Projections from the article capture a market size of 107.14 billion by 2028 at a CAGR of 32.04%, while the global vacation rental market was a USD 74.64 billion industry in 2021. Vacation rental owners have positioned themselves as valuable for real estate investors who make money by renting out vacation properties.
In this blog, we will tell you how to increase revenue manifold for your rental property:
- Why picking the right location for your property is crucial
- Importance of making your rental property attractive
- Choosing a dynamic pricing strategy is non-negotiable
- Tips on marketing your property the right way
- and more…
1. Targeting the right location
The first step in ensuring the profitability of your vacation rental business is picking the correct location. The profitability will significantly depend on the location’s popularity, proximity to local amenities and prime areas, and access to and ease of transportation. You should assess these parameters by listing your ideal locations, talking to the local realtors, and researching using the PriceLabs Market Dashboard.
Choose desirable locations with activities that can be done all year round. Refer to the complete guide to vacation rental investment to learn how to use PriceLabs Market Dashboard to make a sound investment decision.
An ideal vacation spot will give you a better chance at maximizing revenue and put you in a competitive market. The line between in-demand and oversaturated is relatively thin as hosts tend to invest in popular destinations which can sometimes lead to oversupply of vacation rentals in an area.
2. Make your vacation rental attractive
2.1 Décor
The second most crucial aspect of your vacation rental property is its aesthetics. Guests prefer to stay in properties that can give them a stay experience they don’t typically get in their day-to-day lives. You can ensure more bookings by investing time and creating beautiful yet functional décor. Better aesthetics make it visually easier for you to stand out across various listing sites. A good host will get repeat visitors and increase their revenue without extra effort in marketing the rental property. Our handpicked Airbnb hosting tips will make sure that your guests love you.
Hire a professional designer
Vacation rentals should be comfortable for everyone. Unfortunately, one common mistake is decorating your property to suit your taste. Consider hiring a professional designer to give you an objective opinion. They are experienced and skilled at creating rental properties that get bookings and can also help market them.
Choose neutral color schemes and durable furniture
It is better to go for the basics when designing to ensure that people with various tastes enjoy your property. Opt for neutral colors, classic lines, tried and tested fabrics and durable furniture. If you are purchasing second-hand furniture, make sure it doesn’t show any wear and tear.
Bring the accents of the city indoors
There is a reason why your guests chose a specific city/town for their vacation. Although using inclusive interior design themes is encouraged, including subtle accents of the city where your property is located will go a long way in personalizing the experience. This will ensure that your listing is an extension of the town. For instance, if you have a mountain cabin, you can include a more rustic theme.
2.2. Provide in-demand Amenities
Your guests’ comfort will directly depend on the relevance of the amenities provided. Of course, the best amenities will be all the essentials and a few extras. You should use PriceLabs Market Dashboard to understand which amenities are most used and availed.
Provide the basics
For your listing to stand out, you must provide a complete range of supplies to create a 5-star experience for your guests. If your rental misses basic amenities, your guests can express their disappointment in reviews.
Keep a checklist to ensure that the basics, like extra blankets, towels and toiletries, are covered. For instance, you can create inventory checklists for the kitchen, bedrooms, and bathrooms and share them with your cleaning crew or refer to them if you do your cleaning. You can also refer to the Airbnb cleaning checklist to ensure that every nook and corner in your rental is clean.
Add extras to impress your guests
Vacationers love a few extras on top of basics. Upgrade your property with a few luxuries like a hot tub, welcome basket and free WiFi and ensure happy guests and good reviews.
2.3 List your short-term rental on leading vacation rental sites
Leverage the high traffic received by top vacation rental sites by listing your property on these platforms. Ensure you write an informative and honest description of your property when listing on these websites.
Try to make your property look as appealing as possible in your description without being deceptive. Below are a few points you should follow to ensure a catchy listing.
Take great pictures of your rental
The photos of your rental will be the first thing your potential guests will see. Make an effort to take professional pictures or hire a professional photographer to ensure your rental is displayed in the best possible light. You can also ask someone to create a 3D tour of your home.
Come up with an eye-catching title
Your title is the first noticeable element that travelers will see when they search for accommodation. As there is no shortage of short-term rentals on rental platforms like Vrbo, Airbnb, or Booking.com, you will need to create something unique and catchy to stand out from the competition. Two of the most common mistakes to avoid are using generic words and promising more than your property can offer.
Create a comprehensive description
A detailed description helps you to draw attention to amenities and features that are difficult to photograph. Plus, it goes a long way in managing travelers’ expectations. When writing your description, try to use the right keywords, as this will help rank higher on search engines.
List your property on more than one OTA
Selecting the right platform is critical if you are responsible for marketing your property. Every forum has its advantages and disadvantages. So, it is best to list on more than one site. By listing on multiple sites, you will also increase your reach.
2.4. Maintain your Rental
Make sure your rental is well-maintained and clean. Get a good cleaning company to clean the place thoroughly. You can charge extra to your guests as Airbnb allows you to set an Airbnb cleaning fee at the time of booking.
If the property you are renting out is in good condition when people arrive, they will be more likely to book with you in the future and be repeat customers. It’s recommended that you get professional cleaning done before every guest checks-in. That way it won’t get dirty between guests, and you will save on labor costs.
Keep the rental in marketable shape. That includes any needed repairs, updates, and improvements. Stay moderate, but look for any apparent indicators of wear and tear in the property, including anything that looks dated or unattractive.
As you plan out your property’s finishes, keep resiliency in mind. Aim to “tenant-proof” your property as much as possible with scratch- and waterproof floorings such as luxury vinyl tile and door stoppers behind each door. In addition, consider semi-gloss or glossy paint finishes to more easily wipe away scuffs, and use the same paint colour throughout for easy touch-ups.
3. Price and stay restrictions
3.1. Choose a Dynamic Pricing strategy
Forget the old “set it and forget it” model—with fixed nightly rates for weeknights or weekends, during a high or a low season. Empower your listing/s with dynamic pricing, automate nightly rates based on data-backed pricing suggestions.
To create a more sophisticated Airbnb pricing strategy, consider other factors like seasonality, minimum nights restrictions, gap nights, occupancy, etc. You will significantly increase your short-term rental earnings with PriceLabs.
3.2. Implement minimum stay restrictions
Vacation rental owners and property managers commonly use the minimum length of stay restrictions to manage their bookings for different seasons and booking windows. It is an advanced feature that helps property managers optimize their occupancy.
Property Managers usually extend a minimum length of stay during high-demand seasons. This helps them make up for low occupancy during low-demand seasons. For instance, during a week-long festival in the vicinity, property managers would likely mandate booking their vacation rental for a minimum period of 7 days. It is because, during that period, guests are more likely to book their rental for the entire week.
Since it is an advanced feature, it is advisable that you first gain complete knowledge of your market and have a clear understanding of what kind of bookings you want to get before using the minimum length of stay restrictions.
You will lose out on bookings if you set a longer minimum night restriction when the ongoing market trend is for shorter stays. This can seem not very comforting at first. However, if you know how to anticipate the needs of your guests and make the most of the opportunities provided by the market, then using this strategy will prove to be the most profitable.
3.3 More beds equal more guests
People prefer travelling in large groups because this enables them to divide the trip’s costs and make travelling cheaper for themselves. The most significant chunk of the travelling cost is accommodation. If you can make your vacation rental suitable for larger groups and provide more sleeping arrangements for people, you will attract more guests to your rental. You can also charge extra for providing sleeping arrangements for extra guests.
3.4 Target business travelers during non-peak season
If you are hosting a vacation rental driven by seasonal tourism, you know how tough it could get to get bookings for the other months. However, people travel for business purposes throughout the year. In addition, with remote work in full swing, there is an excellent upsurge in digital nomads who prefer to travel while working. Make your rental suitable for this group and market it to them, and you can be assured of getting bookings throughout the year.
You can provide discounts for extended stays, Wi-Fi, and work-from-home set-up.
4. Maximize vacation rental revenue with out-of-the-box marketing
Vacation rental marketing starts with highlighting what you have got to offer. Every vacation rental platform has its unique feature and its own set of policies. While it is advisable that you list your property on as many sites as possible, you also need to make sure that you have read the fine print. It will help determine which platform best suits your needs and maximize vacation rental revenue.
Some of the best listing platforms you should use to showcase your vacation rental include Airbnb, Vrbo, Booking.com, and even some estate management companies websites.
Many vacation rental owners maximize revenue through their websites and social media platforms. They have their own social media strategy or influencer marketing for a vacation rental to market their rental and gain direct bookings. You can utilize all these options to ensure your ideal guests view your listing and their short-term rental is booked with minimum gaps. Read what strategies short-term rental and Airbnb experts, such as Annette Grant and Sarah Karakaian, Jonathan Farber and others recommend following in 2023.
5. Look for upselling opportunities
Airbnb add-on services are known for maximizing vacation rental income, yet only some property managers apply it to their business. This sales technique allows property managers to generate more revenue by selling premium services or upgrades. So get creative and start brainstorming what promotions and services you should offer guests in your area. You’ll support the local economy and build connections as well as make extra income.
6. Market your home for direct bookings
To market your vacation rental, you must first choose the suitable listing sites for your property. For example, if you want to rent your entire property to larger groups, then Vrbo is your best option. On the other hand, Airbnb promotes private room rentals and should be your first option if you want to list a portion of your property.
Hiring marketing experts will ensure your property is viewed and booked regularly.
Here are some marketing strategies that you can adopt for your rental:
- SEO (search engine optimization): Use the right keywords to be more visible on search engines.
- PPC (pay-per-click) ads: These sponsored ads are targeted to appear when your guests search for precise keywords.
- Display ads: These are the banner ads that follow you around the internet. You can have one for your property.
- Facebook ads: Facebook algorithms allow you to put your property in the newsfeed of people looking for homes in your area.
- Organic social: Social media is an excellent way to market your listing. With the right strategy, your property will be seen by hundreds and thousands of people on social media platforms.
6.2. Encourage repeat bookings
The hospitality industry is a buyers’ market. With high competition, you must constantly strategize to get booking via different platforms and campaigns. Providing excellent customer service is one of the simplest ways to stay ahead of the competition.
Make sure that your property is always in good condition for your guests. Going the extra mile for your guests will also drive referrals because guests are significantly more likely to refer a property that provides an exceptional service.
7. Improve profitability with cost-cutting to maximize vacation rental revenue
7.1. Tax deductions
If you rent the property for more than 14 days, it’s considered a business for tax purposes. That means you have to pay taxes on the income it brings in. But it also lets you write off many expenses you’ll eventually incur to repair and maintain the property. You can deduct almost any “ordinary and necessary” cost of doing business. You can even write off hosting fees charged by Airbnb and other platforms.
Consider writing off the following expenses as a rental investor:
- Hosting fees
- Property management fees
- Mortgage interest
This isn’t exhaustive, so talk to a financial advisor or accountant to maximize your deductions.
7.2. Insurance to protect your property
Lastly, property insurance is an essential part of any vacation rental investment. Vacation rental insurance will protect you from losses your property might incur while renting out. For instance, if a guest falls and gets injured during the stay, they could ask you for damages.
The homeowners’ coverage might not offer adequate coverage for this scenario, therefore, look carefully at what will and will not be covered.
About PriceLabs
Established in 2014 and headquartered in Chicago, PriceLabs is a leading provider of innovative and easy-to-use dynamic pricing and revenue management solutions for the accommodation industry. PriceLabs provides a data-driven approach, automation rules, and customizations to manage pricing and stay restrictions that help property owners and managers increase revenues efficiently and easily. With over 90 integrations and a growing list of channels and property management systems, PriceLabs’ automated revenue management solution is built to serve the needs of everyone from large property managers to single-property owners. Learn more at www.pricelabs.co.
Frequently Asked Questions
1. How can I increase my rental ROI?
Dynamic pricing strategy is helping several property managers and vacation rental owners to increase their rental ROI. Other factors that affect an STR business’ earning potential include location, property aesthetics, minimum night stay settings, and marketing strategies.
2. How do you profit from short-term rentals?
You should list your short-term rental on various vacation rental platforms like Airbnb and Vrbo, where guests come to find properties for vacationing. You should update your property listing to show your guests a clean, visually appealing property with basic amenities.
3. What type of rental property is most profitable?
Short-term as well as mid to long-term rental properties are profitable. In the case of short-term rentals, you can charge more nightly rates but have to work harder to ensure maximum occupancy. For mid to long-term rentals, you could charge lower nightly rates but ensure that your property is occupied for a longer duration and has fewer gap nights.
