With the growing popularity of vacation rental properties, owning and operating a successful vacation rental management company can be extremely profitable. However, don’t go into this business thinking it’ll be as simple as putting up a few Airbnb ads on behalf of your neighbors and watching the money roll in.
Sure, it’s profitable, but it’s also a cutthroat business. You’ll need to brush up on your marketing, research, and networking skills to run a successful start a vacation rental management company.
Many property management systems include a built-in Channel Manager that connects to other booking websites. The Channel Manager connects the PMS to third-party sites such as Airbnb, Booking.com, and Vrbo, and ensures that the booking calendar is synchronized automatically after each reservation. This prevents double bookings and ensures that guests are always aware of room or vacation rental availability. Learn about the benefits of a Channel Manager for vacation rental managers in our Channel Manager guide.
Cloud-based all-in-one application
The majority of these all-in-one solutions are cloud-based. This means that hosts do not need to install any additional software, applications, or apps on their computers; instead, they can simply log into their account using a web browser. All features are also accessible on the go with mobile apps and mobile browsers on a smartphone or tablet.
PMS for hotels vs. vacation rentals: what’s the difference?
As previously stated, property management systems originated in the hotel industry, but they also have significant benefits for vacation rental properties. However, good hotel software and vacation rental software solutions differ from one another because hotels and short-term rental properties have different features and requirements. The following are the main distinctions:
Type of room vs. entire apartment
A hotel may have a variety of room types, but many of them are identical. When a room is fully booked, there are frequently other options. As a result, it is sufficient to define different room types in the hotel software and then specify how many of each type are available. The number of rooms does not usually change after that. Furthermore, hotel rooms are typically in the same building or complex, and thus have the same address.
On the other hand, vacation apartments or vacation homes are one-of-a-kind. There are no substitutes available once customers make an online booking and reserve a vacation rental unit. As a result, a vacation rental PMS must be able to map each listing as a separate property. After all, not only are the dimensions and amenities different, but so is the location. The number of vacation rentals available may fluctuate over time. As a result, it’s critical that the PMS be adaptable there as well.
Account for the user
Multiple user accounts are required in a hotel because several users need to access the PMS on a daily basis (administration, reception, housekeeping, etc.). In a vacation rental, the administrator is usually just one person. In this case, however, a mobile app is useful so that the host can access the PMS while on the go. Because vacation rentals usually do not have a reception desk, an option for online check-in or self-check-in is also very useful.
Costs
Many hotels are part of international chains that manage a large number of rooms and bedrooms. These businesses have large revenues and profits, allowing them to afford expensive PMS. On the other hand, the average vacation rental owner has 3 to 5 units. As a result, hosts require a low-cost platform to manage their properties.
Channels for booking
There are also significant differences between hotel and short-term rental booking portals. Integration with major online travel agencies (also known as OTAs) like Booking.com, Expedia, and Agoda is critical for hotels. OTAs are less important for vacation rentals than portals like Airbnb, Vrbo, or other niche portals.
Integrations with third parties
Property management systems for hotels, hostels, and vacation rentals require APIs, third-party integrations, or interfaces to other software providers. Revenue management systems, order software, upsell software, point-of-sale systems, and payment are all features that hotels require in their hotel software. Vacation property owners, on the other hand, frequently use platforms that automate as much as possible. Integration of software for dynamic pricing, monitoring systems, smart locks, and guest experience, for example, is critical for them.
What Are the Most Important Factors to Consider?
Running a successful vacation rental business is not easy, as I previously stated. Many factors must be considered, including the purchase, maintenance, marketing, and rental of these properties to travelers.
But, most importantly, you’ll need to decide on your business’s strategy right away.
1: Investing in your own properties
Investing in your own properties necessitates extensive research into market demand for specific locations, seasons, and other factors that will ensure a steady stream of guests and a fair price for the property.
Managing properties on behalf of their owners is the second approach.
This option is less demanding in terms of start-up costs unless you have a lot of cash on hand. If you want to persuade homeowners to put their keys – and revenue streams – in your hands, you’ll need to be extremely knowledgeable about vacation rental management operations.
Seasonality
Consider remote locations that have more appeal during certain times of the year if you want a seasonal business with slower months during which you can catch your breath and work on business strategy.
If, on the other hand, you’d rather invest in a business that makes a consistent profit year after year, you’ll want to open your doors in a city or invest in an evergreen vacation resort that attracts visitors from January to January.
Supply and Demand
It is critical that you select locations that attract a large number of visitors. At the same time, keep in mind the number of available short-term rental options in the area.
Make sure you’re investing in an area with plenty of attractions and a thriving tourist scene by doing your homework. To set yourself apart from the competition, you could focus on less common types of rentals (such as villas or apartments, or eco-friendly vacation rentals).
What Is The Profitability Of A Vacation Rental Management Company?
The vacation rental industry is unquestionably profitable, with over $80 million in revenue generated in 2019. The average revenue per user could be in the $100,000 range, depending on the quality of the property, the level of service provided, and the efficiency and effectiveness of internal operations.
Implementing a dynamic pricing model that reflects dips and rises in demand is the key strategy for maximizing your profit, regardless of the size and shape of the properties you manage. The Airbnb Clone guide will give you a better understanding of how profit works.
Is it necessary for me to hire employees for my property management firm?
Solo vacation rental managers, on the other hand, can do very well for themselves if they have the right tools.
However, depending on the size of your properties, you may choose to outsource operations or hire in-house staff for tasks such as cleaning, maintenance, or even managerial assistance, such as an airbnb virtual assistant.
What Vacation Rental Management Software Is Available?
I believe that getting a reliable Management Software is one of the best investments you can make for your entire Vacation Rental Management Business journey!
You might think that managing your vacation rental property manually is the way to go at first, but you’ll quickly realize that rising guest expectations combined with increasingly complex vacation rental property management operations make purchasing Vacation Rental Management software a necessity, if not essential.
It’s best to look for dependable software that can assist you with tasks such as balancing listings on multiple booking platforms, managing your staff, and providing excellent service and experiences to your guests via automated messages, home automation, custom guidebooks, and more.
You might want to learn more about why you should use Hostway as your vacation rental software of choice.
What’s the Best Way to Get Started?
Starting a Vacation Rental Business will necessitate the following steps once you have the answers to all of the key factors we discussed above.
Step 1: Choose the services you’ll provide.
As a Property Manager, you have a variety of responsibilities to choose from, and your level of involvement is entirely up to you.
It can be challenging as you take on more clients if you start out providing full-service management and handling all of the work yourself without any help or staff. If you only offer marketing services, on the other hand, you may be severely limiting your ability to scale.
As a result, it’s critical to strike the right balance based on your capabilities and capacity.
Step 2: Determine your maintenance and housekeeping needs.
In most cases, a management company offers both scheduled and on-call maintenance, which is then outsourced to local plumbers, electricians, landscaping companies, and other service providers. In fact, putting together a vacation rental team could be beneficial.
The rise of Airbnb spawned a slew of new businesses, including vacation rental maid services that include professional linen cleaning, scheduled deep cleaning, and even key deposit and recovery.
As your company expands, you might want to consider hiring an in-house team.
Step 3: Determine Concierge Services
This is a very hands-on position that entails greeting guests for each booking, which includes meeting them at check-in time, handing over keys, and orienting them to the property.
Guests arriving by plane or train can be picked up and dropped off by some management companies. This would fall under concierge services, but there should be a fee associated with it.
Step 4: Make sure your marketing is in order.
Your ability to keep a steady flow of bookings for your clients will be the backbone of your vacation rental management company. Your customers are likely to be interested in marketing services such as:
- Services that provide listings (creation, editing, maintenance)
- Vacation rental photography – Property photography
- Management of reservations
- Development of a website/implementation of direct booking
- Site optimization / listing
- Top email marketing tips for vacation rentals (advertising / promotional services)
Step 5: Make sure your contracts are in order.
Rental management companies will typically offer clients two types of contracts: commission and guaranteed. Due to its simplicity and sense of security for property owners, the latter is becoming increasingly popular these days.
A commission-based model will typically include flat fees for services such as cleaning and maintenance, as well as a percentage of booking profits that will be deducted from the owner’s monthly profit share.
Guaranteed models guarantee a monthly payment to property owners. The management company, in essence, operates a Rental Arbitrage scheme. This could be significantly more lucrative for management, depending on your research and negotiating skills.
Step 6: Gather all of your legal documents, liabilities, and certifications.
I strongly advise seeking legal counsel when drafting client contracts in order to protect your vacation rental business, as you need to limit your liabilities as much as possible when taking control of someone else’s private property.
To ensure you don’t miss out on deals, both your client contracts and rental contracts for guests should be written by a professional.
Bonus: To operate a vacation rental business in some US states, you’ll need a property management certification. Before offering your services, make sure you are familiar with the rules and regulations, such as Airbnb subletting restrictions.
Step 7: Begin onboarding your partners.
You may only need a few independent contractors to get start, depending on the size of your company – especially when it comes to maintenance. Cleaning, on the other hand, is a more common requirement.
Regardless of your initial intentions, doing some research and compiling a rolodex of local businesses to contract with is highly recommend.
Check to see if your current client agreements will cover the costs of either model. When you decide to make changes to facilitate growth, there will be no losses or need for re-negotiation with current clients.
