7 Tips to Scale Your Vacation Rental Business

Business is booming and you’re ready to scale up. But before you expand, you’ve got to make strategic decisions that carry long-term implications. You might be wondering: How to scale a vacation rental business without compromising on the qualities that make your business great?

RueBaRue_Rental Management_A photo of a stressed out woman looking at laptop

One thing is for sure, there’s a limited amount of time and resources. Between maintenance, guest communications, and scouting out new properties, scaling can be overwhelming to say the least. Even if you’re financially ready to take on new listings, operational issues can easily get out of hand and snowball into bigger problems. However, you don’t have to sacrifice quality for quantity. We’ve put together a list of surefire tips to help make your short-term rental scaling efforts a success. In this article, we’ll cover:

  • Finding the right time to scale your business
  • How to scale your vacation rental business: 7 tips
    • Starting local to achieve long-term goals
    • Laying the groundwork to scale your business
    • Determining your business model
    • Building your tech stack
    • Optimizing guest communications
    • Automating and simplifying guest management
  • Making a case for property owners
  • Sustainable practices for scaling success

Let’s get started.

Streamline your management processes while reducing guest messages and calls by 70%. See how RueBaRue can support your growing business. Book a demo.

When is the right time to scale your rental business?

Before thinking about how to scale your vacation rental business, first ask the question: Is it the right moment to do so? You don’t want to start taking on listings prematurely and then find yourself scrambling to make ends meet because of poor operational practices.

While planning out your expansion, consider these key elements driving your business’s success:

  • Secure financial standing – To take your business to the next level, make sure that you have the financial backing to support your growth. According to a study by US Bank, 82% of small businesses fail because of poor cash management. As we have learned from the pandemic, it’s always better to have more than enough backup savings for when things go awry.
  • Solid human resources – Before scaling, audit your current employment practices and make sure you’re not at risk of losing any of your top performers. Look at your business’s turnover rate, employee satisfaction rate, and hiring metrics to ensure you are prepared to recruit and train new employees.
  • Quality management – Scaling a vacation rental business should not come at the expense of management processes. Be careful not to bite off more than you can chew and sacrifice the quality of your services as a result. Review your systems and infrastructure to make sure they’re sustainable.

How to scale a vacation rental business

1. Dream big, but start small

When planning out your growth, you may have some ambitious long-term goals in mind. Who doesn’t want to see their business revenue double or even triple in size? However, to materialize these goals you’ve got to have a realistic business strategy to back it up.

Image showing a vacation rental business growing like a plant

Caption: The best way to grow your vacation business is to start small and local.

Credit: Name_gravity / Unsplash

One of the best ways to scale is to acquire new properties within a limited radius. That way, your systems, and operations stay local and can go as smoothly as possible.

Just imagine the amount of hours you’ll save while coordinating cleaning services in one city versus three cities. Not to mention resolving issues with guests and managing employees. It’s much easier and less expensive to keep your operations close.

Additionally, working locally helps you to develop an understanding of the local rental market as well as build a network of contacts and partnerships with property owners, property management companies, co-hosts, and cleaning services.

2. Lay the foundations

First and foremost, you’ve got to have a solid foundation to sustain your growth.

This means having a trustworthy team and scalable internal practices. Think about whether your current practices allow you to hire and train new talent. By having sufficient human resources, a solid internal communications structure, and a positive work environment, you will be able to ensure a happy workforce.

Aside from your team, you need to have a good property management system in place for managing guest communications, bookings, and check-ins. Keeping your guests autonomous and satisfied directly impacts your business’s success. In the words of Airbnb CEO Brian Chesky, “We start with the perfect experience and then work backward. That’s how we are going to be successful”

It is simply impossible to scale successfully without prioritizing the guest experience. In this case, reliable property management software and integrations are essential. More on this later.

3. Consider your business model

Equally important for long-term success is a solid business model that you believe in. Here’s what you need to consider depending on your type of vacation rental business model:

  • Full-service management – If you are working with a full-service model, you need to be especially careful not to spread yourself too thin while scaling. It is especially important to stay local, as your business success is completely dependent upon a network of professionals to be physically present.
  • Online property management – Unlike full-service management, a model in which you manage vacation rentals remotely is much more simple to scale. With an online property management model, you will be less dependent on a physically present ops and guest management team and more reliant on technology to scale successfully.
  • Hybrid property management – With this model, you can have the best of both worlds. If you currently have a full-service rental model, growing into a hybrid work model might be worth considering. Automating some of your processes can give you a cost-effective solution to some of your scaling challenges.
  • Franchise model – The franchise model is perhaps the best option for those looking to streamline their branding and processes. However, expansion means dealing with full-service management challenges. You will need to have team members physically present at your properties and ensure that your brand image is upheld while growing your company, which presents its own challenges.

Regardless of your business plan, you need to establish targets and identify possible barriers to your growth. As you plan to scale up, the key is to think about potential roadblocks that you may encounter along the way.

4. Find the best locations for your business

As mentioned before, having properties in close proximity can really help operations as you scale up. But the proximity of new properties shouldn’t come at the expense of desirability. Here’s what to look out for while finding the right prospects:

picture of a rural vacation rental property

Caption: The rural vacation rental market has taken off since the pandemic

Credit: Greg Rosenke / Unsplash

  • Natural settings – With the rise in remote and flexible working conditions, the short-term rental market has taken off over the past couple of years in rural areas. However, this trend may be reaching the end of its tracks. According to a forecast by AirDNA, the demand for vacation rentals in rural areas is expected to slow down considerably. To give you an idea, the demand for coastal locations is only expected to grow by 3% in 2022.
picture of a short-term rental property in an urban setting

Caption: The demand for vacation rentals in urban areas should grow in 2022 and 2023

Credit: Andrea Davis / Unsplash

  • Urban settings – According to the same AirDNA forecast, demand for urban short-term rental (STR) locations is expected to grow by 33% by the end of 2022. There is no doubt that urban areas are on their way to recovery and may even see demand reach pre-pandemic levels by 2023.

5. Build a solid tech stack

The right vacation rental tools are an absolute must-have for any short-term rental business owner looking to scale. To save time and money, it’s in your best interest to use human resources strategically and automate repetitive tasks wherever possible.

Make sure that your PMS covers the basics and can easily integrate with other software. While finding the right property management tools, here are some of the features that you should look out for:

  • Digital guestbook – With this feature, you can cut down on the amount of time that you spend helping guests settle in. By giving guests access to things like door codes, arrival times, house rules and a local area guide, they will feel more secure and comfortable during their stay.
  • Guest messaging system – While determining the best technological solution for scaling your business, you should definitely place guest experience at the forefront of your efforts.

You’ll want to make sure that you have a way of communicating with guests quickly and be able to resolve any problems that they may encounter. Using technology to facilitate guest communications will not only get you 5-star ratings, but will save the time and resources spent on unnecessary interactions.

RueBaRue SMS automation feature

Caption: With an automated guest messaging system, you can cut down on time and put the guest experience first

Credit: RueBaRue.com

6. Improve guest communications

Without having a clear way of communicating with guests, your scaling efforts will be stopped right in their tracks.

A big problem that many vacation rental business owners face is that they find themselves burdened with an impossible amount of messages, bookings, and changes to manage. Dysfunctional guest communications can paralyze any business growth, not to mention damage your image in the process.

Automation is a more reliable means of immediately connecting with guests and finding out if there are any pressing issues that you need to address. By using automated guides and templates, you can cut the amount of constant back and forth messages and reduce your workload by up to 70%.

Many owners are hesitant to automate texts because they are worried that generic automated messages might upset guests.

The solution to this is to use macros to give your guests customized responses and access to all of the information that they may need. Basically, macros are actions that can be saved and stored for whenever you decide to use them.

For example, you can create a template and use it automatically based on a guest’s query. With macros, you can customize automated messages with information such as guest names, booking references, check-in dates, door codes, and WiFi passwords.

7. Automate operational tasks and optimize the guest experience

Scaling your vacation rental business means that you will also be scaling your operational challenges. For this reason, finding tools that integrate with your property management system should be at the top of your list. The more processes that you can automate, the better off you will be.

In addition to guest communications, you can successfully make the following more efficient with the right software:

  • Contactless check-in – Having a contactless check-in system is a real win-win for anyone looking to scale their vacation rental business. Not only does it save you loads of time, but it also empowers your guests with autonomy and flexibility. They will be able to securely arrive at their destination without having to rely on a physically present employee to let them in.
  • Extended stays – With the right tool, you can automatically find gap nights and vacancies and offer them as a discount to guests who may be looking to extend their stay. With this feature, you can maximize your revenue by keeping your bookings full.
  • Review requests – Automating requests for guests to review their stay is a must-have for any entrepreneur’s marketing strategy . Often, the first thing that guests do is go to google a vacation rental listing site and read reviews. To keep your growing business bringing in new customers, you’ll want to be sure that there are plenty of recent 5-stars next to your name.

Elevate your guests’ experience while saving time. Learn about RueBaRue’s solution for reducing guest messages and calls. Book a demo.

Make a compelling case for property owners

The best way to convince homeowners and investors that you are capable of generating revenue with their property is by showing them hard numbers and a solid track record of business success. In your presentation, you’ll want to include:

  • Average annual occupancy rate for your existing properties
  • Average revenue per year
  • Guest reviews
  • An overview of your current operations
  • Guest reviews
  • Guest management and operations technology

The more proof of your service levels that you give to property owners, the more likely they are to feel confident about your proposal. Having clear records and smooth operations will make them jump at the opportunity to grow alongside your business.

The bottom line: Scalable operations and guest communications

Scaling your vacation rental business isn’t just about growing bigger. It’s also about growing better. Scalability in the short-term rental industry comes down to the following factors:

  • A solid team, a bulletproof business plan, and a strong financial standing
  • A reliable system of communicating with guests, a way to offer them personalized and local insights, a guest experience that brings in 5-star reviews
  • Automated check-in tools, a guest messaging system, and a digital guestbook to integrate with your PMS software.

Improve your operations and put your guests’ experience first. Use RueBaRue for user-friendly text messaging and guestbooks that will impress your guests and save you hours. Book a demo.

Frequently asked questions about how to scale a vacation rental business

How do I scale my business on Airbnb?

To successfully scale your rental business on Airbnb, you’ll want to have a good system in place for things like organizing cleanings, communicating with guests, and managing check-ins. It’s best to use property management software that’s compatible with the Airbnb platform and integrations that support your business model.

Is the vacation rental business profitable?

Although it can take time for new properties to take off, generally speaking, the vacation rental industry can be very lucrative for business owners. With that being said, making decisions based on market research and trends can help to boost profit and make your new business successful.

What is a good rate of return on a vacation rental property?

Generally speaking, anything between 10-20% is considered to be a good return on investment for a vacation rental property. However, it should be noted that there are many factors contributing to this number, such as the type of property and its location.

How much does the average Vrbo owner make?

On average, vacation rental owners who use Vbro earn over $33,000 in yearly income. The number varies depending on location and property type. For a calculation of how much you could earn while listing your property with Vbro, consider using their online calculator.