How to Start & Grow Your Vacation Rental Business

The vacation rental industry is booming and there’s plenty of room for new and existing players to grow and enhance their businesses. The question is, where to start? For new players, we’ll walk through the basics of starting a vacation rental business. For those already in the game, consider the following tips and tricks on tools, systems, and techniques to build ease and success in a modern, remote world.

Are vacation rentals profitable?

Are vacation rental businesses profitable? Yes, starting a vacation rental business can be profitable. The vacation rental industry is booming – revenue in the vacation rentals segment is projected to reach $81.14 billion in 2022. If you’re thinking of starting a vacation rental business, now is the time to do it. 

Short-term rental businesses are appealing because they are popular among those who rent houses for short periods of time. The most important variable affecting profitability is where you are located. The occupancy level, demand, competition, and pricing in a specific location are all factors that influence profitability, the more appealing the location, the higher the chance of success.

You can do several things to increase your chances of profitability when starting a vacation rental business. With the right planning and execution, you can create a thriving short-term rental business that brings in steady income.

How to start/set up for success

It goes without saying that starting a vacation rental business is not a walk in the park. It requires time and effort to manage guests, maintenance, and sudden changes. But if you set yourself up for success with the right tools and systems, and put in the hard work required, running a successful vacation rental business is surely possible. Here are our four tips to help get you started:

1. Do your research before making decisions. It’s much easier to make money with a vacation rental when you soak up hospitality advice from experienced sources. 
2. Choose a Location. Choosing a viable location is essential for your short-term rental. Look into seasonality, demand, and supply – this means considering things like weather patterns, tourist traffic, and accessibility. The location of your rental will determine who your target market is, what kind of amenities you can offer, and how much rent you can charge.
3. Make Your Vacation Rental an Inviting Space. Making your vacation rental beautiful is important for two reasons. First, it makes your property more appealing to guests and increases the chances that they will book it. And second, it makes guests feel more comfortable and at home during their stay.
4. Offer Amenities. When starting or running a vacation rental business, it’s a good idea to offer amenities to guests. This can include things like WIFI, cable TV, a pool, and on-site laundry facilities. The more amenities you provide, the more attractive your property becomes.
5. Market Your Rental. Marketing your vacation rental is essential for success. You need to let potential guests know that your property is available for rent.

Listing your new vacation rental

The best approach to promote your rental is to list it on vacation rental websites. This will give potential guests the opportunity to see pictures of your property and read reviews from other renters. It’s also a good idea to set up a social media account for your rental business, which will help you reach a diversified audience to build brand awareness.

5 ways to grow your vacation rental business

Now that you’ve got the basics down, it’s time to start growing a successful short-term rental business:

1. Choose the right software

As the owner of a short-term rental business, choosing software can make or break your day-to-day operations. Rental unit managers often turn to property management systems (PMS) to run their day-to-day, but managers and owners will also benefit from setting up a centralized software system to assure your PMS, ticketing software, and other plug-ins are fully integrated. 

To grow your rental business, your entire suite operations tech should work together as one, connecting your front of the house, back of the house, and reporting deck – every corner of the booking space.

When selecting or up-leveling your software, ask yourself these starter questions:  

1. What is the size of my property? 
2. How many units am I managing on a daily basis? 
3. What existing systems do I have in place? Are they working well and/or are they scalable? 
4. Do I rely on front desk personnel, or is my property self-check-in? 
5. Am I an onsite owner or manager, or do I manage remotely?

Read: How to Integrate your PMS and Ticketing Software.

2. Hire remote staff

Take advantage of a new, remote workforce to reduce overhead costs and give you more space to run and grow your business. Remote staff can help with everything from customer service to marketing and bookkeeping. Hiring, onboarding, and managing remote staff will be easier with a flexible knowledge base that taps into automation, device notifications, and workplace autonomy. 

3. Organize operations & automate communications

Organizing your business operations is key to a successful vacation rental business. This includes creating personalized processes and protocols for everything from guest check-in to housekeeping, to staff onboarding — all within your central operations platform. Automating communications is also essential, as this takes the pressure off of management or ownership.

4. Utilize data tracking & reporting 

One of the best ways to understand and achieve growth in your vacation rental business is with tracking and reporting. Month over month growth numbers will help you project pricing, marketing, and operations as your business expands and changes. By tracking data, you can see what is and isn’t working for your business and make changes accordingly. Monthly reports will also help owners decide which issues to prioritize. For example, using a flexible knowledge base, you can tag repeat maintenance issues in one unit, such as a plumbing issue, as high priority. 

Read: What’s a flexible knowledge base in hospitality management?