Reducing Common Owner Mistakes through Effective Vacation Rental Management
by: Tim Blackwell
With a consultative approach and effective vacation rental management, property managers can reduce common owner mistakes and attract new bookings as well as repeat business.
A property manager’s role is ever-evolving in vacation and short-term rentals. With new owners entering the market every year, property management has become more than just signing new homes and growing doors.
Not all owners see the value in working with a property management company. Sometimes they let the excitement of purchasing a second home cloud their decision and decide to manage the property themselves, which can lead to costly mistakes.
Those who enlist the help of professionals ultimately rely on guidance so they can achieve the greatest return on investment.
It’s important to understand what owners are thinking when they search for a company to manage their assets. Matt Deal is a veteran vacation rental marketer and consultant who understands the owner mentality. He has found repeated success in owner acquisitions, unit marketing and presentation, revenue management and price strategy.
Deal, a world traveler who founded ParamountVR, says owners are a special breed and may think their properties will sell themselves. Often they leave money on the table or subject themselves to unnecessary risks because they don’t take vacation rentals seriously enough. Convincing them to sign with a property management company can be difficult.
We recently sat down with Deal and asked for his thoughts on how property managers can convince owners who may think they can go it alone to entrust a property management pro. He offers tips on overcoming common mistakes owners make, and shares how vacation rental property managers can set themselves apart when building their portfolios.
Ask questions rather than assume
Owners can get caught up in the euphoria of vacation rental management and the associated dollar signs. Before signing with a property manager, owners should be presented with available options and methods, including accurate market-based projections.
Also, owners should not assume that guests know how vacation rentals work; this is where a property management company can step in and provide value by ensuring a positive customer experience. Owners need to be assured that they are being represented by a professional who is accessible and knowledgeable.
Get into the mindset
Vacation rental management takes a certain kind of person, and owners sometimes have unrealistic revenue expectations, fail to understand certain parts of the business, or move too slowly in a fast-paced industry. “The property represents so much more to the owner, but once rent changes hands it becomes a business and needs to be treated as such to ensure that liability is limited and the risks are worth it financially,” Deal says.
A rough revenue estimate backed by realistic market data and a game plan should be prepared. Owners and the property management team should think like guests and be responsive, as well as market the home with professional grade photos and share reviews.
Ensure that residents are screened
Property management companies can play a big role in helping owners attract the right vacation renters through proper screening. Deal says that the biggest mistake an owner can make is not screening prospective residents. “It’s in everyone’s best interest to ensure screening is being done,” he says.
Take the guesswork out of channel management
The vacation rental industry has grown substantially, and owners must fully understand booking channels and rely on a trusted source to manage bookings. Research is critical but time-consuming. Some vacation rental booking sites have firm restrictions and terms, while others don’t share guest information. And fee structures vary. Quality vacation rental management companies should do the homework for owners and stay ahead of ever-changing trends.
Make rental agreements a priority
Deal is often surprised how many owners swap the keys for payment without a formal rental contract. Unfortunately, with no binding agreement, the owner is at extreme risk with a guest.
“The rental agreement is critical to the viability of the rental, limiting liabilities and protecting all parties,” Deal says. “Just because something hasn’t happened yet doesn’t mean something won’t.” A proper agreement should cover arrival and departure dates and times, maximum occupancy, pet and smoking policies, damage, quiet times and pool and spa regulations.
Avoid setting and forgetting rates
Deal says the Cardinal sin of DIY owners is setting and forgetting rates. Rates should be adjusted frequently to keep up with supply and demand. Setting rates once a year may leave money on the table.
Deal advises working with a savvy property manager who understands and employs revenue management software so owners maximize rents. “Keep your ear to the ground and don’t be afraid to adjust your rates up or down in order to maximize bookings,” he said. “Owners need to realize their property is perishable. Unsold nights go spoiled.”
Set and follow policies
Good vacation rental managers enforce reasonable policies and procedures, which limit not only their liability but the owner’s as well. Since staying in a vacation rental involves people’s personal homes, the basics like screening, signed rental agreements, deposits and payments need to be in place.
Also, owners should understand how to deal with emergencies and establish key procedures to ensure guest safety. Cancellation policies and screening processes should be set in stone.
Put yourself in the guest’s shoes
Owners typically need guidance on creating a memorable guest experience, and property managers can provide it. Deal says it is important for owners to examine their services from a guest's perspective.
“If a guest submits inquiries for a handful of properties on HomeAway, and your response takes 48 hours while others respond in under one hour, which property do you think the guest is most likely to book?” Deal asks.
Guests expect a streamlined experience, from booking through check-out. Anything less can result in a bad review for the owner.
Owners have a lot to think about when offering their personal home or properties to guests. A good property management company empowered with the right tools can relieve a lot of the burden and help the owner achieve the desired return on investment while reducing risk.
Vacation rental management companies can create exceptional experiences for owners and guests while maximizing revenue, reducing operational costs, streamlining the guest experience and outperforming the competition with Kigo.