Starting new endeavors is always intriguing as they provide ways to earn more money. One of the most exciting ventures is beginning a vacation rental business. This will make people’s vacation dreams come true.
A vacation rental business is exhilarating as it will let you meet new people, and explore new things and you can also make vacation rental income. If you are completely new to this business, then you need proper assistance in developing the same.
Here, we will guide you in understanding how well the vacation rental business is performing in the market, its core benefits, and the steps involved in starting a business in this industry.
Why do you need to start a vacation rental business?
Before deciding to start a vacation rental business, have you ever questioned yourself about why to start this business? If not, then this is the time you need to find an answer to this question. The current vacation industry is facing steady growth and many statistics prove how important for any entrepreneur to step into this industry. Let us check a few commendable growth stats.
- In 2021, around 13.5% of users have been vacation rental guests which means one in eight people have been guests. In 2025 it is expected to be one in five people to become vacation rental guests.
- 64% of users have chosen vacation rentals mainly to get access to the kitchen and 49% of users have stated that they needed privacy.
- Airbnb is the biggest vacation rental platform that has 5.6 million active listings and has covered more than 100000 cities all over the world.
- During Covid-19, the vacation rental business gained more occupancy when compared to the hotel industry.
Around 45% of property buyers have invested mainly to generate income by renting their property.
- Each year the revenue through the vacation rental business is taking a growth by 7.2%.
- All these figures are quite satisfying and promising to step into this vacation rental industry.
Benefits of starting a successful vacation rental business
Owning a vacation rental business is one of the most stable sources of income and guarantees a substantial amount of yield every year. We need to first understand what benefits we are going to get out of this business before we enter the industry.
Property value remains high
Unlike other business-like the food and beverage industries, vacation rental businesses will never lose their property value in terms of lifespan. With proper building maintenance and utility, owners can run a lucrative business for a long period.
The property value keeps increasing over a while. Meantime you can earn by renting your property for guests and in the future, if you plan to sell the property, you can expect a huge price for your property in the market.
Tourism is endless
People have many reasons to take a vacation break. It can be a happy get-together or a sad farewell, numerous reasons will make people travel and stay for a vacation. It is for sure there is no end to this business.
The entire business operation is easy to understand. No professional knowledge is needed to start a vacation rental business. You may need to know about hospitality management and also customer handling to run a successful vacation rental business.
Things needed to start a vacation rental business
Now we are clear that the vacation rental business is very profitable and we are all set to start the same. We are going to move step by step stages that are involved in building the vacation rental business. Without proper planning and implementation, we may fail to survive in the market.
Decide the property for renting
This is the crucial stage where we need to finalize which property, we can rent for vacation business. There are two main approaches to finalizing the business.
Investing in the property you own
This approach needs more market understanding and you need to find out which place has more vacation guests. In that place, you need to buy a property on your own. Equip the property and make it ready for rental. For this, you need a heavy budget as you need to purchase the property. This is suitable for users who prefer to have a long-term rental business.
This is the most affordable option where you can rent a property for the long term and then you can re-rent it for your vacation rental business. Without spending a huge investment, you can easily start a business. But at the same time, you need to be well-versed in vacation rental management as you need to start earning instantly.
Legal Documentation and Licenses
Before starting the vacation rental business, you need to be clear with the entire vacation rental industry regulations. Laws and regulations that are related to vacation renting vary from state to state and country to country. You need to study what laws and regulations your region covers.
First, it has to be legal in your city. If so, you can proceed with applying for your rental property for registration. Once registered, you need to apply for the relevant licensing that is required for running the vacation rental business.
You can get assistance from any experienced property lawyer who would be familiar with property laws and regulations.
Simultaneously you need to know what taxes are applicable for the vacation rental business and those taxes should be settled on time.
Draw a detailed business plan
Any business needs a proper plan that will help in achieving business goals easily. A well-crafted business plan is a real key to success. You can identify challenges, risks, strengths, shortcomings, and financial needs for your business while planning.
First, you need to set a goal for your business that will be related to revenue and expenses. Your target you want to hit and the time needed to reach the goal have to be analyzed prior. List down the assets that will be helpful for your renting business.
Find out the Unique Selling Point (USP) by analyzing your competitors in the market and finding out what feature you have that your competitors lack. You need to promote that USP and gain the attention of your audience.
Setting the property management strategy
Managing the rental property is a challenging one. You need to frame a strategy that will help you in maintaining the entire asset and get profit out of it. To set up a strategy you may need to ask several questions to yourself first.
- How much time should I spend on managing my rental property each day?
- How I am going to handle messages and bookings made by customers?
- Should I need additional manpower to manage the vacation rental business?
- How can I make use of technology is maintaining the business effectively?
You need to find solutions for these questions and then should proceed with the next process.
Furnish your renting property
You can retain your customers only by delivering personalized services. They should feel at home when they are staying in your rental property. For this, the place should be well-furnished. You need to understand your target audience’s preferences and should arrange materials accordingly.
Check with your existing stock and prepare a plan for getting the remaining stock like furniture, utensils, and many more.
Give more importance to lighting as it will enlighten the mood of your guests.
Make sure you provide ample storage space for your guests to keep their luggage and other belongings. Avoid keeping your items like your family photographs, jewelry, and any other thing. This will disturb your guests’ stay at your place.
Set your pricing
You need to be more attentive while setting the price for the stay. You need to know the market pricing and know what your competitors are charging their guests. After analyzing your need to fix a reasonable price.
If you choose the wrong figure, you may face a serious downfall in your vacation rental business. Calculate all your expenses that include maintenance and other charges. Then fix a price that will assure you a reasonable profit.
Choose the vacation rental software
To efficiently manage your vacation rental business, there is no doubt that you need the support of vacation rental software. There are several hidden challenges that one needs to face while running a business. Getting assistance from vacation rental software will help you to the core. A few benefits are listed below.
- Users can easily manage all their vacation rental properties under one platform.
- Vacation rental platforms can get more direct bookings which will increase the business and revenue.
- Can sync your calendar with the platform and can never miss any booking.
- Payment processing is simplified and customers are offered several payment options.
- Tracking and monitoring are possible and the admin will get insights through analytics and can offer personalized service to customers.
- The vacation rental software will allow customers to share their experiences and this will help to improvise the service offered.
Still, there are many more advantages of using the software for managing your vacation rental business. all you need is to find a perfect vacation rental script that will support you in effectively managing your business.
Advertise your business
A vacation rental business needs more customers to visit your rental property. To attract more customers, you need an excellent marketing strategy that will gain the attention of your target audience.
Digital marketing has a crucial role in building a brand and increasing the customer base for any business. You need to make use of this marketing technique and should appealingly reach your target audience.
Social media marketing is a part of digital marketing and this has given better results when compared with any other marketing technique. All your target audience will be active on any of the social platforms. You need to run campaigns and make sure you attract your audience to your platform.
Before investing in marketing, you need to make sure you have a perfect vacation rental website or software. The platform should have a call to action that will let the admin know that a user is approaching his platform.
Hope you have gained enough knowledge about how to run a successful vacation rental business. Believe it or not, the vacation rental business is going to reach new heights in the coming years.
After the pandemic, the hospitality industry as a whole is expected to have a positive future. This is the right time to step into the market and make good money.
Stay connected with appkodes for further assistance. We can support you more in building a promising vacation rental business.