant.

[00:16:03] So what you really need to do is figure out a way to, okay, how can I take this money that I'm making on the weekend and defend it by at least selling the other days at. and that's the, the mindset that you need to have coming in. And and what'll get in the way of that is ego and pride because you'll say, well, my place should rent for, well, it's not right.

[00:16:26] Everybody else in the market is getting, but they're not . Right? So you got an, how low can I go is a really important number to know. Yeah. So that when the bookings that you do get that are profitable, you can actually. . And then the other thing that I do is I simply prevent people from booking weekends a certain number of days out.

[00:16:48] So if you can figure out what your average lead time is. Ooh, this is another good nugget. Say so. So say somebody. When you get bookings, typically they come within say, 10 days this time of year. So people are booking, this is very common. It's empty. They book kind of last minute. , you know, you don't sell it for a lot because it was last minute, right?

[00:17:11] So what we do, what I do with the calendar then is, okay, within 10 days is our metric. So within 10 days, I start allowing people to book one and two nights stays, meaning they can book a weekend, but anything beyond 10 days, they have to book at least three nights. And what that does is it keeps my weekends open.

[00:17:31] So that that last minute person that's booking that actually wants a week or two or a month can book it because my calendar's open. Yes. Because I didn't sell a weekend a month ago. Right. For, you know, something and now I'm scrambling, scrambling to try to sell the rest of these empty days that are hard to sell.

[00:17:54] Right, right. So that's how you get longer bookings being, knowing how low you can. [00:18:00] and then having, having the calendar available so that they can actually book it. And we get quite a few of those. We got a couple yesterday. Yep, we sure did. That will take us through December, January and February. So you can do that by using a tool?

[00:18:14] Yeah. So we use a tool that's Price Labs. We talked about price slab before, and that's just an example of, you know, there's a difference between having price labs. Knowing how to use it to your advantage. So it's an expert tool that you then need to use expertly, and that's not all of it. There's some other things I do in there, but that's, that's the basics of it.

[00:18:35] If you just did those two things, if you knew how low you could go and got there for the days that were harder to sell, and if you did a little calendar management so that you avoided those weekends being booked so far in advance, then you then now you've got a. You've got a shot at not losing money.

[00:18:55] Not losing money, and actually being profitable during slow season. It's never gonna be as good as high season. But remember, I'm looking at this from a 12 month perspective, and what I'm really doing is trying to at, at the very least, defend the profit that we made in July. because I overall will be profitable for the year.

[00:19:16] Right? Because we, because this is a revenue business. It's a revenue business, right? Yeah. So, and, and that's a really great mindset to have is okay, well, not so much what is my, my occupancy rate and my, my average daily rate? It's, it's those two things combined , it's, it's all of that combined. in a a 12 month period.

[00:19:43] Right. So just like when I was talking about, okay, I've got a weekend booked, I'm willing to sell the rest of the week at cost just to defend my profit on the weekend. Mm-hmm. , you can expand that out in your mind to, okay, I got July booked. Right. I'm willing to give January [00:20:00] away at cost. so that I'd keep the profit from July.

[00:20:03] That's a really great analogy. Right. So I'm just looking at it on a bigger scale, right? Yeah, yeah. But well, that's huge. I mean, and combine that with your profit First money management system, right? And all of a sudden now it's. Kind of becomes more stress free. Right. Well, you know, another thing to think about in, in the, in the low season is, is your listing.

[00:20:29] And it's, oh, that's a good point. It's really easy for most people to get booked in in the high season, whatever your high season is. Yeah. Everybody's book, regardless of, of are you the best listing out there. But in the low season, That's where it really becomes apparent with an important to make sure that number one, you have really great design and if you need help with that, please let me know because I can help you to, to have really great design and then to have really great photography.

[00:21:06] Cell phone pictures will not do it right, so you have to have good pictures, but then you have to have. Something for the photographer to take a picture of . Right, right. I mean, it can't just be like your secondhand stuff and thrown together. It needs to look professionally designed with professional photos and really.

[00:21:35] Speaking to that customer. We've said this over and over and over again, is who is your target customer? Speak to them. Have your title. That is something that they value, right? Fully fenced in backyard, pet friendly, whatever close to the airport. Gig wifi. [00:22:00] Gig wifi. I mean, desk workspace is whatever your customer wants.

[00:22:03] Whatever. I mean, whatever your customer, whatever speaks to your customer, have that in your title and make sure that you showcase those things in your pictures, especially. The first five pictures, those are so important. So yeah, we talked a lot about that in the last episode, but oh my gosh. So go back and listen to the listing review and, and we'll, we'll, yeah, we'll tell you all of those little details that, that you need to be, but it, in the slow season, it will become even more apparent if you don't have those things.

[00:22:38] Have you thought about why I think. because people there, there aren't as many people traveling to your area in the slow season. And those people are, the people that are traveling are pickier. Well, they can be pickier, right? Because they can be. Yes. The the, it's a supply and demand. Yes, it is the supply.

[00:23:04] So demand goes down, but supply stays the same. Correct. Which means that there's less people book. And they're gonna book all the best places first. Yes. And you need to be one of those best places. Right. Which means pictures, design and pricing. Those three things. Target customer and target customer. Yes.

[00:23:22] Yeah. I mean, I, we, we cannot preach on it too much. Yeah. Because there are so many people out there that aren't doing that. And then they come to us saying, why am I not getting booked? And I'm like, my very first question is, who are you serving? I don't know. everybody. No. Who designed this? I did. I did.

[00:23:43] Right. Who took the pictures? I did with my cell phone. I did. Right. And, and that actually ends up becoming the problem. Yep. Right? Yep. We see it all the time. So, so those are, are some really great tips and to help you navigate [00:24:00] the, the slow season. Number one. Do the, the. Go to Air DNA and that is free data to figure out and identify when slow season is.

[00:24:11] When the slow season is right. And then do, start your profit of first money management, cash flow management system right now. Do that right now. Think about how low you can go so that you can, you know, sell those nights at cost if you have to. And then manage your calendar, like John was talking about.

[00:24:33] Mm-hmm. , did I forget something? Marketing. Marketing. Just the last part. We talking about market. The, the pictures, the marketing. You know, this is the time that you need to be good at it. and you don't have to be good at it during high season. Right, right. And then you get, you, you realize what you're doing wrong when slow season comes wrong,

[00:24:50] Right. So true. So avoid that if at all possible. And if you're you're currently in that situation, fix it. And if you need help with that, give us a call. That's what we do. Yeah, we do. We, we offer coaching. We do, you know, listing reviews. We will help you with your pricing. You know, we do design and, and set up and design whatever you need to help make you the best operator ever.

[00:25:15] There you go. Here at the short term rental authority, , right? And if you need advice on Christmas sweater, you can ask Wendy. She has really great test taste in them. Thank you. Thank you very much. It's a lama. I know. It is. And it even has a. It has a tail on the back. It's ridiculous. It's ridiculous. I think it's fabulous.

[00:25:35] I love ugly Christmas sweaters. Plus, they're so comfy, . They are. They are. Well, we hope you found some value in this episode and you also like. Ugly Christmas sweaters. If you do, we really, really, really want to see pictures of those in our Facebook group. So go ahead and post those in the Facebook group and become a member of our Facebook group, a short term loan authority.

[00:25:57] We are doing a a [00:26:00] cash flow 1 0 1 board game tomorrow night. If you are local, please come and see us and come play the Cash 1 0 1 board game with us. Yeah, we do that the last Thursday, or last Wednesday. Wednesday of the month. Yes. Last Wednesday. Every month of every month. Yes. Because by the time you hear this episode, we'll have already done this weeks

[00:26:17] Sorry, but last Wednesday of every month in Charlotte there's a meetup group for it. It's called Charlotte Cash Flow 1 0 1. It's called Cash 1 0 1. Cash 1 0 1 Meetup. Yes. And that's on meetup.com. All right, cool. Check us out. So come check us out and we'll see you again next time. Onto the next. Onto the next.

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