Three Tips for Boosting Revenue from Your Vacation Rental Business in a Sustainable Way
How do I fulfill demand? That’s the question on the lips of any vacation rental property manager I speak to these days. And understandably so. The way we live, travel, work, and holiday has shifted beyond expectation over the last two years. And vacation rentals have risen in popularity as a result— thanks to the flexibility, comfort, and innovative tech enhancements they provide. Preference for short-term rental accommodation shows no signs of slowing in 2022, and vacation rental property managers across the globe are preparing for yet another bumper year of bookings.
Sounds great. But is the outlook as rosy as it seems? If I continue my conversation with the vacation rental property manager, the question quickly moves beyond simply how to fulfill demand to a more nuanced one: How do I fulfill demand in a profitable and sustainable way? The good news is that there is a way to do this. It’s all about running your vacation rental business with optimal efficiency, and here’s some ways you can do just that:
1. Tech Up Your Property Operations
If you haven’t considered using property management software before, now is the time to do so. There are a host of solutions out there to ensure you’re running your business with optimum efficiency. Automating tasks—from guest communications, to check-in/check-out procedures and reviews, to cleaning scheduling and maintenance—saves both time and money, leaving you free to focus on the core job of growing your business while keeping both owners and guests happy.
Beyond operational tech support to ease the property management burden, it’s worth implementing tech automation more widely into your vacation rental business. There’s been exciting innovation in home automation in recent years, and the short-term rental industry has been quick to realize its appeal on many fronts. First, because today’s tech-savvy traveler has established expectations around tech connectivity in everyday life—and this extends to vacation time. Second, smart home technologies to enhance a stay—such as keyless access, optimal heating and cooling settings, voice activated guides, etc.—have real potential to improve guest satisfaction. And finally, “smart” management of lighting, heating and cooling, water management, and so on drives further efficiency in your business by identifying unnecessary use, leaks, and issues, all leading to cost savings.
Do your research and find the right solution to suit your particular business needs. Whether you manage a handful of properties or a growing portfolio, investment in smart property tech will help you run your vacation rental business more efficiently and, ultimately, more profitably.
2. Get Set for Direct Bookings
Up until recently, online travel agencies (OTAs) dominated the travel marketplace. The pandemic and ensuing travel restrictions—causing much contention over cancellations and refunds—changed this. Short-term rental managers started looking to direct booking sites, attracted by the agile approach they offered in an ever-changing market.
Put simply, direct bookings offer a way for property managers to communicate clearly with their guests during testing times, which reduces friction and improves guest relations. And there’s the added benefit of cost savings by cutting out the “middleman.” What’s more, with developments in software solutions, direct bookings are not as operationally challenging as they were in the past. It’s no wonder then that they’re predicted to grow to a market share of 50 percent by the end of 2022.
This upward trend to book direct presents property managers with a real opportunity to shake up their business model. This is where strategic planning comes into play. Take time to consider your branding (note the appeal of a branded website in the booking experience) and positioning (consider who you’re targeting and how best to differentiate your properties). Start softly by reaching out to previous guests before moving into targeted marketing. With the right strategy in place, it won’t be long before the direct bookings start to flow— and with it the financial gains. Invest the savings you’ve made by cutting out OTAs into your own booking platform, your branding, and the properties themselves. This will help drive more direct bookings and reduce costly reliance on OTAs.
3. Focus on Distribution
We know the demand for vacation rentals is there. And you have the inventory to meet this demand. To capitalize on this market need, you now need to make sure that your vacation rentals are visible. Distribution is key here. Effective vacation rental distribution—listing your short-term rental on a range of sites—increases your visibility among travelers and potential guests.
There’s a number of ways to tackle distribution. Airbnb is still the most popular marketplace. Vrbo is hot on its heels and will, I believe, take a larger market share in 2022. And Google Vacation Rentals—with its Google Search, Travel, and Maps functionality—has been making waves since its launch in 2019. And, of course, not forgetting the OTAs: Full reliance on them may be waning, but they still play a vital role in distribution today.
The way to ensure you get the most out of your distribution approach is to put the effort into strategic planning. Think carefully about the right channels for your business. And, importantly, make sure you optimize your listing to ensure each channel speaks to the target audience.
The vacation rental industry is booming. To make sure that your business is a part of this growth story, you must be seen. Get this right and you’ll be on the right path to scaling your vacation rental business for continued growth and profitability.
The Market Is Yours for the Taking
The vacation rental market has changed dramatically in recent years. The surge in popularity and technological innovation in the industry resulted in a phenomenal growth story, which continues to be written in 2022 and beyond. And property managers of any scale can be a part of this.
So, back to that question: How do I fulfill demand in a profitable and sustainable way? Well, the answer lies in adopting the right management tools and solutions into your business, embracing technological innovations, and, above all else, understanding your brand identity and keeping this front of mind in all strategic planning.
Vince Breslin is the founder of Uplisting, a property and channel management software built specifically for growing short-term rental businesses. Launched in 2017, after the co-founders met working at HouseTrip (sold to TripAdvisor), Uplisting now works with managers across the globe, helping them to increase revenue, decrease inefficiencies, create five-star guest experiences, and reliably grow.