You can grow your vacation rental company in two ways: inventory and revenue. To add inventory, you can either approach owners and add them to your portfolio, or use rental arbitrage. But adding more inventory isn’t the only way to grow. Your goal should be to maximize each of your properties’ revenue potential as well.
We’ll walk you through the two ways to grow your inventory and how you can maximize your revenue potential in three steps.
How to grow your property management company’s inventory
Approaching owners directly to manage their properties can be difficult if you’re just starting out. Before partnering with you, owners want to see a portfolio of rentals you’re currently managing as well as your past successes. If you already have a couple of profitable properties under your guidance, this might be enough to onboard owners.
While this is a low cost method of growing your inventory, it can take time - and some marketing and networking effort - to reach your goal. The amount of money you make will be determined by the rates you set and the revenue split between you and the owner, which can vary based on property and location.
The second approach, rental arbitrage, is best fit for those who don’t have a lot of experience or are looking to grow quickly, but it requires upfront capital.
With rental arbitrage, you can rent properties on a long-term basis, and then sublease the space as a short-term rental, taking the net revenue as profit. This method doesn’t incur a revenue split, and you don’t need to have an existing portfolio of homes to add a property.
However, you will have to pass whatever screening process that the landlord has in place, and you should check that you’re legally able to sublease the property before making any financial commitment.
How to grow your property management company’s revenue
After deciding which method is best to add more units, it’s time to make the most of your properties! However you accumulate inventory, you can best maximize your properties’ revenue with these three tips...
1. Add your vacation rentals to more listing channels. The more channels that feature your properties, the greater your visibility and the better your chances are of not only being fully booked, but maxing out your occupancy with the most revenue-rich bookings available.
Managing multiple properties across multiple channels, however, can become cumbersome. Most managers choose to employ property management software to centralize their entire business - from reservation calendar to cleaning and maintenance operations and more!
If you are in need of PMS, to house your channel distribution in one place, it’s best to use software with direct connections to each listing site - otherwise, you’re at a high risk of incurring double bookings and data outages.
2. Build your own direct listing channel. While it’s important to have your properties listed on all major channels, creating your own dedicated website for your properties is a necessity. Your website acts as your direct channel, helping you avoid channel booking fees and giving you a competition-free space to tie all of your marketing activities around. Even better, direct channels are typically very easy and inexpensive to set up!
Check out this tip to bridge the gap between your website and your external channel management strategy.
3. Create an internal guest referral system. A great way to increase your revenue is by offering incentives to guests in exchange for referrals. The way this works is, when a guest stays in one of your properties and has a good experience, they’re encouraged to refer that property - or one of your others - to a friend. In exchange, either the referrer or both parties will receive a discount or other special incentive, whether it be a gift card or percentage off their next stay.
You can even link them to your properties’ Facebook page so they can quickly share with their friends for easy exposure. Word-of-mouth is the least expensive yet most credible marketing source you can ask for. And a referral program is a great way to get the ball rolling! Don’t forget to have them book with your direct channel though - otherwise you’ll be stuck paying costly channel fees on leads you sourced yourself.
Do you have the right tools in place to grow?
The short-term rental industry is a lucrative one, and if you have the right systems and processes in place, you’ll find it much easier to scale your property management business - whether it be in terms of inventory or revenue.
While these three tips will set you off on the right path toward maximizing revenue for your existing properties, it can be time consuming - and overwhelming - to manage everything.
MyVR is here to help. Our software automates your day-to-day activities like reservation management, guest communications, payment processing, cleaners and maintenance and more, so you can focus on long-term, sustainable growth. We integrate directly with every channel to ensure you never incur booking errors, and you can set up your own branded direct channel in a matter of minutes.