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Transparency is key for owners

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25 Aug '20
For some, settlement with owners is a dilemma that recurs every month. A shame, because why is it a dilemma? From experience, I can say that holiday parks and rental organisations often manage this themselves by entering into different agreements with owners. My advice? Stop this and make sure it becomes clear to you and your owners. Transparency is key! Reading time: ⏱ 10 minutes
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The settlement

What does a settlement with an owner involve? Simply put, it is the payment of the rent realized on his accommodation, or that of several accommodations in a group (poule), minus the agreed commission that is due to the rental organization.

Simple or not? Below is a list of components that can form the basis of the settlement. Can you still follow this? 👀 (If you're scared, read on after the bullet points)

  • The period to be settled, either per reservation, per month, per quarter or perhaps per year? This often depends on the moment of calculation, is this before arrival of the reservation, how many days in advance do you agree with the owner? Is this based on the departure date or maybe with an overlap in months?
  • Would you like to make it even more detailed? Are there costs that have to be transferred directly to the owner, yes? Which costs are these, pet or cleaning costs? and is this 100% or a percentage? In order to avoid many back and forth payments, you can also choose to settle all outstanding invoices from the owner with the settlement before sending them.
  • Deep? It is also possible to enter a different commission percentage per period of stay or channel. If your guest comes for a weekend, you as an owner will receive proportionally less than if the guest comes for a midweek. Do you charge a fixed amount per night of the reservation? A pool settlement with different values per day, per period makes it even more clear, not ;-).

Yeah, this is quite a list. And I haven't mentioned everything I've come across over the years. Everything can be agreed upon, but isn't that how you lose the overview? Settling with 50 owners each in a different way - because Peter has negotiated just a bit harder than Karen - will result in the weekly task called 'Settlements'.

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So many people, so many wishes

As you have read above you can go in all directions, you do this as a service to the owner. Sometimes you just want to walk that extra mile to make a deal. Is this wise? Business wise, yes, but operational? I don't think so. When making agreements with owners, you have to stick to your principles, because that way you make sure it stays clear to yourself.

You probably want to use different commission agreements. That's fine, but remember the following principles:

  1. Easy to use side by side, this means:
    • Periods are the same, from the first to the last day of the period. Does an owner start on the 22nd? Then make a small settlement until the end of the month so that it can catch up with the 'group';
    • Settings are the same. Do you pass on certain costs directly to the owner, such as costs for a pet? Then try to do this as much as possible for all owners in that group;
  2. A clear overview:
    • Try to make as many 'groups' as possible, this can be done on the basis of:

      a. Accommodation type, for example: Standard, Deluxe etc; b. Size or type, for example: 2 Person Studios versus 8 Person Villas; c. Facilities, for example: Wellness or when owners have made an effort to renovate the accommodation. d. The type of owner, you have practically no work with fixed agreements but tons of work with percentage commissions of Peter and Karen.

  3. Stay within limits: This is perhaps the most important thing of all: You are the boss, set clear lines. Not everything needs to be added, this also makes it more manageable for the owner in the long run.

Is an owner buying another accommodation? Or has an owner renovated his accommodation? Then the agreement has to be changed. When you have structured agreements, you can make the changes quickly and easily, for example by placing the accommodation in a more favorable group.

In addition, these principles help you to make your work easier. And the result of that? You no longer have a week's worth of work, but only a few hours.

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Honesty is the best policy

I already started with it: transparency is key. Or: honesty is the best policy. Call it what you want to call it, but this transparency is the basis for good collaboration.

If you work with a simple agreement, then this is clear to everyone. Not only for you, but also for the owner. This ensures a transparent start of your collaboration.

Because of the owner's insight in the settlements and calculation, you will get less questions. This gives you more time for other things.

In addition, the owner can perform a check which can lead to finding out that you have had just that one setting wrong. He informs you and you don't pay 21% but 9% VAT. Result: more profit, a win-win for all. Does an attentive owner point that out to you?

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Just checking

"Everything used to be better", but does this also apply to the financial processing of settlements with owners? Having to do the calculations manually in the financial package and then just hope it turned out right on the other side? Or tinkering with an Excel yourself and hoping that the formulas work well? Try to automate these kinds of recurring processes with a system that does this calculation for you.

If you have the source data (the reservations and the rental income) at the place where you make the statements, you can make this whole flow run automatically.

Let the system do the tough calculations based on the agreements you have set. All you have to do is check the settlements - randomly per group - and then send them out in one go. Clear and simple!

Guess who's back: Transparency is key! Does something change in a reservation that you have already settled with the owner? Then of course - also automatically - you want to be notified. This way you can correct the settlement and pay the owner. This way you are not only transparent but also flexible in noticing and making corrections. And correcting settlements to meet the terms that you both agreed upon is the most transparent, isn't it?

Want to have a sparring session over your complex rental agreements? I won't settle for less 😉.

See below how Marco Hendriksen from Topparken experiences automation regarding settlements.

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