With more and more vacation rentals coming on to the market, it is becoming increasingly difficult to maintain occupancy rates. Grandview Research recently released a report stating "the global vacation rental market is expected to grow at a compound annual growth rate of 5.3% from 2022 to 2030 to reach USD 119.0 billion by 2030" (grandviewresearch). What this means for STR owners is that the competition for bookings is only going to continue to grow. In order to stay ahead of the competition and grow your occupancy rate there are a few key methods that you should be incorporating into your strategy.
Lets get into the weeds and break each one of these strategies down into well defined steps.
Set Yourself Apart From Your Competition
One of the best methods to grow or maintain your occupancy rate is to set yourself apart from the local competition. There are several ways in which to accomplish this.
- Offer Special Amenities
- Create a Unique Property/Experience
- Excellent Communication
Offer Special Amenities - Let your guests know that you value their decision in booking with you by providing a welcome gift, such as a gift card to a local brewery or restaurant. These types of gestures can go a long ways in impressing your guests and may add that little extra touch to help you stand out from your competition.
Another special amenity you could provide is a complete digital guidebook advertising local events, restaurants, and attractions. Informing guests of all of the "local" spots is a great way to show your guests you care about their travel experience.
Providing food and drink items also scores highly with guests. We encourage all of our clients to provide at minimum tea and coffee, however you could also include breakfast items such as oatmeal or breakfast bars. If choosing this route, be sure to provide individually packaged items to eliminate the possibility of contamination.
Property Uniqueness - The current trend in vacation rentals seems to be more about the experience of staying somewhere unique rather than solely booking a place with a bed and a shower. If that's all that people were looking for then they'd just find the cheapest hotel. There are many ways to spice up your unit in order for it to stand out, but I will only list a few:
- hang local art on the walls
- paint a colorful mural or accent wall
- style with live plants - provide unique/colorful furniture
- create a theme and decorate around it
Not all properties are created equal, however there are a million ways to turn an average property into a stylish rental.
Excellent Communication - As with most things in life, communication is the key to success, and is imperative in running a vacation rental while continuing to maintain a high occupancy rates. Guests want to feel like they are receiving first class treatment and one way in which you can accomplish this is by clearly communicating with them. Each guest will be different in their needs, so you'll have to judge each situation accordingly. Over communication is rarely a bad thing. Be quick to answer any questions they may have and do your best to accommodate their strange requests.
Promote Your Property
Everyone's favorite word, advertise! The reality of the world we live in today is that the bigger reach you have the greater the influence. With that being said, one way to increase that reach and promote your property is through social media platforms such as Instagram, Facebook and Twitter. Promoting your property online is a great way to create demand while also showcasing some of its best features.
Platforms like Instagram are great for showing off your property. Some techniques hosts are utilizing include photos of the surrounding area and places to visit while staying at their home. You can also give virtual tours of the space including the neighborhood.
Social media platforms also allow you the space to engage with your guests beyond their stay. Creating a hashtag for your guests to tag in their photos creates an opportunity for prolonging the experience and keeping them engaged long after their stay, while also drawing attention to your property.
Be creative with your photos and video and let your personality shine through via your properties Instagram page. Creating a unique experience is almost as important as the space in which your guests will be staying.
Pricing/Booking Strategy
What is one of the major elements guests look for when selecting a vacation rental? You guested it, price. Staying competitive with your local competition is key in continuing to book reservations. Potential guests will not only be looking at your price, but comparing it to other comparable units in your area. Staying on top of your listings price and market trends can be demanding and requires constant adjustment. Here are some things to consider when setting and adjusting your pricing:
- Seasonality
- Comparable Unit Rates
- Local Events
- Overall Market Conditions
Lets examine these elements a little closer
Seasonality - Depending on where your property is located its more than likely going to experience seasonal fluctuations. For example, in Colorado, tourism numbers spike during the summer months consequentially driving demand and nightly rates. During these high demand periods it is common to raise prices. However, these high prices typically can't be sustained year round and thus a reduction in price is warranted during off-peak seasons such as spring and fall. Luckily in Colorado's case, the off-season doesn't last long as visitors flock during the winter months for skiing, in fall for leaf peeping, and spring to catch the raging rivers during high run-off. This makes Colorado a good state to invest in which we'll cover in another post.
Comparable Unit Rates - Keeping an eye on your neighbors nightly price is a good way to gauge the affordability of your property. There are of course other factors to take into consideration, such as bedrooms, square footage, location, and amenities. When comparing with similar units you'll have to figure all of these factors into price differences between units.
data.rabbu.com is a great tool to compare similar sized units within a radius of each other.
Local Events - Having a good understanding of the local economy and special nearby events will give you a leg up on pricing your unit competitively. As mentioned in the seasonal section, understanding when high demand times occur is crucial in allowing you the ability to increase price. There are a few automated pricing software applications that can assist in adjusting your price, but nothing compares to understanding the local market and events like an informed local or property management company.
Overall Market Conditions - Not only is it important to have a good understanding of your local market, but national trends as well. If there is a major boost in travel nationally you may be able to capitalize on some of that trend through higher nightly rates. This is where I see an automated software application picking up the slack.
Another element guests consider is your reservation/cancellation policy. Setting a flexible strategy gives guests more comfort in booking and allows them the peace of mind knowing that if something comes up on there end you are willing to work with their reservation details.
Update Your Property
The last, but definitely not least method is to update your property through remodels and furniture upgrades. When people hear the term remodel they shiver, but remodels don't have to be extensive or expensive. Sometimes a little bit of paint can go a long way. Here are some simple remodel tips that even the most unexperienced DIYer can accomplish with little effort and a conservative budget.
- Fixture upgrades
- Fresh paint/accent Wall
- New flooring
- Updated furniture
Fixture Upgrades - Updating kitchen and bathroom fixtures can easily transform a space for as little as $100, and most fixtures can be purchased at any big box home improvement store and easily installed. Newer bathroom/kitchen fixtures could also save you money in water savings as well.
Fresh Paint/Accent Wall - Paint can be a little costly especially if you hire it out, however it can make a tremendous difference in bringing new life to your space. Giving your home a new look and feel could be what propels it above and beyond the local competition.
New Flooring - LVT is a great option, which is relatively cheap and holds up well to abuse, making it a great choice for rentals while also coming in a ton of different styles. This is another one of those projects that can be completed by just about any average joe with a little bit of time.
Final Thoughts
Owning and operating a short-term rental doesn't have to be a full time gig, but dedicating a little time and effort into making your unit stand out by improving guest experience, establishing excellent communication practices, implementing sound pricing strategies, and integrating stylish upgrades are some of the few ways you can ensure your unit stays profitable for years to come.
As always, good luck with your endeavor and enjoy the journey!
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