Why Property Managers Must Shift Strategy to Navigate Owners Through a Challenging Market

Koryn Okey
8/12/2024

The STR market is barely recognizable compared to just a few short years ago.

A post-pandemic afterglow that saw revenues shoot up is dimming rapidly while demand is softening. It’s no surprise that many property owners are feeling stuck in a period of stagnant income, desperately trying to understand how to increase income for their properties.

This means that nailing the property manager-owner relationship is more critical than ever. The market today is challenging, so owners naturally want to be assured that their assets are not only protected but being leveraged as much as possible. This requires a pivot in strategy. It’s no longer enough for property managers to simply offer basic listing management and guest services. To thrive in today’s market, they must instead transcend the role of a service provider to a strategic partner, offering services that exceed guest expectations and create unparalleled guest experiences from the physical space and amenities provided upon arrival.

Many of today’s owners, especially investors, are still relatively green to the sector, having been drawn in during the height of the pandemic. This means they are yet to endure the less glamorous troughs of what is undeniably a volatile market at times. Their focus is quickly shifting away from getting a foothold in the market and maximizing returns to safeguarding their investment.

Building and maintaining trust with these owners, then, hinges on transparency and accountability from their property managers. Therefore, property managers must be both proactive and flexible when it comes to communicating the types of information shared with owners, balancing the fine line of communicating how properties are cared for, how they’re performing, and which tools are being used, along with market dynamics and industry best practices to help owners understand how they compare to other properties.

To know what exactly to communicate to owners—and when—requires that property managers understand their owners. Many top companies categorize owners by personas (investor vs legacy owners, for example) so their teams can align on how to approach and communicate effectively.

For instance, investor owners focused solely on the bottom line and revenue generated from the property may simply want monthly summaries or find value in weekly updates or real-time operations dashboards that provide instant visibility into their property's status and performance.

For legacy owners, who are more concerned with handing down the property from generation to generation, they may care more about the guest screening processes and maintenance schedules or dynamic pricing strategies and marketing efforts. These owners tend to want to be kept in the loop about exactly what’s going on behind the scenes and understand where their money is going and how the property is being cared for. Similarly, simplified explanations and data visualizations tend to be most effective for owners unfamiliar with real estate complexities.

But there are a number of universally important priorities for owners across all personas. Transparency and documentation around maintenance procedures, including preventative measures and response times for repairs, assure owners their properties are being well cared for. Providing insight into the effectiveness of tools such as smart home technologies and guest messaging reaffirms to owners that their property managers utilize the most advanced and impactful innovations to fully optimize their assets.

But building trust with owners extends far beyond a property manager simply being an open book.

On top of the never-ending balancing act of managing expectations with more realistic outcomes, property managers must also be willing to initiate tough conversations about the dynamics of the vacation rental industry, trends, and shifting market dynamics. Many owners, especially those new to the STR landscape, simply haven’t been in the market long enough to truly understand the complexities. Property managers must establish themselves as knowledgeable and authoritative advisers. Being able to speak to your market’s unique dynamics, explaining the seasonal demand patterns, the competitive landscape, and how global events continue to reshape traveler preferences assures owners their properties are safe and being cared for by professional operators. This transforms how property managers are ultimately perceived in the eyes of owners and plays a pivotal role in the ultimate success of a property.

When a property manager has a deep understanding of what drives success, they can make recommendations that ultimately save the owner money and increase rental revenue. The ability to identify a potential issue before it escalates into a larger problem that impacts a guest’s experience, like replacing an appliance instead of repairing, allows property managers to provide owners with strategic counsel. Offering recommendations on increasing ADR by adding amenities or making a property pet-friendly, based on emerging market trends, allows owners to increase revenue. 

Data, however, underpins all these strategies. Without it, property managers are guessing, and bad recommendations can leave owners more frustrated than ever. Understanding how small improvements can offer incremental improvements allows property managers to build a solid foundation for gaining trust with owners. Companies like KeyData do an incredible job of aggregating data that allows property management companies to benchmark themselves against competitors, helping them understand and implement data-driven strategies to boost performance.

As the industry continues to adapt to a post-pandemic world, the strength of the bond between property managers and owners will ultimately determine who wins and loses. Offering a more consultative approach allows property managers to become the strategic partner owners need to navigate through uncharted waters.

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