Managing a vacation rental by owner property can be challenging. There is so much involved in creating a profitable vacation rental business that getting it right from the start is tough — manageable but tough. It is more than learning from a few websites and hoping for the best; adopting a strategy for marketing and operating the business professionally from the outset can yield more income and occupancy than any adhoc approach.
These 10 points are a sample of the most common mistakes VRBO’s make. Maybe you have done one or two and maybe you are still. Being able to take a step back and observe your vacation rental business from back behind the trenches will give you a better perspective as to the areas you need to improve your strategy.
1. Not screening
Vacation homes are often seen as ideal ‘party’ venues for groups of young (and not so young) people. If you set your own restrictions on your property i.e. family groups only or no-pets, or as not suitable for young children, you’ll need to ‘screen’ potential guests to make sure they are a good match for your property. This simply means you need to talk to your guests — on the phone and not by email – to establish what they are looking for in a vacation rental and deciding whether you property is right for them, and conversely whether you want them in your property. Many first time owners get so excited about the first enquiries and bookings, they go for them without really thinking it through which can result in the potential for issues on arrival.
2. Listing with too many sites
There’s a gazillion listing sites on the web, all vying for your marketing dollars. Many of the newest sites will entice you in with a free listing and while there is nothing wrong with taking up these offers, think twice before you sign up with too many. Also make sure you are able to link back to your own website before you do. Remember that each time your business information changes (rates, amenities, photos) you will have to go to each site you’ve registered with and manually change the details.
Check out ‘Free Is Not What It’s Cracked Up To Be‘ for more information on free listings.
3. Thinking Craig’s List and Kijiji will bring quality clients
This is purely personal opinion but we have not yet had an enquiry via Craig’s List or Kijiji that has brought an acceptable application. The guests you are looking for will be looking for reputable sites to find listings of vacation homes and tend to use Craig’s List and Kijiji for last-minute or discounted offers. Let’s just say that on a hit-and-miss scale, they are mostly misses. In addition to this, scammers use these sites extensively and because of the media coverage surrounding some of these, advertising on these sites is seen with suspicion by many potential renters.
4. Taking a booking without a rental agreement
A well written rental agreement is essential for your peace of mind as well as your guests’. It records the period of the rental, check -in/check -out times, occupancy limits, pet policy as well as any other restrictions you place on a rental. It saves any misunderstanding as you can easily refer back to the signed agreement in the event of a dispute. Your ‘small print’ can go in a Terms and Conditions of Rental document that is signed along with the agreement.
5. Pricing too high….or too low
‘My neighbour rents for $2000 a week and his place is a shack compared to mine’. That may be the case, but before you rush to slap a high price on your property, take some time to evaluate more of the competition. Your neighbour may accept all-comers and easily get the money from ten 18-yr olds wanting a party venue, who don’t care they are being over charged. You, on the other hand, are probably looking for more responsible groups who will respect your property. When pricing, look carefully at what is advertised on agency and listing sites for properties in your area and evaluate the facilities and features of your competitors closely.
6. Taking the first booking that comes along
It’s exciting when an enquiry turns into a booking and you just want to grab it. Forget the fact there are 9 people and your place only sleeps 7 comfortably, and that they have got 2 dogs and you prefer to accept only one. Set your maximum occupancy levels and pet policy and any other restrictions you want to make and stick to them. You’ll feel much more comfortable turning a booking away because you haven’t compromised your decisions. And….there will always be more guests anyway.
7. Ignoring gut feelings
Sometimes a conversation with a potential guest just doesn’t feel right. The person might say something that makes you feel a little uncomfortable or they forget to tell you about a child or two in the initial application and it later comes up in discussion on the phone. The question, “How many cars can we park there?” can be an entirely innocent one if a small family is coming up at different times and may bring a couple of vehicles, however it could also mean a small wedding is planned they are conveniently forgetting to mention. If it doesn’t feel right, sound right or sit comfortable with you, it is always better to err on the side of caution and politely reject the booking.
8. Asking for payment on arrival
If you don’t take a deposit, and simply ask for payment to be made on your guests’ arrival, you run the risk of them not turning up, or arriving with a cheque you then have to clear through your bank which may not happen until they have departed. It is very difficult to ask your guests to leave and go back home if they ‘forgot to bring the money’ and promise to bring cash when you come back at departure time. Make sure you take at least 25% deposit on booking, and the remainder with enough time to clear through your account. This is standard practice in the industry, so if your guests don’t want to follow your procedures, you are probably better off without them. For very last minute bookings accept a money order sent to you by courier or expedited mail.
9. Sending keys in the mail
This was the old method of guests getting entry to the property but if you want to maintain security of your property, don’t do it. Giving guests a method of access before their appointed rental period opens up a lot of security issues — not least of which is them copying the keys and giving one to each group member. At the end of the season you could have a vast amount of keys in circulation. Instead, fit a keyless entry system, or use a lockbox, and set a new code for each guest. This way, once they have left the code is changed and they cannot use it again.
10. Supplying the barest minimum
The key to great rental income is in repeat guests and 5 star testimonials. The way to achieve both is by going above and beyond the competition. If you provide the barest minimum in the way of features and facilities, your guests will either be barely satisfied, or will complain after they leave. Expectations have risen significantly and what was seen as ‘luxury’ a few years ago, now is considered to be standard. I still hear the expression, “It’s just a rental” as if that excuses old and stained mattresses, clunky and rusted refrigerators, and grandma’s hand-made throws on the beds. This isn’t a dollar-store business — it’s a consumer driven tourism industry that is rapidly achieving main stream status as a vacation choice. It’s better to be on the leading edge of it, than in the bargain basement.
All vacation rental owners will experience a range of issues and it doesn’t take too long to get into the swing of enquiries, reservations, and rental agreements and finally, maximum guest occupancy. We all make mistakes along the way and wish we had done things differently, but each one is a learning point that just creates a better business along the way.
Please share some of your biggest learning points in the comments below.