Inflation has taken a massive toll on the world’s economy. From gas to groceries to travel, prices are up, and spending is slowing down.
Some experts say the next recession is inevitable, while others prefer to continue watching the trends before jumping to conclusions.
What we know for sure is that it will take an immense amount of work to grow and build a successful vacation rental business in today’s economy.
Tourism is an industry that profits the most from a booming economy. Increased leisure spending happens when people work more while saving money to spend on luxuries like travel.
In this article, we’ll cover the key steps you need to take to keep your business afloat and grow it–regardless of the state of the economy.
- 1 Step 1: Identify Your Target Market and Develop Your Persona
- 2 Answer these questions to discover what types of guests should be your target market.
- 3 Answer these questions to create a vacation rental persona.
- 4 Step 2: Evaluate and Upgrade Your Amenities
- 5 Step 3: Optimize Your Pricing
- 6 Step 4: Increase the Capacity of Your Vacation Rental
- 7 Step 5: Run Local Marketing Campaigns
- 8 Step 6: Improve Your Listings
- 9 Step 7: Consider a More Lenient Cancellation Policy
- 10 Step 8: Engage in Social Media Marketing
- 11 Step 9: Collect Five-Star Reviews
- 12 List Your Vacation Rental on RentalTrader
Step 1: Identify Your Target Market and Develop Your Persona
Part of increasing your revenue is identifying the target market you want to book your property. During a recession, this is more important than ever.
Landing your target market will help you maintain steady customers and cater to their individual needs, optimizing the guest experience and increasing the odds of guests coming back for additional stays.
You may think that developing a vacation rental property that fits everyone’s needs will drum up more business, but that is not entirely true. It’s impossible to appeal to absolutely everyone, so narrow your focus and make your vacation rental appealing to a specific group of travelers.
The first step in catering to your target market is figuring out the type of guest that might frequent your vacation rental property. This might be businesspeople, solo travelers, families, couples, honeymooners, spring break vacationers, or retirees.
Answer these questions to discover what types of guests should be your target market.
- Where is my property located?
- What type of property do I have?
- What kinds of local attractions draw people into town?
- What amenities does my property offer?
- Do I have a yard or other outdoor space?
- Are there any stairs or other potentially challenging areas to navigate?
- Do I have a good office setup for business people?
Now that you have started to address the practical questions about your rental property, your next step is to develop a persona.
Have you ever come across an ad campaign that feels like they are talking to you? That’s because they are–you are their targeted persona. Keeping this in mind with your vacation rental property will help you reach your target market consistently.
A persona is a made-up, generalized character that encompasses the characteristics, desires, and needs of your ideal guest. According to the Vacation Rental Formula, marketing departments have long used personas to define the perfect customer for a product or service.
Answer these questions to create a vacation rental persona.
- What is your persona’s name? What is their age, gender, family status, salary, location, education, hobbies, etc.?
- What are your persona’s defining characteristics?
- What are your persona’s vacation goals?
- What are your persona’s needs and wants?
- What are the best things your property has to offer from your persona’s perspective?
- What fears might your persona have about staying at a vacation rental?
- What does your persona spend time doing online?
- What does your persona’s dream vacation look like?
Spending time developing your persona helps you step into your ideal guests’ shoes and optimize your space to cater to their needs.
Following these steps will also help you determine the best places to list your vacation rental property. Platforms like RentalTrader and other vacation rental listing sites allow you to promote your property directly to your target market.
Step 2: Evaluate and Upgrade Your Amenities
You might think that amenities are a special added touch for vacation rentals. But the reality is that amenities aren’t extras–they’re essentials for rental success.
During a recession, vacation rentals become more appealing to travelers because they tend to be less expensive than traditional hotels and resorts. You can make your property even more enticing by providing various amenities that set you apart from your competition–meaning both hotels and competing vacation rentals.
Hotels often charge fees for various amenities, so if potential guests see that your rental not only comes at a lower price per night, but also includes tons of extra perks, you’re much more likely to win their booking.
For this step, start by evaluating your property’s amenities. What would your target market and persona most appreciate and enjoy? What would make their stay special? By thinking through and adding the types of amenities your target market is looking for, you’ll be well on your way to pampering them and bringing them back, year after year.
Airbnb commissioned a survey that revealed 97% of US travelers claim that amenities greatly affected their travel experiences. You may not need to completely remodel your entire property to stand out, but here are some quick wins that will give you a leg up on the competition.
- 24-hour check-in
- High-speed WiFi
- Cable TV and/or streaming services
- Surround sound system
- DVDs and books
- Game consoles
- Family-friendly games
- Area recommendations
- Adapters and chargers
- Complimentary welcome basket
- Office supplies
- Kitchen amenities
- Small kitchen appliances
- Kid-friendly toys and outdoor equipment
The more you provide for your guests, the better reviews you’ll receive. When you have lots of five-star reviews, your property will perform better on listing sites. This will lead to more bookings, which in turn means more money in your pocket. This is what we’re all looking for, especially in times of economic downturn!
Taking the time to think through the details is vital, and learning to understand your guests so that you can cater to them gives you a significant advantage.
Step 3: Optimize Your Pricing
Pricing is a crucial driver for bookings, and many factors go into pricing your vacation rental property. This is particularly true when the economy isn’t doing as well, because travelers will be looking for great deals that fit their current budget.
The ultimate goal when pricing your rental is to be competitive and establish pricing that fits the market in your area.
As Lodgify explains, there are some essential rules to follow when setting your online vacation rental rates.
Start by making a list of your expenses, including costs to maintain your rental property, such as the mortgage, utilities, taxes, cleaning services, emergency repairs, and landscaping upkeep. With your expenses in mind, you can calculate the amount of gross revenue necessary to earn each month.
When setting your prices, think long-term. It’s better to have a lower nightly rate for your property than attempt to over-sell it, which will result in fewer stays. The balance is between creating an affordable yet profitable property that competes with the vacation rentals in your area.
Evolve states that properties priced higher than the average competition get fewer bookings overall.
The key takeaway here is that charging more per night does not mean you will earn more. Long-term, a viable strategy is to charge slightly less than your competition, which usually results in getting more bookings over the course of the year.
How to Achieve Competitive Pricing
A key to competitive pricing is researching similar properties’ nightly rates in your area. As you look at local pricing, notice the amenities that those properties provide versus your rental’s amenities. Ideally, you should provide more amenities for a slightly lower nightly rate to attract more guests.
During peak season, which varies quite a bit depending on your location, competitive pricing is crucial. It’s not unusual to charge the equivalent of one month’s mortgage as the price for a week’s use of the rental.
Lodgify recommends that property owners offer reduced rates for the month before and after peak season to increase profits.
Research your local peak season, especially if your rental properties are near high-traffic vacation spots. Your property does not have to be in a high-traffic area to get bookings. Many vacationers are actually looking to get away from the congestion and stay in quieter, quainter areas.
While establishing strategic and competitive pricing can be challenging, using dynamic pricing tools can help. PriceLabs, Outswitch, and AirDNA can automate and optimize your pricing so that you have one less task to handle.
Step 4: Increase the Capacity of Your Vacation Rental
One way to make more money during a recession (or anytime, really) is to increase your vacation rental’s capacity. It’s simple: the more people that can stay at your property, the more money you can make!
Can you convert a sitting room into an additional bedroom? Have you considered enclosing the loft to make it into a “real” bedroom? Is there an opportunity to add padded benches to increase the kids’ sleeping capacity (particularly for family-friendly vacation rentals)? What about investing in a pull-out couch or bunk beds?
All of these are ways to increase your rental’s capacity by at least one or two people, which can result in increased revenue in the long term.
Step 5: Run Local Marketing Campaigns
Ever since the pandemic began, the idea of a “staycation” has gained traction. People want to get out of their homes, where they’ve spent an inordinate amount of time over the past couple of years, even if that just means staying at a vacation rental property a few minutes away.
To appeal to staycationers, promote your vacation rental in local social media groups. You could even offer a discount or run a giveaway for those who live in the area and need a getaway.
For example, you could create a Facebook post advertising a free weekend at your property. To enter the giveaway, people need to like and share the post. Your property will get plenty of publicity, as well as a chance for a five-star review.
You can also partner with local businesses, pay for small business advertising on platforms like Nextdoor, and work with your local tourist information center to promote your rental.
Allowing for instant booking means local guests who want to book a last-minute stay will be able to, and adjusting your minimum stay enables those who only want to spend a night or two away from home to do so.
Other changes that can attract local guests are allowing pets, ensuring that your property is family-friendly, and curating an office space or two for remote workers to get things done.
Step 6: Improve Your Listings
You might have the best vacation rental in the area, but if your listings consist of dark, shaky photos and poorly-written descriptions, then you’re not going to get many bookings.
Ensure that your listings contain high-quality, well-lit photos that accurately portray the space and well-written descriptions that highlight your property’s attributes. Create listings on multiple platforms to reach more potential guests, and use property management software or a channel manager to combine your calendars and keep up with bookings.
Step 7: Consider a More Lenient Cancellation Policy
Between the pandemic and the current state of the economy, many feel that we’re living in very uncertain times. Having a cancellation policy that isn’t too strict can help guests feel better about booking your property.
When they know they won’t have to pay a huge cancellation fee they can’t afford should the stay not work out, it gives them the peace of mind they need to book their stay.
We touched on this briefly in Step 5 but putting some effort into marketing your vacation rental on social media can help more potential guests discover your property.
There are so many avenues to consider: Facebook, Twitter, Instagram, Pinterest, and even TikTok can help you get more publicity and increase your bookings (and thus your revenue).
For best results, curate your vacation rental brand to appeal to the target market and persona you established in Step 1. Take photos and write descriptions that will draw your target market in and make them imagine how wonderful it would be to book a stay at your rental.
Short-form video content performs excellently these days and can function as a “digital handshake,” a method of imparting information and building trust between you as a host and your potential guests. Plus, videos are often more memorable than photos and text.
Consider creating a content calendar for your social media pages so that you can consistently share information with your followers. Rather than constantly publishing promotional content, intersperse plenty of travel tips and local recommendations as well.
Step 9: Collect Five-Star Reviews
We know, we know–collecting five-star reviews is much easier said than done. However, considering reviews are the second most critical factor for potential guests, it’s crucial to earn as many good reviews as possible.
These charts from Transparent show how properties with higher numbers of reviews and better-scoring reviews have improved occupancy rates.
Here, you can see that in the United States, properties with a 4.6-star rating or lower had an average occupancy rate of 61%, while properties with a 4.7-star rating or higher had an average occupancy rate of 69%.
This chart shows that the more reviews a vacation rental has, the higher its occupancy rate is.
So, how do you get more reviews? We recommend sending out an automated message to guests after checkout encouraging them to leave feedback on your listing. Many guests will forget to leave a review unless they have something particularly negative to say, so a polite and friendly reminder can go a long way.
In general, the more bookings you get, the more reviews you’ll earn. Focus on the steps we discussed above, and you’ll likely see an increase in bookings. This will lead to an increase in reviews, which will contribute to more bookings and continue the cycle.
List Your Vacation Rental on RentalTrader
In times of economic downturn, the last thing you want is to part with huge percentages of your rental income thanks to listing site fees. That’s why you should list your property on RentalTrader.com.
Unlike many of the big guys in the industry, it’s completely free to list your property, and our host fee sits at a flat 4.5% per booking. Our mission is to make travel affordable for everyone and to take back the vacation rental industry. Join us today!
We’re not just a listing site, though. We also have hundreds of informational articles for hosts and guests. Whether you want to learn more about running a vacation rental or are curious about the best places to travel, we’d love to share our wealth of knowledge with you on our blog.