It was all smooth sailing…..the year was 2020 and the turnover was a staggering plus 21% compared to the year before. The sun was shining and life was sweet on board of the Ship called Club Villamar.
But then the weather turned! Dark clouds, huge waves, thunder, lightning and all of the sudden the Ship found itself in the worst storm it had ever been in.
So what do you do, being the Captain of the Ship? You have only 1 responsibility: ´Do not sink the ship!´. So you do what is needed: You get rid of the stuff you do not need at this moment and you fasten the stuff you do need.
It is a hell of a job, but somehow you manage to keep the Ship from going under.
You look around you: Still in rough weather. The waves are playing with you. All under control for the moment. Sail by sight. Only react to what you can see, your facts and stay the course. Sure…..You will not end up where you originally wanted to go, but you will most certainly reach the next harbour. There you will lick your wounds, repair the ship, take on new supplies, plot course and set sail again.
As you, the Captain, stand at the helm, weathering the storm, you hear a sound. It comes from down under. It´s a clinking sound. Like a pick axe pounding on the hull of the sea worthy vessel.
Then it hits you: ´Somebody Is Trying To Sink My Ship!´
If there is 1 thing I have learned during this COVID19 crisis, it is your dependency on others. Let me give you a few examples.
The OTAs
Ahhhhhhh…..The Online Travel Agencies. Our friends! How have they messed up! For many a source of easy revenue, now a source of massive headaches.
We, with our company Club Villamar, book and have always booked over 90% ourselves. Our own marketing, our own website. We just believe that you should not allow yourself to get too dependent on others. So we were lucky. Many others were not so fortunate.
Airbnb
Every week I have received updates and changes in the Terms and Conditions. Remember the changing of the cancellation policies? When you will be paid? The cancellations and full refunds? The 2×250 million ´sorry we let you down fund´? The ´maybe you want to rent out to hospital staff´ action? The ´we are going long term, because that is the way to go´. The recommended 24h to 72h interval between guests?
In the mean time they get out loans (where are we now….2 Billion?), fire staff and stop all advertising.
Homeaway
Not that bad, only that they communicate to the guest that they have strongly advised their partners (us) to make a full refund.
So what do the guests expect……Right…..and we work with vouchers and only for the time that arriving is not possible, not 3 months into the future.
Good thing the Expedia Group got a capital shot of over 3 Billion.
Booking.com
Same here with the cancellations. And no matter what your own procedure is, you will be invoiced by Booking if the guests are not refunded by you. Sweet. These guys are even funnier, applying for a ´save my ass´ Billions- support with the Dutch Government. Like they never made a profit.
The next press release was about firing a large part of the staff.
These OTA guys are amazing. I made a video about 8020. This is the 10% of bookings that gave us 90% of the headaches during COVID19.
And these are the Billion Dollar Backed companies we have to compete with on Google Paid Advertising when this thing is over. Crazy!
As they say in the military: ´One is None´: Make sure you diversify your marketing channels.
Paypal
We use Paypal for our credit card payments. We are a multi million Euro per year client for them.
We have a rolling reserve of 20(!) %. That is money (20% of the amount of all payments through Paypal) that they keep from us during 90 days to cover the risk of chargebacks. That can add up to 100s of 1000s of Euros that we cannot use in our working capital. In the previous 10 years, we have had less than 50 chargebacks all together.
A couple of weeks into COVID19 we get a ´routine check´. How we are handeling cancellations, the yearly reports of the last 2 years, the quarterly report for 2020 and the bankstatements of the last 3 months. Yes, a ´routine check´. And while we are in the process of getting the paperwork, they block the rolling reserve and the saldo on our account. Account frozen.
Your Partners
All of the sudden you have to be concerned with all the partners (other companies) you work with. Are they financially healthy? Can we still pay them before the guests arrive? Is our down payment secure? Will they be able to provide the service our guests expect.
You can be in charge of your own finances, but are they in charge of theirs?
Your Vacation Rental Owners
There is a lot going on in the life of everybody and that includes our owners. Spain has been hit hard. Unemployment is soaring.
Owners are cancelling their contract because they believe that al, is lost. they have been pounded by the media and cannot see that ´This too shall pass´
´This Too Shall Pass´
Conclusion
As you might have seen I have left out a couple of players: The Media with the constant bombarding with half facts. The Goverment Leaders.
I am sure you can think of more players.
We are very happy to see that our independence is making sure we keep our head above water and…..behold….good news……
There Are Clear Skies Ahead!
We will come through this thing. No problem. We have a strong ship.
But I will not forget these people trying to sink it.
And neither should you.
Want to know how we manage to consistently reach a double digit million Euro turnover with 90% direct bookings?
Check out this video with Simon Lehmann, recorded a couple of weeks ago for the AJL Consulting Profitability Hub.