Starting a vacation rental business is a potentially great way to grow personal wealth, even if you aren't a homeowner or if you have bad credit. Making the business successful and maintaining good ratings, however, requires a slightly different type of business acumen.
The way to a customer's heart in this business is by offering them a valuable product - an excellent accommodation - to consume, and making it easy for them to do so. Running a vacation rental business over the past few years has taught me that guests' satisfaction depends on three main factors:
1. Product Offering
Most of the listings we find on platforms such as Airbnb or Vrbo are entire home units or private rooms within a home. Offering a more unique, less obvious type of space could provide you a cutting edge over your competitors. Get creative and diversify your basket of hosted properties. Boats/yachts, bungalows, private islands, oceanfront villas, treehouses, cabins and even castles are now being listed.
Amenities can also give your space an advantage over competitors. As we can see with the high demand for condos in the United States, high-rises that offer the best amenities can demand the highest rents. Popular amenities include a weight room, games room, swimming pool and/or hot tub and electronic locks on the doors. Amenities that are now being considered necessities include free Wi-Fi, parking, desks or workspaces, entertainment systems and access to a full kitchen.
As great as they are, amenities can only go so far. Taking it a step further and going beyond the basics could add major value to your product offering. Consider providing an airport shuttle service, meals and other pet- and family-friendly services.
Location is another paramount feature of your product offering. Tourists usually travel with the intent of visiting a nearby city and all its major attractions. The closer your property is to public transportation, famous landmarks, etc., the more likely you are to run a successful operation. First, however, you should research your city's/state's/county's rules on hosting. In New York City, for example, Airbnb recently implemented a "one host, one home" policy, which prevents multiunit property owners from running a vacation rental business similar to a licensed hotel that is subject to additional taxes for doing so.
2. Product Marketing
Hosts who offer a fully compliant, conveniently located place to stay with the top amenities can make a killing, if people know about their product. Fortunately, sites like HomeAway and Airbnb are in such high demand that most travelers already know where to go looking.
High demand has also churned out a high supply of listings, which means hosts are under pressure to make their listings stand out. This makes having great pictures absolutely critical. Airbnb claims hosts earn up to 40% more by using professional photos in their listings.
Some platforms offer this service for free. For hosts more inclined to DIY or who don't have professional photography access, you can still put your best foot forward:
- Try to use a professional DSLR camera with a wide-angle lens.
- Take bigger photos for optimal resolution, using landscape orientation whenever possible.
- Aim to create depth in each photo for a 2-D effect.
- Make good use of natural sunlight.
In each room, remember to:
- Accent the bedrooms with contrasting pillows and shams.
- Complement the living room with flowers.
- Include quirky works of art in your pictures. They give your space more charm and character.
- Ensure the kitchen and bathroom are sparkling clean.
3. Good Reviews
Important as visuals are, good reviews remain an essential part of your marketing strategy. Furthermore, positive reviews bump up your ratings as a host and can easily become the deal-breaker when guests are deciding between two properties.
Negative reviews, however, are a deal-breaker in favor of the competition. Fortunately, there are some ways you can try to avoid receiving them:
• Provide any relevant information for the guests' stay in a check-in message. Attach this message to the house manual, which should provide further instructions on how to use/configure household items such as the remote control.
• Be available for questions or concerns during the first 24 hours of every stay. If necessary, outsource the communication. This is important because most kerfuffles can be quashed with simple communication.
• Be generous with free stuff - wine, mints on the pillows, chocolates, fruit baskets, snacks. These are simple pleasures that go a long way to getting a positive review.
• On platforms that permit it, leave your guest review immediately after checkout. This notifies your guest, and conveniently, guests can only see the review once they write their host review. There's no guarantee their reviews will be positive. Regardless, go ahead and post a positive review for the guest, and then sit back and relax.
Building good relationships with your customers goes a long way to earning that five-star review every host wants. If you plan to scale your business, these reviews will likely be the first item that prospective property owners read about you. Many homeowners who list their properties for short-term rental have multiple properties they could use your help with. According to a study published in 2017 by CBRE, multiunit hosts are a key driver of Airbnb revenue growth. Yet that's also the reason various states are cracking down on multiunit property owners who host their space without having to pay the same taxes as hotels.
Remember to fully research all the rules around hosting for your city, state or county. An unfailing way to receive a bad review is to have your guests learn the space you're hosting is not fully compliant, which may result in them having to look for new accommodation. However, by offering a superior product with the right marketing and real positive reviews, you'll be on your way to a successful side hustle through vacation rentals.