Running a vacation rental is like running any other business. There are strengths, weaknesses, room for improvement and threats. Whether you have just started out or have been hosting for a while, at some point in time, it’s a good idea to analyze your business and determine what is working well and what needs improvement.
In order to do an analysis, we recommend you primarily examine two things: your product (your vacation rental) and yourself as a business owner. There are many factors to consider, such as budget, target audience, market, price, etc. If you’re unaware of what your best attributes are, you may not be taking full advantage of them. Similarly, if you don’t know your weaknesses, you may not know what you need to improve on.
So how is your business doing overall? We’ve created 10 questions for you to evaluate your business, as well as a SWOT analysis template to help you along the way.
1. Did you receive as many bookings as anticipated?
What was your objective in this business? Did you have a certain number of bookings you wanted to achieve? Compare your goals with your results and analyze the correlation. If you were anticipating bookings but ended up having a quieter time, find the reason behind it and what you can do to boost bookings. Perhaps it was the low-season?
Whether you allow instant bookings or inquiries, have a look at the pros and cons of each and decide which one would benefit your business the most. If you don’t allow direct bookings, perhaps you would like to try out this option for a certain time period and see the results.
How has marketing your rental been? Are you using all the available tools, such as social media? Or are you solely relying on listing sites? Go above and beyond and advertise your rental, there are many ways to promote it.
2. Have you stuck to your budget?
When you initially started out in this business, you may have come up with a business plan in which you calculated all the numbers in running a rental and had a budget reserved. This could include amenities provided, such as towels and bedsheets, coffee capsules, the bills you have to pay, etc.
Do you have funds set aside in case you need to repair something in your rental? If you didn’t make a budget plan initially, it’s not too late! Start one now and make sure you write down how much you spend weekly and monthly. Be sure to include all the details, for example, “$10 on shower gel and soap this week.”
3. Is the price right?
Many guests consider the price to be decisive when choosing accommodation for their vacation. In an ideal situation, you would like to match their price, but of course that this isn’t always the case. In most cases, it heavily depends on the guests’ budget.
Having too low of a price could mean your turnover profit won’t be as high, and you could also attract troublesome guests. Contrarily, if the price is too high, it may deter guests from reserving.
Another scenario could be that guests are disappointed at the end of their stay because the price didn’t correspond to the property or service that they expected.
As part of your analysis, you need to make sure the price correlates in terms of the property structure and market. Have a look at what your competitors are offering by looking at listing sites for properties in your area. Perform a quick Google search to find other vacation rentals nearby. You could also look at online travel agencies to compare the cost per night of staying in a nearby hotel.
4. Do you offer the right amenities and items?
Which items are essential to your guests? Are you offering all those items in your rental? Put yourself in the shoes of a guest and picture what they need. It may be the little things, such as dish soap and kitchen roll that actually go a long way in uplifting the guest experience. When evaluating your business, think of additional items you can offer, such as the 45 must-have amenities for vacation rental homes. You might be surprised by what you discover on the list!
Of course, there are some things that are an absolute must nowadays, such as WIFI connection. But what happens if you don’t provide a TV? No problem! In this case, you just turn it around in a positive way. On your listing, you could say that your home is a retreat for peace and tranquillity where you can escape. If breakfast isn’t included, cross-promote with local businesses such as a coffee shop and offer your guests a discounted price for pastries.
5. Have you made any mistakes?
Have you made any mistakes that have impacted your business? Here are a few examples that can be considered as minor slip-ups:
- Were you late to check-in or check-out and the guest wasn’t happy about waiting?
- Did you miss something in the cleaning?
- Did you think you had the right insurance but actually you didn’t?
- Did you not screen your guest beforehand and then they ended up stealing?
- Have you been paying the right taxes?
- Did you decide to do everything yourself when instead you think you should have hired a professional? E.g. photos on the listing site
- Was something missing for your guests?
Don’t worry, everyone makes mistakes, we’re all human after all. The most important thing is to learn from them and prevent them from happening in the future.
6. Did you familiarise yourself in areas you didn’t know?
If you didn’t seek professional advice or go through a property management company, how did everything go? For example, if you didn’t hire a professional photographer to take pictures of your rental, were your own photos successful in terms of receiving bookings?
If you decided to do some DIY, renovate your property or do some interior designing yourself, what was the result?
If you would like to familiarise yourself with the vacation rental industry, read blogs that give you insight into many different aspects. There are also tons of e-books, resources and guides available online which allow you to scale your vacation rental business.
7. Who is your target audience?
Who exactly if your target audience in your vacation rental? Is there a similarity in the types of guests? For example, do you tend to receive more couples, solo travelers or groups? Are you marketing to someone in particular or do you have a wide variety of guests?
There are certain aspects in which guests tend to pay more attention when choosing one accommodation. Location is one of the determining factors. Have you done a vacation rental market analysis? Is your property situated where there is a high amount of international travelers and tourists visiting? Another aspect to consider is the type of neighborhood in which the property is located. Is it more suitable for families, senior citizens, or millennials?
Decide how the location of your rental and the property type affects the types of travelers you receive and work your way through that. Take into account how close your property is to the city center, or how far guests will have to walk to get to public transport. Do you have points of interest nearby? Any shopping centers, places to dine, amusement parks?
Whilst you cannot improve the location of a fixed property, you can on the other hand market the property to appeal to guests. If your rental is in the mountains, promote it as a quiet getaway or an escape. If your property is situated far away, give your renters alternatives, such as a “15-minute drive to a theme park or shopping mall.”
8. How has the vacation rental industry been?
Are you aware of the latest laws on vacation rentals? In Los Angeles, California, homeowners can only rent out their primary residence. This means homeowners must be present in the property when renting out for short term stays. In Hawaii, a new law was passed that limits the number of rentals allowed to operate to 1,715 properties in Honolulu.
What about the latest news on the industry? Following a recent shooting in a vacation rental in Orinda, California, the CEO of Airbnb has declared that the platform will ban party houses.
Are you aware of taxes and licenses required to run your business? It’s extremely important to keep up to date with the industry and find out how changes can affect you and your business.
9. What’s your reputation as a host?
Guests prefer to stay in an accommodation in which the owner has received very good reviews from previous travelers. Reviews help increase bookings, build trust, and help your business grow.
The opinions of your guests, in general, are a great way to find out what the strengths and weaknesses of your vacation rental are, and you can always learn from them by thanking them for helping you improve. If you’ve received a negative review, take this time to analyze and understand why the guest was unhappy. Don’t use this negative review to get you down, but rather, to bring you up. Learn from it and avoid whatever the guest was unhappy about for the next guests.
Another way to build a reputation is by showing you’re an expert and local in your area.
Recommend restaurants where you can enjoy the local cuisine, places that only locals who’ve lived there all their lives know, or points of interest which tourists don’t necessarily know about.
10. How has the experience been overall?
And finally, decide how the experience of running a vacation rental business has been on the whole. Running a business is no walk in the park. There may be ups and downs, it’s like a rollercoaster. Examine how has the experience been so far. Ask yourself questions the following questions:
- Have you enjoyed it?
- Has it been what you expected?
- Do you have any regrets?
- What could you have done differently?
It’s a good idea to keep track of your progress by documenting it monthly. Write down your feelings and experiences. Don’t just do the analysis once and forget about it. Have it as one of your goals, complete this evaluation every 3 months or so.
Ultimately, it’s all about finding a balance between everything. If you recognize a strength in your property or the way you manage your business, make the most of it. If you see that you have a weakness, do everything possible to improve it.