Calculating 5 Property Management KPIs With VRPlatform & Sage Intacct
Founder & CEO
There are several Vacation Rental performance metrics that all property managers should be tracking, but what do they all mean, and how can you use them to drive your business?
Tracking performance metrics helps tell the whole story of your financial performance, not just whether revenue and net income have increased or decreased over time. Perhaps rental revenue has grown, but gross profit grew at a slower pace because OTA and other fees grew, or maybe, revenue per property has decreased because your property portfolio grew faster than your rental revenues.
Below are key performance indicators that should be top of mind for every vacation rental property manager to track financial performance and project future financial results.
While the calculations for these metrics are fairly straightforward, it’s a time-consuming effort to manually update them on a daily, weekly, or monthly basis. Luckily, Ximplifi automates this process with VRPlatform and Sage Intacct financial software, so you can instantly see real-time performance insights when it’s most critical for your business.
Gross Rental Revenues
We will start with the obvious one, rental revenues. Every vacation rental property manager should be tracking this metric month-over-month, year-to-date and season to prior year season. However, going further should tell an even better story. For example, calculating rental revenues by property, destination (if multi-destination manager), area of town, owner, channel (OTA, TA, Direct, etc.) are all metrics that should be considered to give more insight to financial performance.
How To Calculate Gross Rental Revenue
To calculate Gross Rental Revenue, simply sum up all fees charged to renters during a time period. This includes, but is not limited to, fees like taxes, housekeeping and cleaning, OTA fees, and credit card processing charges.
Gross Rental Revenues = Sum of Payments Received from Guests
Most property management systems will automatically calculate this for you, but it’s still possible to see discrepancies depending on the types of property management and operations software you’re using. To ensure the highest level of accuracy in your accounting and KPIs, VRPlatform integrates multiple sources of financial data into a tried and true financial platform, like Sage Intacct. Using customizable and interactive dashboards in Sage allows you to filter and compare gross rental revenues by time periods, owners, booking channels, regions, nights stayed, and more.
Step 1: Set up data connections within VRPlatform
Step 2: Create tracking dimensions in Sage Intacct
Step 3: Add performance cards, charts, & tables to display your KPIs
Net Rental Revenues
Knowing if your gross rental revenues are increasing or decreasing is good, but how much of those gross rental revenues are coming to you, the property manager? Tracking the net rental revenue that you are receiving as the property manager after the owner payout and OTA fees, can help you make vital decisions. For example, should you focus marketing and referral efforts to drive direct bookings that don’t have OTA fees? Are there ways to pass some costs back to the owner or guest as net rental revenue gets squeezed? Are there some OTA channels that you want to discontinue or limit?
In addition to OTA and credit card processing fees, identifying the direct costs of rental revenues and tracking gross profit (both as an aggregate and a percent of revenues) is the best way to know if the work you’ve put into growing rental revenues is resulting in more income to your bottom line.
How To Calculate Net Rental Revenues
To calculate Net Rental Revenues, subtract all relevant business expenses from the Gross Rental Revenues you received during the same period (see above).
Net Rental Revenues = Gross Revenues – Expenses
Expenses can include items like direct wages, sales commissions, vendor payments, OTA fees, taxes, and any other costs of doing business.
One of the key benefits of using VRPlatform to track and calculate Net Rental Revenues is that you can create custom rules to specify how expenses should be recorded within Sage Intacct. This way, you can decide if charges like housekeeping fees and utilities should be billed to you or the owner, and you can customize those assignments for each property you manage.
Step 1: Categorize expenses in VRPlatform
Step 2: Specify how expenses should be allocated
Revenue per Available Room/Property
As discussed above, the gross rental revenues you are tracking might be growing, but revenue per property might be decreasing because your property portfolio has grown as well. More rental revenue might mean more to your bottom line, but less revenue per property can mean some not-so-happy owners. To see the whole picture, RevPAR is a metric used by the hospitality industry that reflects your ability to rent available listings at an average rate.
How To Calculate Revenue per Available Room/Property (RevPAR)
To calculate revenue per available room and/or property, divide gross rental revenue by the total number of available rooms or properties in the period being measured.
RevPAR = Gross Rental Revenues / Total # Rental Units
As available rooms and properties for rent fluctuate for property managers, this metric is key to telling the whole story of financial performance, especially for managers who want to identify trends across subsegments within a larger portfolio.
By adding the RevPAR calculation to your dashboard within Sage Intacct, you can filter and group results to show variances by different dimensions, like region, owner, booking channel, etc.
While all the metrics above look at historical performance, booking pacing helps project future performance. By factoring in the seasonality that occurs throughout different times of year, this metric helps you gauge if demand for your listings is ahead or behind, compared to your bookings last year.
To give this number some context, you will want to look at specific time periods. For example, as of January 1, 2022 what are the gross rental bookings for Q1 2022 compared to bookings for Q1 2021 as of January 1, 2021? Knowing your booking pace helps make vital decisions, such as where to focus marketing efforts, planning for hiring or seasonal layoffs, or which properties and destinations to highlight.
How To Calculate Booking Pacing
To calculate Booking Pacing, divide the sum of all bookings to-date by the sum of the prior year’s bookings through the same date.
Booking Pacing = Current Bookings To-Date / Previous Bookings To-Date
The end result is a multiplier that is less than, equal to, or greater than 1, and can be interpreted as follows:
- If Booking Pacing = <1, bookings are behind last year
- If Booking Pacing = 1, bookings are in-line with last year
- If Booking Pacing = >1, bookings are ahead of last year
With rich dimensions in Sage Intacct, this metric can be dissected in many of the ways we have already discussed, such as by property, region, owner, booking channel, etc.
Other Key Performance Metrics
Beyond the metrics listed above, there are several other ways to tell the story of a vacation rental property manager’s financial performance. These include number of guest stays, occupancy rate, gross/net revenue per guest stay, average nightly rate, average number of nights stayed, and revenue per payroll headcount, but the list can go on even further.
Unlike basic software, Sage Intacct can capture statistical counts, making it possible to roll up data like bookings, stays, and nights and use these values in calculations like the ones we have discussed here.
With the combination of VRPlatform automation and rich reporting in Sage Intacct, there’s no limit to how deep you can dive into the data, giving you complete visibility into your business at the level you want.
To make timely, informed decisions and drive better results for your vacation rental property management business, keeping real-time KPIs front-and-center is a must. The bad news? Time is never on your side. The good news? Ximplifi is.
With Ximplifi’s VRPlatform integration, all your property management and operations systems instantly sync with Sage Intacct, so you can skip tedious spreadsheet calculations and jump straight into analyzing your business and developing a strategy for success.
For help with these and other financial metrics, reporting and/or planning for your vacation rental management business, contact us with the form below.
10 Signs You've Outgrown QuickBooks
Frustrated with QuickBooks?
Download my article to determine if you need a more sophisticated system to meet your needs.