With the rise of digital nomads, remote workers, and remote offices, the demand for vacation rentals continues to grow. From Airbnb to Vrbo and everything in between, the market is saturated with options for travelers looking for short-term housing.
As a result, getting started as a vacation rental business owner can be challenging. But with the right strategy, enough commitment and careful planning, you can get your business off the ground and thrive in no time.
Here are some pointers for starting your own vacation rental business.
Before you jump head-first into the vacation rental business, make sure you thoroughly understand the market you’ll be operating in. Market research and rental statistics from Airbnb will help you better understand where the industry is headed.
Market research will help you better understand your target audience, their pain points, and how your business can better serve them.
It’ll also help you better understand what drives the market. Make sure to ask questions that go beyond “How much will vacation rental business owners make?”
According to Statista, the global travel market is expected to reach nearly $1 trillion by 2024.
Researching your competitors is important if you want your business idea to stand out from the rest. Here are some helpful metrics to conduct effective market research for your vacation rental business to better understand your target audience and what they want from such a business.
Image: AllTheRooms Competitor Tracker
Your vacation rental business structure will impact your success as an owner. Depending on your situation, the best design will vary. You can choose four business structures: sole proprietor, partnership, corporation, and S Corporation. A sole proprietorship is the easiest to set up. It also comes with the least regulatory requirements among Airbnb and similar companies. This type of business is best for new entrepreneurs. Corporations need upfront work and investment but offer the highest level of protection.
If you want your vacation rental business to succeed, you’ll need a strong brand. A brand is more than just a logo or a website. A brand is so much more than what you see on the surface.
It comprises all the interactions your business has with customers. It is a customer experience while using your product or service. So you can see why branding is so important and why you need to start building one.
Make it easy for customers to identify with your brand.
Be consistent. Consistency will help customers recognize your listing and associate it with a particular experience.
Be memorable. Your brand should be something that stays in your customers’ minds.
The technology you use for your vacation rental business can significantly impact your success. Technology can help you streamline operations, improve customer service, and save time and money, from getting customers to book reservations to getting market data.
Several tools can help you manage your vacation rental business. From reservations to accounting and everything in between, there’s likely a software solution that can help simplify your work.
These are some of the essential tools you’ll need to consider for your vacation rental business:
Analyze any short-term rental market in the world TRY IT FOR FREE
Building a solid brand is essential for any business. But, to turn your brand into a thriving business, you’ll also need to focus on marketing your vacation rental business.
You’ll need a solid marketing plan to help you effectively reach your target audience. A marketing plan will help you determine what type of marketing strategy is best for your business.
When creating your marketing plan, you must know your target audience. Who are they? Where do they spend their time? And what are they looking for? Once you know this information, you can start thinking about how to reach out to them.
Make sure to include these three components in your vacation rental marketing plan: Content, Promotion, and Measurement.
You need excellent content, great promotion, and reliable services to succeed in the vacation rental business. This is very similar to the path to success in other companies, but there is one huge difference: You can segment your strategy based on many different data points, locations and audiences. Here are some examples.
Ethnicity and gender play a significant role in shaping your audience. This is especially true when it comes to vacation rental markets. For example, Asian tourists account for almost one-third of the global tourism market. As a result, it’s crucial to understand how they use the travel industry. Likewise, Hispanic tourists are also growing in popularity. They make up an average of 25% of all travel bookings. Understanding how Hispanic tourists use the travel industry will help you better market to this audience.
The way your target audience travels can have a significant impact on your vacation rental business. The best way to understand your target audience’s travel behavior is to conduct research.
You can do this by surveying your customers or doing some in-depth interviews. Once you have a better idea of your target audience’s travel behavior, you can tailor your vacation rental business to suit their needs better.
Geography is another critical factor to consider when marketing your vacation rental business. The market in each city will vary based on a variety of factors. This includes travel behavior, cultural trends, and the number of tourists in the area. For example, the number of tourists in New York City far exceeds the number in San Antonio. This can have a significant impact on your marketing strategy.
With so many different markets to choose from, it may seem impossible to stand out among the crowd. However, there are a few ways you can better tailor your marketing strategy to suit different regions.
The timing of major events such as graduations, weddings, or sports tournaments can significantly impact your vacation rental business. You can use event timing to identify peak seasons to determine when your market is most likely to travel. This will help you tailor your marketing strategy to suit your audience’s travel behavior.
The best way to use event timing to your advantage is to conduct market research and create a marketing strategy before the event. This will help you better prepare for any spikes in demand and position yourself.
As a vacation rental owner, you need to charge your guests a price they will be willing to pay and feel is fair. You also need to ensure that the cost covers everything, including repairs and maintenance, taxes, insurance, utilities and other fixed expenses. Setting a price for your business can be tricky. There are many different pricing strategies you can use depending on the circumstances of your business and where you market it. Here are some options for setting a price for your vacation rental business.
Using supply and demand to set your price
One pricing strategy you can use is based on supply and demand. If you advertise online, then you can choose to set your price based on demand and competition. In this case, you can choose to set your price based on supply and demand because demand is already set by the marketplace.
However, there are many other factors that go into setting your price when you direct book guests through an online travel booking site. You may choose to set your price based on the amount of competition nearby. You can also choose to set your price based on the seasonality of your vacation rental business.
The amount of demand and competition that you see in a season may affect your price in that season. For example, during the summer months, you may charge a higher price for your vacation rental because there is a higher demand for those types of accommodations.
During the winter, you may choose to offer a lower price for your vacation rental because fewer people are looking to book in that season. During the spring and fall, you may see less competition and demand because fewer people travel during those seasons. You can adjust your price based on seasonality.
To analyze the average daily rate based on seasonality over time, you can try our Calendar Tool, which will allow you to evaluate and compare various options to choose the one that best fits your needs.
Image: Calendar Alltherooms
Another key factor when setting your price is considering how your pricing compares to nearby competitors. If you are competing against higher-priced properties, then you can choose to set a lower price to compete with your competitors. However, if you are set against lower-priced competitors, then you can choose to set a higher price because that is what customers are willing to pay for your service. You can also estimate and adjust your price based on the seasons.
If you want to have fresh data on competitor pricing, you can use our market research tool to benchmark several properties with the same characteristics to compare the pricing of the competitors. You could also use the future data section of our software to see what the ADR will be like in the future.
Analyze any short-term rental market in the world TRY IT FOR FREE
Starting a successful vacation rental business is possible — that’s the good news. Just be sure to ask questions, have enough information before you invest. create a plan and refuse to settle until you find an investment that fits you perfectly.