Finance

A portion of the total rental amount which the guest pays in advance of their stay.

The price per night that a rental manager or channel is showing to the traveler.

An extra amount guests pay an owner or property complex in order to access certain amenities, such as tennis courts, golf, beach chairs, etc.

Payment method whereby one party (i.e. the guest) sends money to the other (the host) directly via their bank account.

To break even on an investment property is when monthly rental income is enough to pay all the operating expenses and bills associated with ownership of the property.

Typically a sum of money the guest must pay if they cancel a reservation after the cancellation deadline has passed.

A commission that a third-party distributor charges a property owner for listing their vacation rental on their website.

Any additional fee that is unique to a property. For example, most properties will have a cleaning fee, but only those with hot tubs can charge a “hot tub cleaning fee”.

Sometimes called a breakage deposit or security deposit. This is a refundable sum of money (typically around $200 or 10% of the rental rate) which a property owner collects from their guests in addition to the total booking amount. The deposit guarantees that guests return the property in the same condition they found it. In case of damages, the property owner will make appropriate deductions from the damage deposit.

A product that the traveler purchases, usually when paying for their booking. This one-off insurance cost is around $50 to $100 per stay and is bought instead of leaving a damage deposit.

The standard base rate for your property that will always be applied, unless there is a seasonal or weekend rate.

Partial payment guest makes at the time of booking in order to secure a reservation, usually a percentage of the total amount.

A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount that is still owed on its mortgage.

An account -operated by a trusted third party- which contains and holds payments between two or more parties during a transaction.

A predetermined plan that takes into account everybody’s interest in a joint ownership arrangement. An exit strategy gives a business owner a way to reduce or liquidate their stake in a business and, if it’s successful, make a substantial profit.

An estimate of the market value of the property that is based on what a knowledgeable, willing, and unpressured buyer would likely pay to a seller in the market.

Fixed-rate mortgages have an interest rate that stays the same for an agreed period of time.

When a homeowner chooses to sell a home by himself or herself rather than go through a listing agent or company.

A computerized network system owned or operated by a company that enables transactions between travel industry service providers, such as airlines and accommodation.

Additional guest charges beyond the initial price. For example, a guest fee can refer to a service fee, cleaning fee, pet fee or extra person fees.

Breaking up payments into equal, partial payments.

A loan that funds the construction of a property to be sold or leased out.

A benchmark interest index used for setting the rates of various adjustable-rate financial instruments.

A price increase on certain channels, typically to guarantee revenue profit on third-party sites which charge commissions.

The entity or party that is authorized to charge the guest’s credit card for the booking.

The total amount that a property owner receives from a distribution channel (such as Vrbo or HomeAway) after the commission has been deducted.

Typically lower rates that have special booking conditions. For example, guests will still have to pay the full price if they cancel, make changes or don’t show up. In other words, they will not receive a refund in the event of cancellation.

Fast and convenient web-based payment services, e.g. PayPal, that allow automatic money transfers over the internet, or directly from a credit card and/or personal checking account.

The amount of money the property owner receives after the vacation rental manager takes their commission from the total revenue.

The way by which a guest makes a payment to the host.

Also known as “payment gateway”. It’s a tool that collects and processes payments.

Splitting booking amounts into two or three payments, instead of charging 100% at the time of booking. Subsequent payments will be charged from the guest’s credit card automatically.

Payment Card Industry compliance is a set of standards and guidelines for companies to manage and secure credit card related personal data during and after financial transactions. PCI compliance is required by all card brands.

A sum of money beyond the total rental rate which covers the stay of any pet and costs associated with it (i.e. cleaning). Pet fees are non-refundable, but pet deposits should be refunded if no damage has incurred during the stay.

An extra service charge vacation rental owners and property managers can charge to guests who wish to heat the property pool or hot tub.

The act of funding a property by using one’s portfolio or a part of it as collateral.

Pricing strategy where rates differ depending on the number of guests staying.

A system of offering different rental rates for different rental seasons.

The total amount of expenses involved in managing a rental property.

The price for a reservation offered to a potential guest and customer.

The official or advertised price of a room or property per night, on which a discount is usually negotiable.

An amount of money (usually equivalent to one night’s stay) collected at the time of booking which validates the rental contract. The purpose of the advance deposit is to guarantee a reservation, and the full amount is applied to the guest’s bill upon check-out.

A performance measure used to evaluate the efficiency of an investment (or compare the efficiency of a number of different investments). To calculate the ROI of a vacation rental, the benefit (or return) of the property is divided by the cost of the property.

A performance measure used to evaluate the profitability of the company based on the amount of revenue generated. It compares the amount of net income generated for each dollar of revenue.

Also known as “income”. It’s the total amount of money generated.

The use of analytics to track a vacation rental (or group of rentals) and their performance over time. This helps the owner or distribution channel to maximize revenue and growth.

Most states in the US require people who rent out their vacation homes to charge and collect state sales or lodging taxes on the income they earn from these short-term rentals. These taxes are collected by the state, county and/or city, and like all sales taxes, they are paid by the guest, not the host.

See damage deposit.

Contribution to a venture in labor rather than funding.

See guest fee.

A fee that is charged by a vacation rental management company to the owner of the rental. This is usually a percentage of the rental revenue rather than a specific amount.

Pricing strategy where you add different rates per night for Thursdays, Fridays, and Saturdays.

Also known as "bank transfer". Payment method whereby one party (i.e. the guest) sends money to the other (the host) directly via their bank account.