4 Ways to Maximize Vacation Rental Revenue
At InvitedHome, we understand that everyone rents their home for their own personal reasons, and not every homeowner has revenue as their primary goal. We’ve taken this to heart, and put together a quick list of the 4 best ways to maximize vacation rental revenue based on your personal needs and objectives. Here's an overview:
1. Use your profits to upgrade and update your vacation home
2. Find a balance between personal use and peak periods
3. Be flexible with your rates in the offseason
4. Stay committed and on top of everything
Whether you want to generate the most revenue possible or earn enough to reinvest in the home over time, you can use these tips to hit any vacation rental management goals you have. We'll take a deeper dive into these strategies below.
Reinvesting rental profit back into your home is a slow-burning but sure-fire way to increase rental revenues over time. We love this tactic because it takes care of two of the most important aspects of renting a home:
Look at the trends of in-demand and high-earning homes of the day, and see what they have that you don’t. Then, start adding. If you have tile counters, put your profits into granite or marble counters. Turn old appliances into a professional-grade kitchen. Have an empty patio? Put in a hot tub or firepit. If you need a new bathroom, here's a great blog full of remodeling ideas and the latest trends.
The benefits are twofold: Your family will get even more joy out of the home, and its appeal to potential guests will go through the roof. Higher demand will allow you to price it accordingly, and the improved guest experience will lead to better reviews, more stays, and even higher demand. It’s a long-term cyclical effect that’s good for everyone involved.
In the vacation rental business, a few dates can drive enormous revenue. It’s critical to identify these dates, and set up a dynamic pricing system based on these peak demand periods. However, you’ll also need to decide which dates you know you want to spend in your home.
This is where research is key. If you know you’ll be spending Christmas at your vacation home (an extremely high-revenue period), identify other regional peak periods throughout the year, and commit your home to those periods to make up for the lost Christmas revenue. Conversely, you could work hard to rent your home during peak periods, with the understanding you can visit during the low seasons. It’s all about finding your own balance.
All too often, vacation rental owners shrug off shoulder seasons and down periods. True, you won’t get the quick hit revenue from the high season, but if you’re flexible, you can still create a constant revenue stream.
In the offseason, it’s all about increasing occupancy. By nature, this may mean lowering nightly rates. Remember, vacation rentals are a perishable product -- when a home goes unfilled, you’ll never get that night back. It’s always better to shift your pricing to fill your home than let it go vacant. You’ll also continue to build up your home’s guest appeal throughout the offseason through reviews and feedback, further increasing demand during those crucial peak periods.
Don’t confuse lower nightly rates with lower ROI. A good vacation rental manager can navigate this tricky balance and piece it together with a long-term strategy for sustained, strong annual revenue.
Make no mistake about it, maximizing your vacation rental revenue means staying on top of several factors, and responding appropriately. Here’s a short list of questions to ask yourself on a regular basis to determine if you’re getting the most out of your rental property.
Local demand - What two- and three-day events are drawing guests to your neighborhood? How are your competitors adjusting prices to accommodate this higher short-term demand?
Season - When should your peak pricing begin and end to drive the most revenue? This varies widely, so make sure you know your region’s seasonal rental trends.
Length of stay - How long do guests typically stay in your neighborhood? What’s the minimum stay sweet spot, in which you’re driving revenue but not scaring off potential guests?
Competition - What other homes in your neighborhood would be enticing to potential guests? What do they have that you don’t?
Improvements - What are the biggest travel trends your guests will be expecting? What could be pushing them away?
It takes a bit of work, but the payoffs are tremendous.
At InvitedHome, we’ve developed a system for maximizing rental revenue that combines our proprietary HomeCraft™ application with a team of experienced revenue analysts. This approach allows us to put together up to 500 unique rates per year for your home, while always remembering how special your home is to you. Learn more about our Cash, Care, and Communication approach to vacation rental management here.
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