Blogs

Before you launch any type of business, you must make sure to consider all its aspects. They include costs, revenue streams, key customers, etc. To achieve these aspects, a business plan must be developed. Although there are many other factors utilized by vacation rental management companies.

But in this article, we will cover the 9 most important key aspects of the business model. They will surely be helpful for starting a vacation rental management company.

Let’s find out.

What is vacation rental management?

You may be renting out apartments, villas, hostels, treehouses, houseboats, and tiny homes on behalf of the homeowner. All of them are considered vacation rental management. The range of services may differ, which depends on the business model and specific agreement. 

How to Start a Vacation Rental Management Company?

1. Key activities

Before starting a rental management company, you should define the range of services your company provides. Here are the services that you should work on for your rental management:

Creating a Booking Website

First of all, you should define the range of services that your rental company will offer. You should create a professional booking website, which will have all the range of services options. Hiring an expert booking manager who will operate and drive bookings on your website is important.

Other booking platforms may include mainly Airbnb, Booking.com, etc. While making a booking, make sure to mention availability and rates. Availability and booking rates should be synchronized. This will avoid over- or double-booking.

List Your Rental Properties at Rental Sites

Whether you or an expert property manager, you must list your properties at top listing rental sites. These websites are Zillow, Zumper, Hotpads, and Trulia. 

Property Promotion

You should use a wide range of marketing techniques to advertise and promote your properties. Here are some marketing techniques you can use:

Word of Mouth

Spread the word of the vacancy opening up between friends and neighbors. Anyone who is looking for a place. You can also share the words available for rent on Facebook Business Page and Instagram. Make sure you mention complete details of the location of your property. In fact, you can make a video showcasing your property. Mention the benefits of living there in that video and share it on social media.

Use For Rent Sign

It typically measures around 18×24 inches or larger for better visibility. Sometimes, asking the flex printing press to design a For Rent sign becomes helpful. It has a typical size of 18×24 inches, with a background color to catch attention. On this signboard, you mention your contact information. Additional details include the details of your property. People walking and going through the place where rent signs are placed show keen interest. If a rental property suits them location-wise, they urge for it. 

Reservations Management 

Being a part of the business model for vacation rental companies, your booking website should have essential features. The first feature is that the property manager must be able to receive and process reservations. The booking website should have the capability to handle special requests, booking cancellations, and so on.

Guest check-in and checkout

While starting a rental management company, install keyless entry technologies at rental property main doors. When guests arrive, they should access the property (often with the use of keyless entry technologies). as well as take care of the post-stay checkout procedures.

Hiring Important People

When planning for a rental management company, it is important to hire people with the following designations:

• Guest Services Manager: He oversees guest interactions and ensures a high level of service.
• Customer Support Representative: He handles inquiries and provides timely responses to the guest.
• Property Manager: He manages bookings and ensures smooth check-ins and check-outs.
• Marketing Specialist: He creates personalized suggestions for local attractions, restaurants, and activities for the guests. He also creates promotional materials for your rental company.
• Data Analyst: He mainly analyzes guest feedback from surveys. In this way, the CEO of a rental company may improve services based on insights.
• Cleaning Staff: They ensure the property is cleaned every time. They also maintain guest stays.
• Maintenance Technician: He handles repairs and upkeep of the property.
• Property Coordinator: He manages key hand-offs and guest check-ins/outs.
• Operations Manager: He is mainly responsible for overseeing the entire process. He coordinates between cleaning, maintenance, and guest services.

2. Revenue streams and models

Rental payments or homeowners are the main revenue sources, depending on the fee policy. There are the main points to notice:

Guaranteed (fixed) rental model

You can start your rental management company on behalf of the Fixed Rental Model. For every month or year, the property manager pays a fixed rate to the homeowner. Whether the property is rented or not, it does not matter. He has to pay for it. 

Commission-based Model

The following commission-based model requires the rental property management company to get a specific percentage. The company will get 20 to 50 percent commission from the generated revenue.

Fixed-Fee Model

Many vacation rental management companies set up their business according to a fixed-fee model. The property owner will pay an agreed flat fee to the rental company to achieve its services. Even if the property is unoccupied and does not generate revenue, this model is applicable. Since independent contractors and companies offering limited services many use this model. 

Besides choosing a revenue model, some companies charge extra while others set a fixed 10 percent commission. Vacasa is a rental management company that charges for a bunch of additional services. They include home automation, insurance, linen programs, and much more. 

3. Partnerships

Now, partnership with cleaning and field service companies plays a pivotal role in rental management. Choose the most impactful partners, including cleaning service companies, if you do not have your own. The housekeeping staff looks after the toiletries, laundry, and other inventory. 

4. Customer Segments

Homeowners and guests are the customer groups. For them, every rental management company should bring value and offer exceptional services. This is the key to success behind vacation rental management companies. It’s important to understand which property types and which locations you want to work with. You will get the opportunity to meet landlords. So that you know which of them you have to attract as partners. 

As you start off, choose in the business district and expand your portfolio to other markets as you grow. You have just started your rental management company. Now, you should choose a certain property type in the local market. Choosing family villas on the beachside or urban apartments is the best option.

At the same time, it’s not important to define who your main guests will be. It’s directly connected with the property types you have selected. You can cater to middle-class family vacationers, which include beach villas. Make sure you address the needs of business travelers. For this, get a nice brochure from a nearby studio, then upload it on your rental website.

For example, Le Collectionist is a rental website that offers a selection of luxury villas in the chicest European regions. While Ski Colorado Vacation Rentals mainly focuses on lodgings in Colorado ski resorts. Some of the narrower niches include remote mountain cabins and glamping units. 

5. Value proposition

You briefly describe what your business is about and why you are preferable over other competitors. While writing a value proposition, you decide which customer group you primarily focus on.

Many rental companies target travelers while discussing the value proposition. They also have a section on the rental website, in which they invite homeowners to participate. However, many property managers decide to focus on landlords. They are their main customers and do not even have a website for travelers. Whereas other rental companies make separate web pages for guests and property owners.

You can find some examples of value propositions for better ideas regarding vacation rental management:

“Handpicked homes for city stays” – Veeve,

“Spaces designed to speak the local language” – Casai, “Trust your vacation to the experts.”—Elliott Beach Rentals,  “Host more. Earn more. Do more.” – Houst, and so on.

By reading the above examples, you can see that Houst is a leading Airbnb management company. It mainly focuses on homeowners as their primary customers. It does not cater to both travelers and property owners. Although Houst is using Airbnb and other existing booking platforms. However it prioritizes a wide set of management services. By using this strategy, Houst cuts R&D and marketing costs associated with driving direct bookings.

6. Distribution channels

Before planning for a rental management company, you should outline your marketing and distribution channels. Make sure it targets both of your customer groups, i.e., homeowners and guests. It is important to find practical answers to the following questions. How are you going to find homeowners to partner with? Are you running affiliate links to promote your rental company? Did you make a partnership with a local real estate agency? Have you advertised through Google or other online resources?

And what about your guests? Which booking platforms are you using to distribute properties through? For the startup business of a rental company, use popular platforms like Airbnb/Vrbo. Now, you need to build your own brand website with booking functionality. For this, you can get help from a web designer. 

7. Resources

While starting a vacation rental management company, you need four categories of resources. Ensure that you have thought it through well. Keep in mind the following four categories:

• Physical assets: You need tangible objects like office chairs, computers, printers/scanners, and office desks.
• Intangible resources: You require patents, licenses, research materials, and other intellectual assets. IPSIDE is an online portal that allows you to file patents for your rental company.
• Human Resources: Your company requires an HR manager to cover your operations.
• Financial Resources: You need money to launch for the startup of your rental management company. Getting bank loans is an option, which you can opt for.

All the above-mentioned resources are essential to run your rental management business.

8. Customer Relationships Strategy

You have to decide how you will communicate with both your guests and homeowners. A common option is a combination of self-service with personal assistance. As you start off, you’ll probably have more personal interactions, but later on, consider providing more self-service opportunities (a booking website and an FAQ section for travelers, along with a portal and help center for landlords). However, maintaining an expert call center is also important for great customer service and enhancing customer satisfaction.

You should decide on the main approach towards communicating with both of your guests and homeowners. First, your administrative staff will check the availability of guests at your rental website. Guests will learn about the properties that your rental company is offering. Now, you can ask a web developer to add an FAQ section to your brand website. This section will help travelers find answers to common queries. As the vacation rental company grows, you should seek help from a web developer to add more features. He will add a portal to your website for homeowners to track their bookings. Moreover, he will also set up a chat box option for quick assistance. Now, building a call center for your rental company is important for great customer service. It enhances customer satisfaction.

9. Cost Structure

Devise a detailed plan of all your expenditures. Operational costs, capital costs, overhead, payroll, and technology-related expenses—all that has to be carefully calculated.

Think about the cost of building a rental management company, which includes operational costs and capital costs. Other main expenses include overhead costs and payroll and technology-related expenses. You should calculate all of them and consider how you start your business. 

Operating expenses may fluctuate, and that depends on the type of your property, its location, and its size. However, every property manager may face the following expenditures:

• Property Maintenance: Rental properties require regular maintenance to keep them in good condition.
• Utilities: Water, electricity, gas, and other utility expenses. Note that the average monthly cost of utilities in the United States is $400.
• Insurance: Property insurance is mandatory to cover potential damages. In the USA, the cost for annual insurance premiums for rental properties is around $1,200. 
• Taxes: Being the CEO of a rental management company, you should pay on average $2,500 a year.

Conclusion

There are many other factors can be considered for vacation rental management companies. But we have covered 9 of the most common factors that every property manager needs to look for.

Whether you are renting out apartments, villas, hostels, treehouses, houseboats, or tiny homes. You or an expert property manager must list your properties at top listing rental sites: Zillow, Zumper, Hotpads, and Trulia.

Your rental site must be able to receive and process reservations. It should have the capability to handle booking and cancellations. For every month or year, you need to pay a fixed rate to the homeowner. It is for those companies opting for a fixed fee model.

Whereas, for commission-based models, the rental company will get 20 to 50 percent commission. It is also important to take care of all the budget, hiring important people, and tangible resources. This will help in running your rental management company in an efficient way.