Is your vacation rental business struggling because you’re not running it like a business or do you want to learn how to stay away from pitfalls that plague some property owners? In this article, we’ll talk about why vacation rental businesses fail and 12 proven strategies on how to run a successful vacation rental business that thrives.
- 1 Why Vacation Rental Businesses Fail
- 2 12 Strategies To Run Your Vacation Rental Like a Business
- 2.1 1. Take a Step Back
- 2.2 2. Get to Know Your Target Market
- 2.3 3. Find Ways to Reduce Costs
- 2.4 4. Organize Your Business
- 2.5 5. Communicate with Your Creditors
- 2.6 6. Don’t Waste Time on Repetitive Tasks
- 2.7 7. Provide an Amazing Guest Experience
- 2.8 8. Ask Previous Guests for Feedback
- 2.9 9. Learn from Other Vacation Rental Owners
- 2.10 10. Try Implementing a Weekly Budget
- 2.11 11. Use Social Media Marketing Along with Your Direct Booking Website
- 2.12 12. Revamp your Listing
- 3 Main Takeaways – How to Run Your Vacation Rental Business
Why Vacation Rental Businesses Fail
Before we get into the strategies for running your business, let’s talk about the main reasons why others tend to fail. First off, the COVID-19 pandemic hurt many vacation rental businesses since travel was essentially shut down for a while. However, the industry is recovering quickly and growing once again, so if the pandemic is what knocked you down, there’s reason to have some optimism about saving or growing your new vacation rental business. In fact, there’s even a new market segment that you may want to target: the “workationers”, or remote workers who travel to new places and work from wherever they’re at.
But aside from the pandemic, here are the main reasons why vacation rental businesses typically fail:
- They lack a well-developed business plan
- They don’t set their nightly rate correctly or don’t use a dynamic pricing strategy
- They started out with too small a budget
- They were overly optimistic regarding the immediate profit they thought they would make
- They don’t recognize their weaknesses
- They insist on doing everything themselves
- They don’t have a good understanding of their target market
- They try to appeal to everyone instead of focusing on a certain segment of the market
- They don’t pay attention to changes in the market and overall industry
- They grow too quickly to keep up with their business
If you’re new to vacation rentals, let’s avoid these issues. If you’re currently struggling, do any of these bullet points sound like your current situation? If you can pinpoint one or two issues, then you can identify solutions for those particular problems.
12 Strategies To Run Your Vacation Rental Like a Business
Below, we’ve provided 12 general strategies you can use to help save your struggling vacation rental business.
1. Take a Step Back
The first thing you’ll want to do if your vacation rental business is struggling is to step back. Take a deep breath and try to look at the business more objectively, with fresh eyes. Where did you go wrong? What can you do to change that? The key here is not to get discouraged; hold on to that passion that led you to start your vacation rental business in the first place.
2. Get to Know Your Target Market
If you don’t have a target market, now is the time to find one! Rather than trying to appeal to everyone, you’ll need to select a specific segment of the market to engage with. Maybe you want to have a family-friendly vacation rental, or perhaps you’d rather appeal to couples on a romantic getaway. You could also target large groups, workationers, people with pets, snowbirds, or any other particular group that fits well with your vacation rental property. Once you’ve identified your target market, do some research. What does this type of guest look for in a vacation rental property? What types of amenities do they expect? What kinds of activities do they enjoy? Once you know this information, you can better cater to that specific segment of the market.
3. Find Ways to Reduce Costs
When you have a struggling business, cutting costs can help get you back on track. One way to cut back is to reduce your energy costs. Entrepreneur has a great article with 50 different suggestions to reduce your business costs. Some of them that are especially applicable to vacation rental businesses include asking previous guests to leave positive reviews, which can bring in more bookings, and participating in online discussion groups for vacation rental owners. These are both free marketing techniques. You could also turn to independent contractors or freelancers for tasks like copywriting and photography, as their rates are often lower than large businesses and corporations.
4. Organize Your Business
When your business is disorganized, you’re going to run into all sorts of problems. You’ll waste time and money, it’s easier to mix up bookings, and you’re likely to get frustrated. This can even culminate to have a negative effect on your reputation! A great way to organize your business if you struggle to keep up with your own spreadsheets is to use a property management system. Lodgify is a great choice if you have a tight budget, since it starts at only $12 per month.
5. Communicate with Your Creditors
Avoiding your creditors is the worst thing you can do when you’re in debt. Rather than avoiding them, communicate with them. Talk to them about your current situation, and let them know about your plans to pay off your debt. In many cases, they will be willing to work with you as long as you show that you have every intention of paying off the money you owe.
6. Don’t Waste Time on Repetitive Tasks
Rather than wasting hours on repetitive and boring administrative tasks, automate them! This takes a lot of responsibilities off your plate and clears up your schedule so that you have more time to focus on what matters. You’ll have more availability to address the issues in your business so that you can turn things around and find success with your vacation rental property.
7. Provide an Amazing Guest Experience
While you may think you need to focus only on the business side of things to save your vacation rental, don’t forget about the guest experience! At the end of the day, you won’t be able to save your business unless you have happy guests that are leaving you good reviews. Good reviews lead to additional bookings, so see what you can do to improve the amenities you provide, step up your listing, and potentially rewrite your welcome letter or create more resources for your welcome binder. These little changes can make a big difference, and in many cases, you won’t need to spend much money to make the guest experience better.
8. Ask Previous Guests for Feedback
Reach out to your previous guests and see if they’re willing to give you some feedback on what you did well and where you can improve. People who have already stayed at your vacation rental can answer these questions better than anyone else can.
9. Learn from Other Vacation Rental Owners
Even if you don’t know any other vacation rental owners personally, joining groups on social media is a great way to connect with others in the industry. Oftentimes, people are more than willing to talk about their own experiences and what they’ve learned over the years. Reach out and ask for advice and suggestions. There’s never any harm in asking, and you’re likely to get some helpful feedback.
10. Try Implementing a Weekly Budget
If you’re currently struggling with cash flow in your vacation rental business, then a weekly budget is likely to be more effective than a monthly or yearly budget. A weekly budget really helps you zero in and see where your money is going and where you can potentially save.
11. Use Social Media Marketing Along with Your Direct Booking Website
Social media marketing is totally free and can make a huge difference in your business. One underrated social media platform that you should try out is Pinterest. However, don’t forget about Facebook, Twitter, and Instagram. All of these platforms can get your vacation rental property more visibility and more bookings. Be sure to link your vacation rental website to all of your social media profiles so that it’s easy for potential guests to get more information and book a stay.
12. Revamp your Listing
Sometimes, all it takes to start getting more bookings is an improved listing. You could hire a freelance copywriter from Upwork or Fiverr to wordsmith your listing and make it more appealing to your target market. You can also try to write your vacation rental listings and description with these vacation rental copywriting tips. Hire a freelance photographer to take high-quality photos, or just use your phone and good lighting to get great pictures that showcase the best parts of your vacation rental property. Be sure to show off your amenities in your listing and photos, and highlight your health and safety protocols, as many people are looking for these due to the pandemic.
Main Takeaways – How to Run Your Vacation Rental Business
Here are our top 12 strategies for avoiding problems for new vacation rental owners and for those who are struggling with their existing vacation rental business:
- Take a step back and look at the business with fresh eyes to identify where you went wrong.
- Get to know your target market and what they’re looking for in a vacation rental.
- Find ways to reduce costs associated with your business.
- Organize your business using a property management system.
- Communicate with your creditors rather than ignoring them.
- Don’t waste time on repetitive tasks; instead, automate them!
- Provide an amazing guest experience to get great reviews that will result in more bookings.
- Ask previous guests for feedback about what you did well and where you can improve.
- Learn from other vacation rental owners in online groups.
- Try implementing a weekly budget instead of a monthly or yearly one.
- Use social media along with your direct booking website to effectively market your vacation rental property.
- Revamp your listing with fresh, clean copy and professional photos that showcase all your vacation rental has to offer.