Starting a vacation rental business can be a great idea, as it can be a lucrative and rewarding venture. However, it also requires significant time, effort, and financial investment. It’s essential to conduct thorough research and consider factors such as location, competition, and local regulations before starting a vacation rental business. Additionally, it’s crucial to have a solid marketing strategy and to provide excellent customer service to ensure repeat business.
We decided to gather the most successful vacation experts who gave us different tips and advice on which are the best strategies you can use to start your own short-term rental business.
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Vacation Rental Management
Vacation rental management refers to the process of managing and overseeing the operation of vacation rental properties. This includes tasks such as marketing and advertising the property, managing bookings and reservations, handling guest check-in and check-out, providing customer service, managing cleaning and maintenance, and handling financial transactions. Vacation rental management companies or individuals may also provide additional services such as property management and maintenance, as well as providing local concierge services to guests. The goal of vacation rental management is to provide a seamless and enjoyable experience for guests while maximizing revenue for the property owner.
What is the difference between short-term and long-term rentals?
First, where do a short-term rental end and a long-term rental begin? Typically we define short-term as anything shorter than 90 days. However, most property owners who rent out their homes on a short-term basis usually rent out for a daily or weekly rate. When trying to decide whether or not to rent out your property as a short-term or long-term rental, there are a few things to consider.
Location is one of the most significant factors in deciding which path is best for you. We tend to see more short-term rentals in tourist locations, such as oceanfront properties or homes in the mountains with endless views. Most consumers who will rent a property short term are doing so for a vacation, which is why they’re also commonly referred to as vacation rentals.
Whether or not you plan to use the property yourself is also essential to evaluate. If you plan on using the property every so often, the income from short-term rentals may or may not cover the costs of a second home, but it gives you flexibility for personal use. On the other hand, long-term rentals can provide stability and less overhead costs. Management companies typically charge around 10% for long-term management fees, whereas short-term fees range from 15-20%, not including the associated cleaning and linen costs for tenants. Some companies may charge the tenants for these items, so it’s best to verify before signing an agreement.
Another thing to consider is if you want to furnish the property. Short-term rentals should be furnished and updated to compete with other rentals. Investing in the decor and style of the home is the best way to draw in renters and maximize your income. The renter isn’t just buying a place to stay; they are purchasing a memorable experience. Providing that will guarantee a return customer and a successful vacation rental.
-Caleb Parkhurst at Treasure Realty
What are the benefits of investing in a vacation rental?
Investing in a vacation rental property can be a great way to generate passive income and build wealth over time. The rise of vacation rental platforms like Airbnb and VRBO makes it easy to rent out your property to vacationers. Now, more platforms like reAlpha are making it even easier for anyone to invest in this booming market. But what is all the hype about?
One of the key benefits of investing in a vacation rental is the potential for steady income through vacation rental revenues. By renting out your property to vacationers, you can earn money regularly, making it a great source of passive income. Additionally, vacation rentals in popular tourist destinations can potentially generate higher income compared to long-term rentals.
Another benefit of investing in a vacation rental is the potential for appreciation. As property values rise, so too can the value of your vacation rental. By keeping your property in good condition and making updates, you can increase the value of your vacation rental investment.
Investing in a vacation rental can also provide tax benefits. For example, you may be able to deduct expenses such as mortgage interest, property taxes, and maintenance costs from your rental income. It’s essential to consult with a tax professional to understand how owning a vacation rental property will impact your taxes.
Vacation homes can be used for both personal and rental purposes. This means you can enjoy your property when you’re not renting it out and generate income when you’re not using it. In this sense, it’s kind of like a timeshare…only not terrible in every way!
Vacation rental properties can be recession-friendly. While the stock market may fluctuate, people will always need a place to stay on vacation. Additionally, owning a vacation rental property can provide a source of income during an economic downturn.
The vacation rental market is growing, and there is a massive demand for rental properties. According to Airbnb, they are short millions of hosts to meet demand. This presents an excellent opportunity for those looking to invest in the vacation rental business.
-Christie Currie at reAlpha
What are some of the benefits of owning a vacation rental?
One of the most significant benefits of owning a vacation rental is that it provides you with a location. In this case, you have access to accommodations that are located in some of the most beautiful spots in the world. The benefits of owning a vacation rental include:
- Passive income – The fact that owning rental property is a passive income source may be its largest advantage. This indicates that it is an ongoing source of income that requires little maintenance work.
- Financial Security: People may find themselves with an empty property for various reasons. An empty house could be exposed to squatters, vandalism, and maintenance concerns that could soon grow into more severe difficulties. You may feel more at ease knowing the house is being cared for and maintained if you rent the property to tenants.
- Assets Appreciation: By renting out your home, you can keep it now in case it increases in value and give yourself the option to sell it later. Every market will experience appreciation at a different rate, but home evaluations have always been an appreciating asset. Look at the possibility for appreciation in various cities and neighborhoods to determine what you might be able to anticipate.
However, there are risks associated with owning a vacation rental as well: if you don’t have enough money to pay back your mortgage and other expenses, you could be stuck with an expensive debt that will take years—or even decades—to pay off.
To help mitigate these risks before entering into this space, make sure you understand what it takes financially and emotionally to own a vacation rental property before signing any contracts or agreements with landlords. Additionally, you can hire a professional property management company to help with all of the tasks involved in renting and scaling up your rental property.
There are dedicated professionals in each city and state that can cater to your specific needs. For example, at Nova Vacation Homes, we specialize in vacation homes property managements in the Orlando, Florida area. We focus on those homes that are situated in Windsor Hills Resort, Windsor at Westside Resort, Windsor Island Resort, Champions Gate Resort, Solterra Resort, Solara Resort, and Storey Lake Resort. For inquiries regarding homes located in any of the resorts above, please contact us via [email protected] or call us at (407) 919-6682.
-Leon at Nova Vacation Homes
What are the top expenses a vacation rental owner has?
Vacation rental expenses are essential to understand the profitability of your business. The top fees that all vacation rental owners should anticipate are:
Mortgage Costs
If you already own the property, then the mortgage wouldn’t be a problem. The mortgage amount depends on the property’s location and may vary depending on several factors. US Census Bureau estimates that the average lease for a property in the US ranges from $2,062 to $3,059 per month.
Insurance
Most vacation rental owners prioritize their insurance for their property to be insured. This is primarily important to safeguard your vacation rental business and prevent any loss of income! Depending on your insurance provider, the average insurance costs $166.67 per month.
HOA (Homeowners Association) Fee
HOA fees are required if your vacation rental property is located in a subdivision. Commonly charged monthly, HOA fees are used to maintain the shared space in the neighborhood. The average HOA fee in the US is $170, which also varies depending on the property’s location and local amenities offered.
Maintenance Costs
Vacation rental properties do require not only decoration and furnishing but also maintenance in the long run. Sparing 1% of your property’s annual value for maintenance is vital to ensure that your property will have the same value.
General Services
This includes utilities, internet, TV subscriptions, and management services, among other services. While this may vary according to your property type and amenities offered in your vacation rental property, it’s certainly important to track all the expenses for general services.
Ongoing expenses should undoubtedly be well-anticipated to operate a vacation rental business successfully. To save on your monthly expenditures, here are some expert tips:
- Switch to energy-efficient appliances
- Save cleaning expenses: Do it yourself!
- Purchase bulk supplies (for a lower price)
- Be proactive in maintenance
In summary, vacation rental expenses vary from one property to another. And while there are ongoing costs that you can prepare for, you can always secure a business loan for other unexpected expenses and be a pro in the vacation rental industry!
-Jae Seok An at Airbtics
What is the best type of property to purchase for a vacation rental?
When it comes to purchasing a vacation rental home, the simpler the features, the better. It’s also best to stay away from larger homes as more guests increase your chances of your house being the next party house. The sweet spot is a single-story three bedroom, 2 or 3 bath home with easy-to-manage landscaping. I also recommend staying away from Jacuzzis as they become maintenance nightmares. Private pools are a curse and a blessing: they get more money but the cost to maintain them goes up. We have found short term rentals without pools perform better financially by a small margin.
Newer homes with double-pained windows, tile roofs and vinyl sliding glass doors are also desirable. Newer homes will have fewer plumbing issues, and the single-story will eliminate damages due to the occasional tub or toilet overflows. The ideal flooring would be tile, followed by wood laminate flooring. Just imagine a dozen three-year-olds wandering around the house with food in their hands. That’s what you will be dealing with every week.
Accessible parking is a must. If your guests have to park in front of neighbors’ houses, you will have a miserable time—factor in a parking space for each bedroom. A garage is a bonus. Other added bonuses are houses in a cul-de-sac, nearby groceries, and of course, entertainment. Upgraded kitchens are a help but not a deal breaker. As long as your home is spotlessly clean and has comfortable furniture, Wifi, and numerous TVs, some outdated features of a house will be overlooked by guests.
-Jim Eagan at Limestone Investments
What extra amenities should I include in my vacation rental to attract more guests?
Amenities are often location-specific, so I can speak to the amenities which make the most significant impact in our market: the mountains of Western North Carolina.
The top amenity I suggest to any property owner is a hot tub. Nothing increases occupancy as quickly as this single amenity. While a significant investment, it can save a property with little else to offer, and it can be the cherry on top for the more desirable units. Over the past year, 48.4% of our properties have offered a hot tub, but they’ve accounted for 59.8% of our total reservations. In fact, they already account for 60% of all future reservations already booked for the remainder of 2023. They simply always secure first in our area. The properties without hot tubs are always the last to book for any sell-out weekend.
Another popular amenity is to be pet-friendly. Approximately 30% of travelers to our area are bringing Fido, so by not being pet-friendly, you immediately close your doors to a large segment of travelers. In practice, it doesn’t move the needle quite as much as a hot tub (pet-friendly rentals made up 53.8% of our inventory and accounted for 56.4% of our travelers), but many of these homes may not have had as many reservations if they weren’t pet-friendly. As a bonus, adding pet fees can increase your total revenue at a property.
Beyond these standard extra amenities, I’d say that creating a unique experience is often an essential factor to rentals. Travelers often don’t want to go on vacation and stay in a home like theirs. They’re seeking an experience: whether it be a gourmet kitchen, a log cabin with a fireplace, a luxury estate, or a Sleep-by-Numbers bed, provide something comfortable and unique and then highlight it in your listing. Location may reign supreme in rentals, but guests will often travel a little further out for that special “something” that attracts them to your property, whether it be a hot tub or the 75″ TV with sports package.
-G.W. Weber at Carolina Mornings
What data should I collect from my guests and why?
It is essential to collect guest data to provide a safe and personalized experience, protect your property and build relations. Here’s what to collect:
1. Contact details
You need your guests’ correct names, emails, and phone numbers to ensure you address them correctly and correspond with the right person.
In addition to providing information pre-arrival, you should be able to answer guests’ requests during the stay and ask for their feedback afterward.
2. Identity confirmation
To verify your guests’ identity, ask them to provide a government-issued ID, such as a passport or driver’s license, along with a selfie.
Online bookings and remote access increase the risk of fraud or even criminal activity when there is no one to identify the guest in person. Protect your business, ensuring that your guests are who they claim to be.
3. Demographics
Customize your service and offers by knowing your guests’ age, parental status, and reason for traveling. Business travelers, for instance, will appreciate different offers than newlyweds or families with children.
Be mindful of guests’ privacy.* Instead of asking directly, gather information through indirect means. Offer the option to voluntarily provide information by including a survey or a form in your check-in or checkout process.
4. Preferences
Take note of your guests’ preferences in amenities, meals, beverages, and activities and tailor your offering to their needs. This helps to make your guests’ stay more enjoyable and incentivizes them to book again.
5. Feedback
Follow up with guests to ask for feedback and gather additional information about their preferences to improve service. It also helps you identify opportunities for 5-star reviews, build your online reputation and attract direct bookings.
6. Signature
You can require your guests to sign a rental agreement outlining the terms and conditions of their stay, including house rules and cancellation policies.
7. Payment information
Ensure secure payments and prevent fraud by verifying the guest’s identity and ensuring that the payment comes from a good source.*
This might seem like a lot. However, the better we know our guests, the better we can serve them.
*You must comply with data protection laws when collecting and storing information.
-Sasha Barak at Enso Connect
How often should I deep-clean my vacation rental?
Maintaining a vacation rental property can be a challenging task, especially when it comes to keeping it clean. One of the most important things to consider is how often you should schedule a deep clean for your rental.
First, the frequency of deep cleaning will depend on the number of guests that are staying at the property. If you have a high turnover rate, with guests staying for only a few days at a time, then you may need to schedule deep cleans more frequently. On the other hand, if you have longer-term renters, you may be able to schedule deep cleans less regularly.
Another factor to consider is the type of guests that are staying at the property. For example, if you have guests with young children or pets, you may need to schedule deep cleans more frequently due to the potential for spills and accidents. In contrast, if you have guests who are older or more considerate, you may be able to schedule deep cleans less frequently.
When scheduling deep cleans, it’s essential to be mindful of the time of the year. For example, if you have a vacation rental located in a tourist destination, you may want to schedule deep-cleaning during the off-peak season when there are fewer guests. This will allow you to take your time and ensure that the property is spotless.
In conclusion, the frequency of deep-cleaning for a vacation rental property will depend on several factors, such as the number of guests, the type of guests, and the property’s condition. Scheduling deep cleaning during the off-peak season can be an effective way to ensure that the property is always spotless.
-Chris Mondragon at Queen Bee Cleaning
How can I make my vacation rental kid friendly?
One surefire way to boost your bookings is to make your vacation rental kid-friendly. Safety is top of mind for traveling parents, so ensuring that the entire property is baby and kid safe is essential. Provide baby equipment or offer parents a place to rent items like strollers, pack-and-plays, and cribs. If you have an outdoor area or pool, ensure it is secure by adding baby gates or pool alarms. Encourage your vacation rental cleaners to report safety issues to fix them before the arrival date proactively. If your turnover crew notices something hazardous to kids, encourage them to speak up and report it. Secure your windows and make sure there are no sharp edges. Your cleaning process should include sanitizing any baby equipment available for use.
Safety is the priority, but kid-friendly also means fun. Kids love to play, and vacationing parents love when there are board games, gaming consoles, and game rooms for their kids to explore. Themed rooms with interactive murals and eye-popping designs really add a ‘wow’ factor that kids love. Kids absolutely love the Harry Potter-themed vacation rental we care for; each room has a unique theme from Hogwarts. The more kid-friendly you design and market your short-term rental, the more bookings you will see on your calendar from traveling families.
Share kid-friendly activities and attractions in your local area. Playgrounds, state parks, and landmarks are all great places to start. Above all, your listing can focus on the kid-friendly aspects of your vacation rental that will make parents’ vacations more relaxing. Safety, fun, and things to do – the perfect trifecta of a kid-friendly vacation rental.
-John Candelario at Vacation Home Help
What should I consider before making my vacation rental pet friendly?
Our website ShoreSummerRentals.com is a direct booking vacation rental platform for the New Jersey Shore. Peak season is from mid-June to Labor Day. 16% of our vacation homes are categorized as pet friendly and enjoy higher occupancy rates. When comparing booking rates as of early January, pet-friendly rentals are 63% booked compared to a 51% booked rate for rentals that are not pet friendly. As it gets closer to the summer season, the pet-friendly booking rate will be close to complete.
Vacation rentals that allow pets can charge higher rents due to less supply and higher demand. We encourage hosts to charge guests a pet cleaning fee to cover the additional cleaning costs, as well as a refundable security deposit. The host should never rely on vacation rental insurance, as a guest will be more accountable with your home when a security deposit is involved.
Guests want a clean place to stay. Hosts may want to consider removing carpeting and installing durable hard flooring (like luxury vinyl tile) that is scratch resistant and easy to clean up when the inevitable pet accident occurs. Hosts should provide cleaning supplies that can remove pet odors and lift stains and be very specific in your lease regarding what is expected when accidents occur. Pet hair and dander can take a while to clean up, so a great cleaning crew for changeovers is a must.
Consider the type of pets permitted. Often, we see only small, non-shedding hypoallergenic dogs permitted. Very few pet rentals allow cats.
We suggest our hosts supply a Welcome Guide that provides the features, rules, recreation spots, dining options, and other important information. Include information on nearby parks as well as pet-friendly restaurants. Also, be sure to address pet noise and crating a pet when left alone.
Finally, allowing pets in your vacation rental can be financially rewarding and alleviates the guest from the stress of having to board their pet. This creates a happier experience for their vacation and makes them more likely to rebook.
-Maria and Chris Kirk at Shore Summer Rentals
How can I avoid my vacation rental guests disturbing my neighbors?
Angry neighbors are one of the biggest challenges for vacation-rental owners and hosts. And the most significant cause of neighbor complaints is the noise from vacation-rental guests. Frustrated neighbors can create many problems for property owners. They may call the police or even intervene directly with your guests. In the worst-case scenario, they may join forces with other frustrated residents in the community and campaign to severely restrict or even ban vacation rentals in the area.
By taking a handful of proactive steps, you can prevent these issues, protect your neighbors from noise, and–bonus–significantly reduce the risk of property damage and cleaning disasters at your vacation rental. Here’s how:
- Screen guests thoroughly before letting them book. Read the potential guest’s reviews. The simplest way to avoid neighbor noise complaints is to rent your property to guests who are unlikely to make excessive noise. This means guests with an established short-term rental history and positive reviews from previous hosts.
- Communicate “house rules” clearly in your vacation-rental listing, and let guests know the consequences for breaking the rules. Airbnb, Vrbo, and other booking sites have “house rules” sections on property listings that you can customize. Make sure you let guests know maximum occupancy, noise rules (“no outdoor noise between 10 p.m. and 8 a.m.,” for example, or “quiet hours are from 11 p.m. to 7 a.m.”), and strict prohibition of parties or events. Also, let them know what penalties they will incur if they break the rules. And don’t forget to include this information in your confirmation message and your on-site house manual.
- Install privacy-safe noise sensors indoors and out, and enable direct guest messaging. Privacy-safe noise devices measure decibel levels and duration of noise. They do not identify specific sounds or record sounds. These devices can easily be installed during a cleaning turnover between bookings.
Once installed, they can be monitored via a mobile app or website. You can also set them up to send a text message directly to the guest, gently reminding them to take it down a notch if things get too loud. Most of the time, this gentle reminder takes care of the noise problem without neighbors ever being bothered or getting involved.
-Natasha Garber at NoiseAware
Vacation Rental Marketing
Promoting and advertising a vacation rental property is essential to attract potential guests and increase bookings. It involves a variety of tactics and strategies to reach and engage with potential guests and promote the property’s unique features and benefits.
What are the best ways to promote my vacation rental?
Utilize online listing platforms: Online listing platforms such as Airbnb, VRBO, and Booking.com are a great way to reach a broad audience of potential renters.
Hire a Short Stay/Vacation Rental or Airbnb management company: Using an Airbnb management company can provide several benefits for renting out their property on the platform. These companies can handle tasks such as listing your property, creating high occupancy rates, and optimizing your digital listings, so they rank higher (SEO). Also communicating with guests, managing bookings, and handling cleaning and maintenance. They can also provide valuable insights and advice on optimizing your listing to attract more guests and increase your income. Additionally, they can handle guest complaints and issues, saving you time and stress.
Optimize your listing for search engines(SEO): To make sure your rental property is visible to as many potential renters as possible, it’s essential to optimize your listing for search engines. This includes using relevant keywords in your listing title, descriptions, and tags, as well as incorporating photos and videos that showcase your property.
Create a professional website: A well-designed website that showcases your rental property is essential to attracting potential renters. Ensure your website is easy to navigate, has high-quality photos and a detailed property description, and includes information about local attractions and amenities.
Leverage social media: Social media platforms such as Facebook, Instagram, and Twitter are powerful marketing tools that can help you reach a large audience of potential renters.
Network with local businesses: Building relationships with local businesses can help promote your rental property to a broader audience. Consider reaching out to nearby hotels, restaurants, and tour companies and offering to share information about your rental property with their customers.
Consider offering special deals and discounts: Offering special deals and discounts can help you attract renters during slow periods. Consider offering a discount for repeat renters or those who book multiple nights.
Encourage guest reviews: Positive reviews can be a powerful marketing tool, so encourage your renters to leave reviews of their experience. This can help attract new renters looking for a high-quality vacation rental.
Promoting a vacation rental takes time and effort, but with the right strategies in place, you can increase your occupancy rates and make your rental a success.
-Andrew at Airbnb Management
What is a vacation rental marketing strategy?
A vacation rental marketing strategy is a plan of action for promoting and advertising a vacation rental property to attract renters and increase bookings. This can include a combination of online and offline tactics such as listing the property on vacation rental websites, building a website or social media presence for the property, using search engine optimization (SEO) techniques, offering special promotions or discounts, and utilizing traditional marketing methods such as print or radio advertising. The goal of a vacation rental marketing strategy is to make the property more visible and appealing to potential renters, resulting in more bookings and revenue for the property owner.
- Understand your potential customers and optimize your message to appeal to their needs. Create an ideal customer persona
- Optimize your listing on vacation rental websites such as Airbnb, VRBO, and Booking.com with high-quality photos, detailed descriptions, and accurate pricing to attract renters.
- Utilize social media to showcase your property and engage with potential renters by creating a visually appealing Instagram account, Facebook page, and other social media platforms.
- Utilize search engine optimization (SEO) techniques to improve your property’s visibility in search engines and reach more potential renters.
- Build a website or landing page for your vacation rental to provide detailed information and photos of your property to potential renters.
- Offer special promotions or discounts to attract renters and increase bookings.
- Utilize email marketing to keep in touch with past renters and send out promotions or special offers to attract repeat bookings.
- Utilize online review sites such as TripAdvisor to gather and showcase positive reviews from past renters.
- Utilize targeted online advertising to reach potential renters on platforms such as Google AdWords, Facebook Ads, and Instagram Ads.
- Network with local businesses and organizations to promote your property to their customers and members.
- Utilize traditional marketing methods such as print or radio advertising to reach a wider audience of potential renters.
-Ben Day at Jetstream
How can I create a competitor analysis for my vacation rental?
Researching your competition can be a useful part of creating a winning vacation rental marketing plan. Typically, you want to first review who those core and key competitors are. You can research on both listing sites like Airbnb/Vrbo as well as searching on Google for vacation rental managers and reviewing the Maps local profiles. Next up, you can perform an external SWOT (strengths, weaknesses, opportunities and threats) audit of their marketing by reviewing their website, photography, social media marketing and overall site traffic (review organic search traffic in Ahrefs and overall site traffic in Similarweb).
After the SWOT analysis, you can perform a SWOT of your own company to see how you stack up to the competition! You’ll likely find elements that they do better on from a marketing perspective which can start to form your strategy on how to best compete.
-Conrad O’Connell at BuildUp Bookings
How can I give my vacation rental a competitive advantage?
There are a few things that can really set your vacation rental apart from the pack. In my experience, the best competitive advantages are property photos, knowing your audience, and personalized review responses. Anyone can theme a room or have a nice pool; elevate your rental by delivering on the promises your listing implies.
Photos are key. There is nothing that says, “I don’t care about my home,” like unprofessional photography. Poor lighting, amateur angles, and photos of mundane objects all point to a lack of care, and more so, not a place I want to spend my time or money. Thoughtful, professional photography can enhance any home, transforming every day into a place of welcoming comfort. The biggest key, pun unintended, is getting your guests in the door. Once inside, you can wow them with your services, amenities, etc., and their positive experience continues. Without warm and inviting photos, potential guests will just keep scrolling.
Your rentals will sit empty without knowing your audience. You must tailor everything about your listing to the guest you expect to stay in your home. Near a major tourist attraction? Make it family-friendly. Near the beach? Supply beach gear and show it off. Include descriptions that complement your photos and set expectations for future guests. Evoke emotions while giving enough facts to help your guests imagine their vacation in your home.
With the listings sites designed the way they are, reviews are the almighty. Bad reviews present an opportunity to show your next guest your empathy, proactivity, and willingness to make things right. The only way you can do that is to provide a personal response and show remorse for the guest’s poor experience. Acknowledge their thoughts and feelings while explaining to the next guest why their next stay will differ. This goes for great reviews too! You can quickly tell when a host writes a canned response to a study. That, to me, again shows a lack of caring for your guest, and while that guest may have had a great stay, what makes the next guest think that it will be replicated for them?
-Philip Bernardo at Roseus Hospitality
Vacation Rental Pricing
Vacation rental pricing can be complex and can take into consideration a lot of factors. Vacation rental owners need to consider factors such as property amenities, location, occupancy, seasonality, minimum stay, and cleaning and service fees and research the rates of similar properties in the area to ensure they are pricing their property competitively.
How can I build my vacation rental pricing strategy?
Your vacation rental pricing strategy should reflect many different components. You’ll want to consider your nearby competitors, local events, search rankings, seasonality, and more. It’s a delicate balance between capturing high revenue for your property and being realistic about how your property compares to others and also market timing.
Travel buying is a highly research-driven process for many people, and potential guests are always comparing your property against others on their list.
One pricing approach is to focus on traveler events that your property can best cater to. For example, if you know there are a lot of travelers wanting to stay in your area because of a nearby concert stadium or for a yearly event, then you can build your property to cater to those events and raise your prices according to those dates.
What if you want to cater to more travelers & more event types?
You’ll want to utilize technology then and a pricing platform that analyzes all of your area’s events. From junior soccer events and festivals to small religious events. This can all be taken care of with technology.
Another simple approach is to create pricing rules that increase or decrease your prices over time. For example, any unbooked nights for this current week can be lowered by 10%. This discounts your property to capture any potential last-minute bookings since you can’t realistically sell nights in the past. This is called a ‘time-based’ pricing approach & with the right platform like Rankbreeze, you could also apply seasonal customizations that flip around this strategy & do the opposite very easily. For example, during your busy season, you’d raise your prices for last-minute bookings instead of lowering them.
-Kelvin Mah at Rankbreeze
How can I price my vacation rental?
Figuring out the right pricing strategy for a vacation rental can be quite a challenge. However, if you want to maximize your revenue through effective pricing strategies, consider some of the following factors:
- Your Amenities: Rentals with additional amenities such as a pool, porch, hot tub, a yard, extra parking, great wifi, etc., command higher prices. Therefore, you should think about what amenities your home offers and, even more importantly, invest in photography that highlights these amenities.
- Seasonality & Other Demand Factors: Three main demand factors impact pricing for vacation rentals – seasonality, day of the week, and significant events. And again, your amenities matter in terms of how you price against these demand drivers.
- Your Performance: Ultimately, what matters most is whether people book your home either more often or at higher rates relative to other nearby, similar properties. Advanced dynamic pricing systems like Wheelhouse can observe your booking patterns, your reviews & all your amenities to adjust your prices in real-time, based on demand for your specific listing type. At Wheelhouse, we believe “the market is the ultimate source of truth”, meaning the more bookings we can see at your listing, the more we can understand how to price your home perfectly.
- Your Competition: To fully understand your pricing strategy, it’s important to compare your performance to a nearby competitor. Is your competitor able to capture longer bookings? Or, bookings with higher prices? Or, more bookings on weekends? All that information, as well as a careful observation of how they market & price their property, can tell you a lot about how effective your pricing and merchandising strategies are. Should you be thinking about how to price your home for a specific weekend, we’d recommend seeing which of your competitors are available for that weekend. For example, if you are the only home available in your area with a pool… your place is likely worth a lot more for that weekend!
Ultimately, pricing your home correctly requires data & time. This is why teams like Wheelhouse provide software to help you price your home perfectly – earning more revenue while saving time to focus on other critical aspects of your business.
-Andrew Kitchell at Wheelhouse
How can I set my vacation rental’s seasonal pricing?
Your nightly rate is determined by your current occupancy, no matter what season you’re in. And your occupancy is determined by market demand. If you’re not happy with your pricing, then you have to offer more value or maybe sell your current rental due to low demand and start over elsewhere. Hosts think we have more control over our pricing than we do. The market sets your price. If you get it wrong, let’s say you set it too low and have high occupancy, you’d simply raise your price or vice versa.
My revenue management strategy and methodology come down to two things: rates and occupancy. Your aim is to achieve maximal numbers for both.
Step 1: Knowing your “Booking Lead Time” to understand how far in advance the average reservation is confirmed. You can find this in AllTheRooms analytics dashboard or your Airbnb dashboard under insights – conversions. In most markets, your booking lead time will be around 30 days.
Step 2: Decide on your occupancy targets. An occupancy target is how high you want your occupancy within a specific time frame. For example: if the booking lead time is 30 days, we know that about 50% of bookings are confirmed within 30 days of today, and the remaining 50% are guaranteed within 30 days. Based on this, you would want your occupancy rate to be 50% within 30 days. Some hosts may feel more comfortable with higher occupancy, say 60% or even 80% occupied within the next 30 days.
Example:
- 100% occupancy within 7 days
- 80% occupancy within 14 days
- 50% occupancy within 30 days
- 30% occupancy within 60 days
- 15% occupancy within 90 days.
Step 3: Once you have set your desired occupancy rates for the next 90 days, you will need to monitor your future occupancy rates continually. Choose one day per week to check your occupancy and adjust your pricing. If my actual occupancy is above my target, I raise the pricing. If my true occupancy is below my target, I lower my price.
Most hosts are concerned with only their nightly rate and their minimum, but that doesn’t matter what you think you can get or what you want your minimum to be. That’s because Airbnb is a true market in that the market will tell you what your listing is worth, not the other way around.
In summary, your nightly rate is based on your occupancy. The market sets your occupancy. First, find your booking lead time; second, create your future occupancy targets, thirdly monitor your occupancy levels weekly and adjust your pricing accordingly.
-Daniel Rusteen at OptimizeMyBnb
Vacation Rental Decor
Decor is important in a vacation rental because it can greatly impact the overall guest experience and can influence their decision to book and recommend your property. A well-decorated and well-maintained property can make guests feel more comfortable and welcome, which can increase their satisfaction and likelihood of returning.
What are the best decorating tips for a vacation rental?
Decorating a vacation rental can be an extremely fun and rewarding experience but it can also be a challenge if this is not your area of expertise. Here are a few things to keep in mind when creating a space your guests will love.
- Make it cozy: Invest in comfortable, quality bedding to make your rental inviting and welcoming. You want to make the rental feel as though it’s better than being at home, a great escape.
- Invest in well-made items: Choose furniture and accessories that are high in quality and will last for years to come. Make sure the furniture has the proper scale and balance for the size of the rental and could work in several ways. You do not want to skimp in this area. Multipurpose furniture can adapt to many situations.
- Keep it clean: Too much clutter can be overwhelming, so choose a few pieces that will make a big impact. Make sure it has all the amenities a guest might need. Give more than they expect.
- Tell a story! Adding personal touches by incorporating local art, décor, and books to give the space a unique flavor. Small touches like throw pillows and blankets can make a big difference. This is your chance to add texture and pattern. Don’t be afraid to go bold! Color has an emotional impact on mood.
- Pay attention to the lighting: Open the curtains and blinds to let the sunshine in and make the space feel larger and brighter. Bring the outdoors in! Make sure there are plenty of lamps and natural light sources to create a warm and hospitable atmosphere. It’s the details that matter. The right kind of lighting can completely transform any room.
By following these tips, you can make the most of your vacation rental and are guaranteed to stand out from the rest.
Finally, if you don’t think you can do this alone, call a professional like me to help you achieve your decorating goals.
-Yulonda Buster at Designs by Duchess
What should I consider when furnishing my vacation rental?
When considering furnishing a vacation rental, there are three key strategies to think about. Top-notch design, quality, and color. Most people think they can just use the extra furniture they have stored in their garage and buy the rest from Big Box stores to furnish their property. In doing so, you are actually leaving money on the table.
Design is the essential factor. Think of your property as a boutique hotel. Be thoughtful about the items you put into it, and make sure it’s not dated. Think about art, accessories, throw pillows, trays, and everything that make a home comfortable and appealing to a wide range of age groups.
By quality, we mean avoiding online shopping websites with cheap furniture that won’t last. It might look good style-wise, but low prices usually mean it won’t last long. You don’t want to replace a sofa in a year due to sagging cushions. And your guests won’t treat your place as well when they realize the quality is junk. Spending a little more means that, over the long haul, you will actually spend less.
People love color! We are always amazed at how many listings are full of beiges, brown furniture, and fabrics. That is the opposite of what people want on vacation. If you look at the properties we design, they are always full of a wide range of colors. There isn’t a color we don’t like, and your guests will feel that way. Color makes you happy, and it relaxes you. It is also a great way to stand out in a sea of neutrals.
Essentially, taking the time to design your property well or hiring someone to do it for you will increase your ROI in the long run. Our clients average 30% more than their competitors.
-Mercedes C and Karen C at 1 Chic Retreat
Getting help from a professional handyman to design your vacation rental can be a great way to ensure that your property is well-maintained and functional for guests. A professional handyman can help you with various tasks such as repairs, installations, and maintenance, which can make your property more attractive and comfortable for guests.
