If you’ve recently forayed into the world of vacation rentals, you’re likely riding a wave of excitement--and revenue. In 2019, the vacation rental market in the US saw revenues of more than $17.5B, marking an increase of nearly 3% from the previous year. By 2023, revenue could grow to nearly $19.5B. Homeowners are increasingly seeing the benefits of vacation rentals and making money in the industry, and there are more than 660,000 U.S. vacation home listings on Airbnb alone.
Guests are continuing to move away from hotels and into vacation rentals, too. After years of wondering, many reports suggest this year—2020—could be the year when vacation rental bookings actually overtake hotel bookings. We're also seeing an enormous shift in how guests are finding vacation rentals, by eschewing sites like HomeAway and Airbnb and choosing to book directly with the property manager. It's a great time to be a part of it all.
But this meteoric growth is a double-edged sword. More vacation rentals means more competition, and if you can’t keep up with the amenities, offerings, and experiences guests are looking for, you can expect your piece of the pie to crumble. This is especially true as online travel agencies continue to grow and change. As of June 2019, Mariott and Airbnb have both released new luxury vacation rental wings of their business (We're honored that Airbnb's new platform, Airbnb Luxe, chose seven of our homes to participate, and that Marriott also chose to list our homes on the Homes and Villas vacation rental segment), suggesting the travel trend isn't going anywhere anytime soon.
So, what's the best way to rent a vacation home? Here’s a list of 20 ways you can earn more from your vacation rental in 2020, including strategies for improving the guest experience, how to manage your revenue, how to market vacation rental property, and several specific vacation rental marketing tips.
1. Be straightforward and accurate in your description
Guests value trust and transparency. If there’s construction across the street from your home, don’t gloss over this. You’ll only pay for it later when a guest leaves a review with incendiary words and phrases like “deceitful” and “they didn’t tell me about …”
Find a way to communicate the less desirable aspects of your home in a way that is informative but not off-putting. Here are a few examples:
"This area is growing quickly, and as is typical in this part of Florida, there may be nearby construction going on during your stay."
"If you're not familiar with Lake Tahoe snow, know that it comes down hard and fast. We'll do our best to keep your driveway plowed during storms, but several inches per hour is not uncommon, and can be difficult to manage at times."
"The community pool will be closed for improvements beginning April 1, so we can give you an even better poolside experience. Celebrate the reopening with us May 1."
If your listing is as optimized as it should be, this considerate disclaimer won't detract from it.
2. Keep your description updated
Don’t take a set-it-and-forget-it approach to your home’s listing. It should be a living piece of copy that you update regularly. Be sure to revisit your listing:
This is especially important in places like Vail or other ski resort destinations, where learning to market to shoulder-season guests is critical.
3. Understand how the different listing sites work
Airbnb or VRBO? Which one -- if either -- is the best vacation rental listing site for you? At a very high level, the biggest difference between these two dominant players is the fee structure.
With VRBO, you can choose to pay an annual subscription fee to list your home or a pay-per-booking fee of 8 percent. The best way to decide which is best is to estimate the number of bookings you’ll receive. VRBO suggests an annual subscription for homeowners expecting to rent their home for more than six weeks in a year. With Airbnb, owners will pay a percentage of every booking in return for hosting their rental on the site. To learn more about the differences between the two, and how InvitedHome maximizes your listing’s visibility across all sites, take a look at our blog post on Airbnb Vs. VRBO.
4. Photos are everything. Learn to do them right.
The influx of homes on listing sites like VRBO and Airbnb has created an environment in which only the homes with professional photography -- not smartphone photos -- will stand out. This includes more than just hardware, too. You’ll need to develop an eye for creating brilliant, enticing photos. The two photos above show the difference between a photo optimized for a listing (the left) and a standard photo (the right). While both were taken with professional equipment, the optimized photo is much more striking.
Here are a few ways to do this:
5. Make it memorable
Finding unique ways to help your guests have an unforgettable trip means your vacation rental, too, should be unforgettable. A great experience leads to repeat bookings, predictable income, and great guest reviews. This, however, is easier said than done. When you're choosing a vacation rental manager, asking about the guest experience is one of the most important questions for them to answer. Here are all 10 questions to ask before choosing vacation rental manager.
One study conducted by HomeAway and the University of Texas found that travelers are 73 percent more likely to remember their trip if they feel happy and excited about it before it ever starts. You can achieve this by applying the listing tips above, but it doesn’t stop there. Ensuring a memorable experience means keeping in touch with your guests from booking to checkout. Offering local suggestions, leaving a small welcome gift, and printing clear rental instructions to make their stay as relaxed as possible are all musts.
Here is one of the many reviews we've received that is a testament to the importance of putting the guest experience first:
“We stayed at Comfort and Joy recently while visiting Seacrest Beach for a wedding. The property was a perfect choice for our group. We had five adults (one being elderly) and a toddler. There was more than enough room for all of us! Additionally, the furnishings were comfortable and well thought out. There were more than enough cooking utensils as well as plates, cups, silverware, etc. I cannot think of anything we were lacking. Additionally, the service we received from InvitedHome was excellent. They offered personalized recommendations for evens during our stay that are family friendly and wouldn’t conflict with the wedding we were attending. They also offered restaurant recommendations for our family. Each member of their team was extraordinarily professional and friendly. I highly recommend Comfort and Joy, or any property managed by InvitedHome.”
6. Keep your calendars up to date
The guest experience starts long before visitors arrive at your home. Not only is it inconvenient for guests to learn their desired dates are not, in fact, available, but it can even penalize your ranking.
On some listing sites, if you decline a guest stay when it was marked as available on the calendar, your rankings--and by nature your booking rates--could take a hit.
If you're using VRBO, the company takes a deep dive into how you can manage your calendar to ensure it's always up to date here.
7. Upgrade outdoor living spaces
For years, the real estate world has known how important it is to seamlessly integrate indoor and outdoor living, and this goes double for vacation rentals. One TripAdvisor study found that 82 percent of respondents said amazing views were the most important feature when deciding which home to book. Another 46 percent said a private pool was the most important, 33 percent chose an outdoor grill, and 32 percent said hot tub.
What does this mean for your vacation rental? Don’t neglect your outdoor living space. Fire pits, decks with tables and chairs, breathtaking hot tubs, and patios are all investments that will quickly pay off in the form of more high-dollar bookings.
Grand Outlook, one of our vacation homes in Jackson Hole, is a great example of a home with immaculate outdoor spaces.
8. Maintain those outdoor living spaces
It’s one thing to buy and install a hot tub, and it’s another thing entirely to keep it maintained. But regular maintenance of the outdoor living spaces you create for guests is critical to your long-term rental success. The more regular maintenance you perform, the less you’ll have to spend on new amenities in the long-run, not to mention you’ll be precipitously cutting down the chance of an emergency repair when guests are in stay.
Here are a few things to consider:
9. Don’t shrug off interior design
When staging your home for guests, consider what they’ll see on a listing. A window may have an amazing view, but if there are no accents around it, it could fall flat. Take that same window and imagine an elegant chaise lounge in front of it, a bold bookcase in the corner, and a unique lamp on a side table. With a few simple additions, this room’s appeal and comfort rose steeply.
Interior design requires finding a balance. Guests don’t want a stale, empty room, but too many personal effects can also be off-putting. Posters of regional attractions, local art, and traditional decor (such as an antler chandelier in a Lake Tahoe cabin) are all safe bets to include. For a very detailed look at how one interior designer completely remodeled one of our Beaver Creek homes (pictured on the left), check out our Vacation Rental Design Tips here, which includes before and after photos and great advice straight from an expert.
10. Invest in a kitchen update
TripAdvisor’s survey found 83 percent of respondents said the ability to cook in their vacation home was their biggest cost-savings. Also, in last year’s Remodeling Magazine Cost vs. Value Report, even a minor kitchen upgrade was found to provide an 80.2 percent ROI when it came time to sell the home.
So, a kitchen remodel 1.) Increases the listing appeal of your home through a refined aesthetic, 2.) Helps your guests keep their costs down while they’re in stay, and 3.) contributes to the long-term value of your vacation home. It’s easy to see why a kitchen upgrade should be the first action item on your list.
11. Leave a detailed manual
TVs, sound systems, kitchen appliances, and hot tubs all have the potential to thoroughly confuse guests if they’re not familiar with that particular amenity. It’s crucial to create a book or binder that details every item or function in your home. A few examples include:
12. Identify luxury items
We’ll focus a little more on this in the pricing section, but spending the money upfront on luxury items can have manifold effects in the future. Here are a few luxury items to include in your vacation rental:
13. Generate and respond to reviews
It goes without saying that reviews can make or break your vacation rental. If you put enough focus on the guest experience, you’ll generate a positive feedback loop that leads to more bookings, and higher occupancy rates.
However, that doesn’t come without a bit of work. You’ll need to regularly check and respond to your home’s reviews--good or bad. Responding to a negative review gives you the opportunity to address the issue and improve it for next time, while responding to a positive review shows your commitment to and engagement with the guest experience. Simply thanking your guests for staying and leaving a review is better than nothing.
North Lake Tahoe's Winding Creek Estate demonstrates how an elegant kitchen and luxury appliances can transform an entire space.
14. Put a financial plan together and identify goals
Take a step back to make sure you understand your ultimate goal in renting your vacation home. What you decide will affect all revenue-based decisions when it comes to renting.
15. Focus on what adds value to determine nightly rate
It may be tempting to identify the cheapest home in your neighborhood and undercut its price, but beware that home is the cheapest for good reason.
Rather than opting out of upfront luxury investments and lowering your nightly rate, try to approach pricing by understanding what value you can add to your home that will intrinsically lead to a justifiably higher nightly rate. We discussed many of these upgrades and updates in the sections above, and also detail it here.
16. Dynamic pricing, no static rates
Your vacation rental’s nightly rate should never be static. There are so many factors that have an effect on your home’s demand, and it’s up to you to learn what these are and act accordingly. A few considerations include:
17. Plan for peak periods in your neighborhood
A large part of maximizing your vacation rental revenue comes from planning out when you’ll be using your second home, and when your guests will. First, identify the peak demand period for your region, and then decide which of these will be dedicated to guests.
Remember, a few weeks during peak demand periods can add up to a large percentage of your annual revenue. So, for example, if you plan to stay at your mountain home over Christmas and New Year’s, you’ll miss out on that peak period, but can make up for it by marketing your home as a perfect place for spring skiing.
18. Study rates of homes with unique selling points
If you don’t put in the research, you could be leaving money on the table. If your home has a highly desirable offering - such as ski-in, ski-out access in Telluride, or a private walkway to the beach in Florida - this should be front and center, and reflected in your pricing.
However, there may be aspects of your home you don’t even know are attractive to guests. In Lake Tahoe, for example, we’ve found guests in the Donner neighborhood are equally excited about the family-friendly attractions and lush forest setting as they are about the lake itself. It’s critical to identify these selling points that may not be obvious at first.
19. Reassess weekly and build your data
Set aside some dedicated time every week to study your home's performance. Are you ahead of or behind your bookings this week year-over-year? What's the relationship between how you were priced at this time last year and your bookings? If you don't have this data, you can compare month-over-month, or even week-over-week. Anything that will help you establish benchmarks so you can compare against them going forward.
Take notes on all aspects of seasonal demand, conditions, where your guests are coming from, and any other relevant data points, so you can gauge what's causing your bookings and profitability to be up, down, or stagnant. Trust us, having this data in the years going forward will make a huge impact on how you price your home over time.
20. Reinvest profits back into your home
We typically see a specific situation around the 3-year mark: Owners see stable and repeat bookings, steadily higher nightly rates, and a large trove of great reviews. At this point, the rental revenue is far surpassing the cost of ownership, so what should you do with those profits?
Kitchen and bathroom upgrades, a hot tub or outdoor fire table, or new furniture not only help you enjoy your vacation home more, they can increase nightly rates and help you stay competitive in your neighborhood. Or, you could put the profits back into marketing. New, professional photos (especially if you've made upgrades) can go a long way in getting noticed on Homeaway and other OTAs.
These 20 points are a great place to start if you're trying to increase bookings and revenue from your vacation rental this year, but keep in mind this is just an introductory list. Our Owner Consultants can tell you dozens of strategies InvitedHome has developed for optimizing the listing, guest experience, and pricing of your second home. Get in touch with us today to learn more, and check back here often for more tips and strategies.