7 Steps to Start a Vacation Rental or Hospitality Business

by Startacus Admin

With the increased number of people working or vacationing outside their homes and the staycation market likely to stay, businesses like Airbnb and Vrbo are all set to rake in profits.

People want something different from the stark, sterile coldness of hotel rooms. With a vacation rental or hospitality business, you can recreate that warm, homely feeling without necessarily becoming a real estate guru. It is also one of the proven ways to generate passive income. Interested? Here are 7 steps to kick start your vacation rental and hospitality business.

Do Your Research

Before delving into the market, you have to study the data available. What are the most successful profitable related businesses around you? How does your environment affect the industry? Do you intend to use a cabin, condo, or duplex, and how do seasonal changes affect these choices? Successful rental businesses are customer-centric, and they are based on extensive studies to figure out what works and what doesn't.

Vacation rentals are furnished with residential properties typically available for lease over short periods, which are less than 31 days. How do you plan to cater to guests with a shorter stay? If you intend to open all year round, how would intermittent restructuring and maintenance affect your guests’ comfort? In your research process, you would also have to find out the policies and legal procedures involved in starting a rental business. 

There are rules for starting a vacation rental business that differs according to country or state. Additionally, you must understand how the taxation system works in the location you want to set up your business. Certain states do not allow short term rentals. And in some places, the tax imposed may be heavier than others.  Do your research thoroughly to prevent future unforeseen problems that could topple your plans. 

While at it, two questions should stand out above everything else; what does my customer want? And how does this fit into a profitable scheme?

Develop a Plan

No matter how passionate you are about helping people and channeling your love for meeting new acquaintances into a hospitality business, you still have to treat it like a business. A measure of seriousness has to be attached to it. As we know, no business succeeds long term without a sustainable plan. 

Prepare your strategies for turnovers and a backup plan for the event that something goes awry. In the introduction, we mentioned that vacation rentals are a way of making money passively. But it also involves active participation and follow up. What are your plans for raising capital? Is a mortgage involved? What are your plans to pay it up over time? What percentage of the profit would you dedicate to restructuring? What would the staff hiring process involve? 

These and many more are pertinent questions you have to ask yourself. Create a series of plans; do not rely on only one. Carefully outlined goals keep you on your feet, helps you compare your numbers, and assures you that this is a long term business when things seem too difficult. In summary, a business plan keeps you on track.

Secure Property and Ready it for Guests

After laying out the foundation of your vacation rental business by researching and planning, the next step is to get into the part that requires action. At this point, the property should have been procured. Next, clear it out and purchase the major things guests would need. This includes large items like duvets, lampshades, draw curtains, stylized cabinets, and wardrobes, etc., too little details like fresh towels, tissue papers, cloth hangers, etc. Pay attention to the details while furnishing the rooms, because this would define your brand and affect your customer experience. 

Create designs with your environment in mind. In essence, do something that would interest your guest but not eccentric enough to be distracting. Remember that the ultimate aim is to recreate the warmth of home and ensure the comfort of your guest is paramount. As you progress, you may need to ask guests what things they need. Make a comprehensive list of these items so that you can predict what they need. 

Ensure that your booking process is stress-free on the part of the guests. You may want to do some promotions for your new vacation rental. However, all these should be part of the business plan. It encompasses everything from the financial aspects, to your strategies for attracting guests. In your welcome flier, print a small list of house rules your guests are to follow. 

Finally, while setting up the place for your guest, try simulating going through your day and making a list of all the things you need. This helps you get into your guest's head and attend to their needs beforehand, without missing any item. 

Set a Reasonable Booking Price

People new to the vacation rental and hospitality business are liable to make mistakes at this point. The good news is, you don't have to! Do not set the price based on how much you love the house. Going too high could repel potential guests, and going too low may attract the type of guests you are not targeting. 

One way to estimate your price is to take into account the quality of your vacation rental and how much you have invested in it. Do not rush into getting back all your profits in a matter of months. Remember that the gains are long term. Next, compare it to that of your competitors and research on the factors affecting that value. This may involve seasonal changes, holiday pricing, etc. Consider how it fluctuates according to demand influx and competitive rates. 

Advertise Aggressively  

Next, you need to get the word out about your business. Various sites like Airbnb, Homeaway, and VRBO.com provide a platform for home listings. However, you have to do a measure of advertising yourself. Social media is your best bet for doing this. Why? You get to reach and engage with a wide array of potential guests. With each interaction, content, free tips, and posts, you stand a chance to blow your trumpets to the ends of the earth. All you need to do is remain authentic, polished, and professional.

Furthermore, you have to take perfect pictures of the property. Remember that this, in addition to good property description, is the only chance to win guests who would not be able to carry out a physical tour. Be refined but honest. Let your copy reflect what your guests need, but remain truthful while at it. It is a massive turn off when guests complain about not experiencing what they bargained for.

To promote your business, build a vacation rental website. There is nothing that screams professionalism as much as this, and it also insulates you from the uncertainties that come from relying on sites like Airbnb and booking.com. It helps collate user data, provides better customer service, and brings in more profit. 

Lodgify, a vacation rental software, in one of its tips for business owners, states that visitors are usually preoccupied with pictures, and this heavily influences their choice location in the end. No matter how great your rental is, guests would always be moved by what they see first. Get the surface finishing right to attract more customers. If the location is close to a resort or state monument, mention it in your description. In this business, guests do judge a book by its cover.

Incorporate Vacation Rental Software

Technology has made almost every process you can think of, relatively more straightforward. From picking and replying calls for bookings with automated responses, to listing your home, it is much easier. 

Making use of hotel software such as Hotelkit helps with staff collaboration. Other software attends to guest entertainment like the Monscierge Apple tv. From revenue management software, point of sales, booking management, and reputation management, these tools are recommended to ease the stress of running a business. There is software that can help you account for every dollar spent or generated, estimate dynamic pricing, etc. Isn't that relieving?

Maintain Your Rental Property

If there is anything the fall of once-great companies like Kodak has taught us, it is not just about how you start but also how you keep up with the ever-evolving standards. Your business isn't exempt from this practicality. 

If you would not be soliciting help from a property management system, you must put specific structures in place. Ensure repairs are done on time, employ competent staff, track your organization's performance, redesign your website as the need arises, and upgrade your software. Keep up with the trends and set up a good reputation for your business. Nothing sells as fast as an excellent customer experience. 

Conclusion

Vacation rental and hospitality businesses, in general, can be a very fulfilling business. There is a particular joy that comes from meeting new people and knowing you have provided them with the best shelter standards. Therefore, you must build the business intentionally, and with the best processes in mind. These 7 steps are sure to guide you appropriately.

Subscribe to our newsletter

If you would like to receive our startup themed newsletter, full of the latest startup opportunities, events, news, stories, tips and advice, then sign up here.

Published on: 19th August 2020