Is Commission Structure Everything?


05/26/2017 | By Jeff Zallaps

There is a broad range of commission structures in Summit County.  When considering commission structure, the ultimate goal is to assess profitability in addition to revenue generation.  Here are some things to consider:

  • Commission structures should not be a “one size fits all” proposition. Different types of properties command different commission structures.
  • Firms with lower commission structures typically do not have the cost structure to offer sophisticated marketing and lead management programs. For a property generating $50K a year in revenue – a 5% difference in commission structure only equates to $2500.  A strong marketing and lead management program can easily exceed the differential in commission expense.
  • Companies that offer lower commission structures often have to find ways to generate excess revenue through higher fees and charges for maintenance and other client services
 When considering commission structure, remember the old adage:  “You get what you pay for!”

If you would like more information regarding our commission structures, please contact Jeff Zallaps at 720-903-0537 or via email at JeffZallaps@Summitvacations.net.

 

Drip 3 – What Elements of Your Property Drive Revenue

 

There are a number of complex variables that will combine to drive revenue for your property.  Here are a few to consider:

 

  • Season:  In Summit County, expect that 70-80% of your revenue will come from the ski season.  This season commands the highest rate structure.  July and August may have high occupancy – but at a significantly lower rate structure.
 

  • Location:  Given that 70-80% of your revenue will come from the winter season, focus on the locational factors desired by winter guests: proximity to ski lifts, town and transportation.
 

  • Condition:  Many properties in Summit County have recently been renovated leaving more dated properties less competitive.  Up to date properties not only command higher rates and occupancy but also do better in off years (e.g. bad snow year).
 

  • Amenities:  What types of amenities does your property offer?  Personal hot tubs, king size beds, modern electronic equipment all are critical to optimizing both rate and occupancy.
 

Finally, none of the above matters unless your vacation rental management company has a sophisticated program designed to market and care for your second home.  If you have additional questions or if you would like additional information regarding Summit Vacations, please call Jeff Zallaps at [Insert TP #] or email me at _______________.

 

 

 

Drip 4 – Improving Revenue through Renovation

 

When considering improvements to your property focus on the areas generally most important to guests: the main living area, the kitchen and the master bedroom.  We break down opportunities into the following categories:

 

  • Low Cost / Quick Hit:  Simple things such as adding pillows to beds, new comforters, upgrading wall hangings and pictures can make a property feel more modern and show better in pictures.
 

  • Mid-Range Improvements:  Furniture is a critical element to the guest experience.  One of our clients added a king size bed and a large leather couch to their unit and saw a 20% increase in revenue.  Remember – if your property sleeps 10 - try to have 10 eating places!
 

  • High End Improvements:  We recognize everyone has a budget.  However, investment grade improvements in cabinetry, flooring and countertops can drive premium rates and improve the residual value of your property.
 

Please let us know if you would like us to visit your property and assess opportunities to make changes that could drive additional revenue.

 

If you would like to set up an appointment or if you would like additional information regarding Summit Vacations, please call Jeff Zallaps at [Insert TP #] or email me at _______________.

Tags: Blog, Breck, Breckenridge, Management Companies, Property Management, Vacation Rental Program