Third-party listing sites like Vrbo and Airbnb have given vacation rental homeowners the ability to manage their homes in ways never available to them before. These sites provide the basic vacation rental management framework—a listing page, a reservation system, even a basic dynamic pricing algorithm—and the rest is plug-and-play. And these homeowners make decent money, too. Our friends at Key Data found that in 2021, the average Airbnb host pulled in just under $44,000 for the year.
So it’s no surprise that when these owners are approached by a professional vacation rental manager like yourself, they may seem resistant. “Why would I pay you to do it,” they may say, “when I can do it myself?”
We can all agree that for some homeowners, self-management works just fine. But in general, it doesn’t make sense to do so.
As a vacation rental professional, it’s your job to show these owners that they might make more money AND enjoy their investment property more if they handed the reins over to a professional manager like you.
Here are a few common misconceptions that self-managing vacation rental homeowners may hold—and how you can show them another way.
Myth 1: I Make More Money on My Own
Oftentimes, vacation rental homeowners self-manage because they believe they’ll make more money that way. They worry that working with a professional property manager might be too expensive and cut into their profit margins.
But we know that that isn’t the case, is it? Remember how we said that our friends at Key Data found the average annual revenue for a self-managing homeowner to be around $44,000? In the same year, short-term rental homeowners who worked with a professional manager made just over $56,000. That’s a 29% increase in revenue between self-managing homeowners and professional vacation rental managers. And there are a few key reasons for that.
Professional VR Managers Have Marketing Power
When homeowners work with a professional like you, they get the added benefit of your marketing strategy and outreach initiatives. An effective marketing strategy is more than a listing on Airbnb and some social media. It’s email nurture campaigns, banner ads, paid search, SEO…and while you may know this, a self-managing homeowner may not understand how much potential exposure they’re missing. Using data, you can show self-managing homeowners exactly how many more bookings (and how much more money) they could make working with you than on their own.
Top VR Managers Have An Effective Pricing Strategy
While some listing sites like Airbnb offer hosts a very basic pricing software, they can’t experience the full potential of a robust pricing tool, run by revenue and pricing experts. The best dynamic pricing tools make calculations based on a variety of current factors, not what happened yesterday or last year. This way, homeowners are getting the most money possible NOW. If you use a revenue management tool like Rented, you can show potential owners how a dynamic pricing strategy works and how your current owners benefit from it.
Myth 2: It’s Easier and Faster if I Do It Myself
Another argument you may hear from self-managing homeowners is one of self-reliance. They may believe that it would take more time (and more money) to work with a professional manager.
There are a few ways you can come at this argument.
Managing a Vacation Rental RIGHT Takes Time
Someone with little experience in the hospitality industry may think to themselves, “What’s the big deal? Airbnb (or other third-party sites) manage all the reservations for me. All I have to do is answer a few messages from guests and clean between stays. How hard can it be?”
But as experts in the vacation rental industry, we know it’s not that simple.
Impress upon these owners just how much time they actually have to spend managing their vacation rental. For example, one study done by Vrbo back in 2012 found that the average homeowner doing things on their own spent eight to 10 hours a week managing their rental. And that covers only the most basic of vacation rental management tasks (e.g. communicating with guests, turning the property over between stays, updating their booking calendar, and handling any unexpected issues that may arise).
More recent studies show that, as the vacation rental market continues to boom and competition increases, Airbnb hosts and other self-managing homeowners looking to actually turn a profit will have to spend closer to five or eight hours a day managing their rental.
Make It About Dollars and Cents
Once you’ve laid out the amount of work it takes to manage a vacation rental successfully, ask them if it’s really worth the money they’d be making to do it themselves. Assuming they really can and do put in all the extra work needed to compete at the same level as a professional manager, and generate the same net revenue, are they adequately valuing their own time?
If they think they are better off spending the time themselves managing rather than working with a professional and paying the management fee, point out that on average they actually are taking home the same amount. Even after management fees and commission (usually around 30% of the gross), they’re earning almost $45,000 without lifting a finger! Doing it themselves they “make” the same amount, but are losing innumerable hours of their lives every year to do so. Is their time really worth $0 to them? What else could they spend that time doing?
Myth 3: I Don’t Trust Anyone Else to Do It Right
There’s a very good chance that homeowners with this kind of attitude choose to self-manage for a reason. Maybe they had a poor experience with a vacation rental manager in the past, or have heard horror stories from other vacation rental homeowners and are suspicious.
They may also be the kind of vacation rental homeowner who isn’t as interested in revenue. Perhaps their rental is a property that’s been in their family for a long time, or is a beloved second home that they use regularly for half the year. Homeowners with deep emotional connections to their property may struggle to relinquish control to a stranger, or worry that without their oversight, their property may come to harm.
In these instances, your job is to come to the table with compassion and patience. Ask them: Is it worth the energy they spend managing their rental? Does managing their vacation rental bring them joy, or is it fueled by anxiety? Wouldn’t they rather spend that time enjoying it with their loved ones rather than worrying over it? Use testimonials from your current homeowners as a testament to how you treat the properties under your care, and lean more into the ways you partner with homeowners to earn them money AND properly care for their rental.
You may also remind these homeowners that they rely on professionals in many other aspects of their lives—mechanics to fix their cars, barbers and hairstylists to cut their hair, landscapers to tend their gardens and keep their lawns looking nice. Vacation rental management is just another form of service, provided by professionals who know how to optimize their experience.
Don’t let these common myths scare you away from working with self-managing homeowners. Use them as the foundation for a great conversation about what your expertise could bring to the table, and how it can save these owners precious time and earn them more money. By assuaging the emotional and financial worries of these homeowners, you’ll be able to convince them that professional management (specifically, YOUR professional management) is worth it.
Andrew McConnell’s company, Rented, is the culmination of almost nine years of entrepreneurial pursuits in the vacation rental industry. In 2012, Andrew quit his corporate job to start VacationFutures, an online marketplace that connected vacation rental owners with local professional property managers.
Sites like Airbnb and VRBO were filled with properties owned by successful professionals who, Andrew reckoned, probably did not change their own oil or mow their own lawns, but were managing their own rental properties.
He asked his father’s friends who were property owners why they didn’t hire professional managers. “They said, ‘because they charge too much, and they don’t have skin in the game,’” Andrew recalls. He spent ten months researching the industry and came up with a winning concept: property owners would band together and ask management companies to bid against each other to win business. In order to secure the management contracts, they’d have to guarantee owners a specified occupancy rate. Property managers would benefit by growing their number of clients.
By spring of 2013, Andrew had been accepted into a local Durham, North Carolina, accelerator program and had enough investment capital to bring on a partner for his new venture. “We were doubling revenue every month, went out and raised venture capital, and then we hit a plateau,” says Andrew. The problem: property managers who were financially sophisticated and geographically diverse signed on right away, but most companies in the industry were mom-and-pop operations that did not see the value. “We had a good business, it just wasn’t a venture scale business,” says Andrew.
One of Andrew’s salespeople suggested a solution that would attract smaller property managers: what if the company leased properties directly from owners, guaranteeing them a fixed income, then hired property managers on a commission basis and took the spread? “We signed more than 2,000 properties around the world,” says Andrew. “It was providing more than 70% [rate of return] within five months.
However, Andrew and his team discovered that while property managers were good at guest communications and keeping homes clean, they were not so good at revenue management. Airlines and hotels, for example, have pricing down to a science, adjusting rates constantly according to the season, time of month, and day of the week. The team reckoned that they could make more money for property owners if they offered sophisticated revenue management tools that calculated the same kind of dynamic pricing. “We thought we could get a five or six percent revenue lift,” says Andrew. “And within three months, we were seeing a 30-100% revenue lift. It was the same properties, the same managers, we were just doing the pricing and it was fundamentally different.”
Before long, property managers were asking if they could purchase the revenue management solution. “So we started doing that and we started growing faster than any previous business,” says Andrew. By early 2019, he had shifted focus away from the lease arbitrage model to concentrate on revenue management technology, and started a separate company, Rented. In the process, he decided to sublet his office space, sell all the furniture and go fully remote in February of 2020. “It had nothing to do with COVID,” Andrew says. “I think sometimes it’s better to be lucky than good.”
But it was not exactly great luck to start a company in the vacation rental industry at the outset of a pandemic. In March 2020, Rented told all of its clients that their bills would be cut in half until June, but that the same level of service would be provided. Andrew recalls “we told them, ‘we don’t know when things are going to open back up, but when they do, you’re going to need us more than ever because you can’t rely on historical pricing. There’s no historical basis for what’s going on.’” The strategy worked and, in 2020, Rented retained its customers and signed on new ones. “We had clients that, by September, had made more money in 2020 than they had in any prior year,” says Andrew. This year is shaping up to be equally lucrative.
Andrew was initially attracted to YEC for the publishing opportunities. “YEC’s affiliations with [major media brands] was really appealing,” he says. “I knew that was something I could not access on my own. It inspired me to write more and it actually ended up leading me to write a book.” Andrew landed a book deal to write Get Out of My Head, which is about finding modern clarity using ancient wisdom. Andrew has also found value in YEC’s groups, such as YEC Speakers. “It’s been very helpful in building out a new skill set and in providing access to experts,” he says.
Andrew McConnell is the owner of Rented.