Beyond Rent: Creating New Revenue Streams for Your Business
As the hospitality world has evolved beyond traditional accommodations with the emergence of game-changing platforms like Airbnb and Vrbo, property owners have strategically embraced more and more ways to monetize their assets. The opportunity to rise above mere rent collection beckons. With thoughtful implementation and by embracing the intricacies of direct and arbitraged upsells, platform referrals, coordination fees, and affiliate deals with other vacation rental management companies (VRMCs), hosts can further prosper in an ever-expanding market.
The Direct Upsell
Savvy hosts recognize the importance of catering to diverse guest preferences, but the truth is, successful upselling is a subtle art. Leaning into what appeals to travelers is key: bespoke experiences, premium offerings, easy add-ons, and vacation-worthy splurges. Picture this: You’re ordering dinner at a restaurant. Maybe it hasn’t occurred to you to order a glass of paired wine or get your greens with a side salad. A thoughtful (and well-trained) waiter will gently ask and even recommend items that complement your order. Are they looking to generate a bigger bill and hopefully a like-sized tip? Absolutely. Will you appreciate the customized thoughtfulness? As long as it’s not pushy, sure.
The same proves true with short-term rentals. After all, the hospitality industry is all about catering to customer needs and desires—and even anticipating those needs and desires. As a host, any amenity or service can be an opportunity for you and your guest. The thrill of premium Wi-Fi packages. The pleasure of exclusive access to private pools, clubs, and gyms. The ease of tailored housekeeping services. Extra beach towels. Early check-ins. Late checkouts. Transportation arrangements. Luggage storage. Groceries ready upon arrival. Phone charger rentals. Welcome baskets. Minibars. Get where this is going?
Depending on your portfolio size, you may employ a staff to take on direct upsells, as they can require a bit of work. The convenience for guests, however, can be priceless—and because of that, you can add on a generous mark-up. Not only can tailoring your offerings to meet discerning traveler tastes bring in easy, extra income, direct upsells can help to cultivate your connection with guests and leave an indelible mark—often in the form of glowing reviews and, consequently, a heightened demand for similarly distinctive and decadent experiences.
Arbitraged upsells allow hosts to directly upcharge guests and then pay out vendors for the purchased add-ons. Hosts coordinate with local business owners and vendors on the back end to deliver a curated white-glove guest experience of luxury and locality. When partnering with shops, services, and professionals, hosts should consider the appeal of their property’s location and anticipate their target guest’s interests and needs.
While the process of connecting with local vendors may make arbitraged upsells a bit time-consuming to implement, automated software like Zapier and your property management software can take on some of the heavy lifting. And as long as you calculate a reasonable arbitrage commission rate for you or your team, the pay-off can be satisfying. You can simultaneously streamline and enhance the guest experience, level up your business reputation, and bank some extra income through your cut.
However, it’s worth noting that with an arbitraged upsell, the main risk is the flip side of a great experience: a negative one. To your guest, any vendor you’ve partnered with is seen as your company’s staff member. So, in the unfortunate event that your guest perceives any quality or other issues related to their experience, your team has to deal with the consequences.
Sharing is caring—even and especially in the world of short-term rental platforms. The referral has emerged as a potent tool, setting in motion a ripple effect with hosts and their partners mutually benefiting. So here’s what happens: you make recommendations, and if your guest purchases those recommended tickets, passes, insurance coverage, or reservations, you automatically receive a commission. And by integrating your PMS and digital guidebooks with sites (like Viator) that automatically cull popular and local experiences, you can just as automatically benefit when guests book those experiences. Hello, passive income!
Modern matchmaking? Hospitality hack? Simply a smart business strategy? Whatever you call it, a seasoned host has connections—or knows how to make them. Enter the coordination fee, which is just what it sounds like. Say a guest desires a personal chef for a night or an at-home spa treatment, you can flip through your vetted vendors to arrange such an experience. As the middleman, you offer a transparent service: you connect the guest and the third party. The guest is aware of the arrangement—they know the third party is your connection, but not part of your team. From the guest’s payment, you take a coordination cut to compensate you for your time, effort, and resources. The remainder of the profit goes to the vendor or business supplying the service. Bonus: In addition to maximizing your earnings, this tactic also enhances your reputation as a reliable and customer-oriented property manager.
Other VRMC Collaborations
Why settle for being a lone ranger when you can join forces with other VRMCs? This Optimus Prime model involves reaching out to other top VRMCs to initiate a referral program, wherein you promote each other's properties in different locations or within a specialized niche. You can provide a tracking link or discount code on your digital guidebooks or during bookings. Collectively, you can create a direct booking referral program. Such transformative partnerships let you expand your reach without having to invest in new locations, thereby increasing your potential earnings and supporting the short-term rental community.
At the end of the day, the short-term rental business is more than just four walls and a nightly fee—or it can be. At its best, hospitality is holistic. It’s in the small details that comprise a memorable experience. From convenience and comfort to coordination and curation, you can go beyond rent to slay that guest stay.