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Complete guide on how to start a vacation rental business
When we were planning this article, everything was different: planes were flying, people – moving freely and the hospitality industry – flourishing.
The global lockdown due to COVID-19 has turned the world upside down and made governments introduce travel restrictions for 96% of all travel destinations , which has already led to huge losses and a growing number of unemployed people.
Unfortunately, now the travel industry ecosystem is down with a great negative impact on the global economy.
However, every cloud has a silver lining. The unprecedented situation and COVID-19 stress-test have already hospitality agents to join efforts and develop post-crisis programs.
Currently, they’re transforming properties to meet new demands, improve accommodations, enhance the quality of services provided, spur eco-friendly and local tourism.
And while we all hope for the better (which will definitely come), let’s talk about how to start a vacation rental business. You have to be prepared for the bright post-pandemic future, anyway 🙂
What is a vacation rental business?
Vacation rentals are various kinds of property offered for renting out short-term or long-term for travellers. Houses and flats are located in favourite tourist destinations, large cities and rural areas.
On Airbnb, you may even find some unusual hosts like snow igloos, castles or even a hobbit hole.
Find out the advanced features to help you cater to younger tenants and learn what it costs to build a property management system tailored exactly to your business requirements.
A sleek website of a real estate agent can make the right impression and encourage people to buy a house using your services rather than a competitor's. Discover how to convey the right message to your potential clients and build a highly-converting website.
Find out how to create an ultimate tool to make the life of your real estate agency and agents easier and more productive.
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How to Create a Vacation Rental Business Plan
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Whether you’ve done your research and are ready to purchase a property or if you’re daydreaming of being your own boss and starting your very own Airbnb business, you’re going to need to get down to brass tacks and make a vacation rental business plan before you make any moves.
You can always find excellent resources from trusted places like the U.S. Small Business Administration (SBA) . They have a standard guide on how to write a business plan , but, as we all know, vacation rentals are unique and don’t fit the cookie cutter business plan model. There are an endless number of ways in which a vacation rental business may be set up.
- Rent your primary home for just a couple weeks a year while you go on vacation
- Rent a spare room on a short-term basis
- Offer your second home for short-term rental on a permanent basis
- Ask a property management company to rent your vacation rental
- Rent a portfolio of properties that you own and/or manage on behalf of others.
Even though there is a wide variation in the types of vacation rentals, there is one unifying factor: your best chance of success is to plan everything meticulously in advance and not leave everything to chance!
Learn exactly what you need from our in-depth guide and then use our tailored print out to easily complete your vacation rental business plan template!
Table of Contents
Creating a vacation rental business plan, getting the lay of the land, understanding your fit in the marketplace, building your vacation rental presence.
- Repeat Guests Are a Goldmine!
Dig Into the Nitty Gritty. Let’s Talk Money.
Any good business plan starts with an Executive Summary. This provides a useful summary for your investors or your bank. The Executive Summary should address three basic questions: What are you selling? Who will your customers be? How will you sustain and grow this business?
Paradoxically, the Executive Summary comes first but should be written last, after you work out all the details of your business plan.
Your detail business plan should broadly include the following sections:
- Market and Competitive research.
- Sales and Marketing
- Operations and Compliance
And should be accompanied by a 3 year forecast based on key metrics.
You’ve got the basics of your vacation rental business plan laid out. It’s time to start doing market research.
First let’s take a look at the vacation rental industry, and narrow it down to your specific market. Write a general overview of what the vacation rental space looks like where you’re looking to set up shop. Once you have the general summary, pivot to how you will position your vacation rental within that existing space.
The vacation rental industry is rapidly growing, which means it’s a competitive space. While they aren’t your enemies, the saying ‘…keep your enemies closer’ rings true. Understanding your competition is vital to finding where you’ll fit in the marketplace and ensuring your business has room to grow.
Look at direct competition and check-out similar vacation rentals in your area. And do not forget to consider other forms of accommodation as a possible competitor. Hotels and B&Bs are another choice. So pay close attention to details like their occupancy levels, average daily rates, seasonal pricing, and the facilities and amenities they offer etc. Take fastidious notes!
Next, you must put in place a coherent sales and marketing plan.
Armed with this competitive knowledge, you are ready to describe your property (or property portfolio), its unique selling point, and explain how it will appeal to your target audience.
First, identify your target audience:
- Families with young kids
- Millennial couples
- A business or corporate travellers
- Large groups and/or extended families
- Mature, affluent, retired adults
- Any combination of the above
By creating a target audience, you are not excluding any potential guests. You are simply identifying the people who are most likely to book and have a great experience at your property.
This audience can shift for different types of accommodation and at different times of the year. Families will tend to get out during school holidays, pensioners will be a better audience to target in the low-season.
You may also notice micro-trends with who books 8 weeks out, 2 weeks out or even 2 days out. All of this information will help inform how best to present your property. For example, if your audience consists of large groups, showcase that your dining room can comfortably seat 12 people or that your media room has sofa space for 20. Appeal to your target audience for the best results!
Next, you need to describe the main value proposition for your business, in fact, for every accommodation type on offer.
- Why should your target audience stay with you?
- What is most unique or exciting about your place?
In writing up your unique selling points, you need to be sharp, truthful but you also need to bring forward your property’s best assets, including its location. Do not overplay things, as you will disappoint your guests and risk bad reviews. But do not be shy either – if you’ve got it, flaunt it!
Building your vacation rental’s online presence is key to growth, getting bookings and developing repeat business, which can equate to thousands of pounds in consistent annual revenue. Vacation rental marketing is mostly comprised of advertising and online travel agencies (OTAs), social media, email and your website.
How you will take your message to market ?
The answer lies with Online Travel Agencies (“OTAs”) and Booking Sites, major online advertisers and of course, your own website!
Airbnb and Vrbo have made their name in the Vacation Rental space, but why leave it at that? You should also consider other powerful emerging vacation rental channels like Booking.com , TripAdvisor Vacation Rentals , or Google Vacation Rental . Combined, they are sure to give your business maximum exposure.
The more agencies you work with, the more exposure you get, but this can easily become really overwhelming. You could spend every minute of the day managing your listing manually on these major booking sites – ouch! So now is the time to invest in a smart software tool to help you automate all this.
High-quality vacation rental software, like eviivo suite, includes a channel manager, a booking engine, automated guest communications and full payment integration. With eviivo suite, you can update all the major channels, including your own website, in one place and one single swoop, and avoid any overbookings.
Be careful when you evaluate this type of software. Many channel managers synchronise rates and availability, but very few are able to synchronise photos, content, policies, taxes and other fees as well.
Repeat Guests Are a Goldmine!
Marketing and communications go hand-in-hand. Think about how you will communicate with your prospective guests, new or past guests alike. Utilise all the marketing channels mentioned above, and any other communication strategies you can implement.
One third of the guests who visit major travel sites like Airbnb, TripAdvisor, Vrbo will also visit your own website. So you need to have a great online presence!
The key to success here is not the most expensive web technology but rather, quality high-resolution photography and crisp enticing descriptions for each property and its surroundings.
Rather than spending a fortune on technology and development agencies, it’s better to understand your competition and your target audience. And spend your budget on stunning photography and clever wordsmithing.
eviivo suite comes with a free website builder that lets you create your own business personality online, using simple drag and drop tools. It’s free because we think you should spend your budget on quality photography and 3D tours instead!
The most profitable business is repeat business. So make your guests love the place so much that they’ll keep coming back!
You need to nurture them with special offers, promos, regular communications, and above all, that special je ne sais quoi , and you build out with the right amenities and the quality of the information you make available to them on-site and/or online. While you may have a gorgeous property, but if you aren’t offering the right amenities say goodbye to easy bookings.
You may consider a full in-person meet & greet service. However, if you are managing the property remotely, remember that a lot can be achieved through mobile technology, with contactless check-in and check-out options, and the transmission of clear directions and access instructions.
Regardless, make sure your vacation rental PMS is able to automate the collection of payments and safety deposits, and the sending of customised guest emails before, during and after their stay, as doing all this manually would be such a drain on your time!
We’ve made it to the juicy part of the plan – money! Here’s where we’ll be considering revenue (yay!), minus all the overhead and expenses (ugh). There are a lot of pieces to account for and forecast to understand all of the costs for your vacation rental business.
Remember the fastidious competitor notes you took? Bust them out now! Think about how many potential customers you think you can realistically compete for and how popular your destination is. Does that mean that you’ll have an occupancy rate of 40% or 80%? And how will that fluctuate in different seasons and over time?
With all that research in play, it’s time to map out all your rates for a year, taking into account any seasonality in demand. You should also consider how best to flex your rates when combined with different policies, minimum length of stays, and/or promos, or packages (if you wish to bundle-in certain activities or meals). Psst—these will most likely change. The goal isn’t 100% precision. What we want is the most accurate estimate of annual revenue to set you up for success.
Once business is going, with the right software, it is easy to monitor market rates closely and adjust them frequently to stay competitive. This won’t be a set it and forget it setup, it will be key to stay on top of your pricing to stay competitive.
Next, we need to round up all your expenses and include some room for unforeseen expenses. This will include bills associated with your property like the mortgage, insurance and utilities, as well as costs for inventory, staffing, maintenance and services. And if any of this may seem overwhelming or foreign, brush up on understanding key vacation rental data and how you can calculate it.
Lastly, we have to look into local regulations and taxation. Short term rentals are a relatively new type of accommodation, and because of this, how governments manage, tax and regulate them shifts frequently. Look for regulatory information for your property at the local level with your city and country governments, and check the relevant tax information with the relevant authorities. When in doubt, enlist the help of an accountant and/or a lawyer familiar with short term rental laws in your area.
That’s it! Click here to download an easy, vacation rental business plan template and get started now!
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Vacation Rental Business Plan: Step by Step Guide
Are you thinking of investing in a vacation rental or maybe owning a property you’d like to use for vacation rentals? Well, before taking a huge leap into buying a property or investing in this fast-paced and booming business, it is important to take a step back and consider that there are many factors to take into account. As much as it is great to invest in a vacation rental business- decisions are not made overnight.
First and foremost, it is crucial to develop a vacation rental business plan that will allow you to identify potential risks beforehand. Take note, a well-thought-out vacation plan is a key to ensuring and determining the chances of achieving success as a host and in your business. More so, a strategic business plan will help secure funds from investors to develop your business.
Without further ado, let’s dive in:
- What is a vacation rental business plan?
Why is it needed?
- A recipe to a good vacation rental business plan
- Common mistakes to avoid in a vacation rental business plan
- Steps to building a vacation rental business plan
What is a Vacation Rental Business Plan?
In simple words, a vacation rental business plan is a set of rules and practices, goals, and frameworks that will help you make intelligent decisions beforehand ensuring your business is on the right path.
And not only is it a useful tool to refer back time and time again, but it also helps to rely upon and identify risks, plan and strategize on how to run your vacation rental business guaranteeing it’s worth the revenue.
It’s thrilling and exciting when buying your first property especially to property investors - who wouldn’t? They are eagerly ready to hit the ground and get the business up and running. However, keep in mind, before diving in, the vacation rental business plan is what’s going to ensure that you maximize your profits, set measurable goals, keep you on the right track, and accurately measure success.
Think about it - Without a business plan, it is like jumping into a pool of unpredictable risks and losses. A business plan is what keeps your business in place. For example, how do you know if your average daily rate is too low or whether you are spending too much on marketing? Remember, with a good vacation rental plan, your business will blossom and earnings will be tenfold than expected.
A Recipe to a Good Vacation Rental Business Plan
The secret to any good business is timing. Honestly, who wants to be in a mountain of debt? Nobody! Running a vacation rental is no small project. It takes a lot of effort, research, and process. Therefore, before jumping into the deep end, it is highly recommended that you draw up a business plan to truly judge whether your investment is worth the while.
Apart from that, ask for experts’ advice; those who have clearly proven success and have experience in the vacation rental market. Remember, a well-thought-out business plan is what justifies your means as well as guarantees a secure and blossoming investment.
Common Mistakes to Avoid in a Vacation Rental Business Plan
As your first business venture, it is common and understandable to want to welcome as many types of guests as possible but expect that you might not attract everyone.
Keep in mind, your vacation rental is not everyone’s cup of tea and that is perfectly alright. It’s better to narrow down your target niche and focus on that because you add more value to your vacation rental than having to attract none.
Ignoring the competition
Do not be overconfident that your vacation rental is the best value in the area. Be aware, other competitors in the market feel the same way and just might be better in price, style, availability, uniqueness, and might as well be everything; in comparison to your short-term rental. Therefore, try to assess your rivals and strategize on how you can outdo other vacation rentals that put you at an edge in the market.
Unrealistic financial plan
When venturing into your first business, it is common to dream big and want to make millions but take note, it will not happen overnight and neither in the first year of the business.
As great as it is to think positive and aim high, keep in mind when it comes to money, you need to be realistic. It is important to not overestimate your overall profits and underestimate your budget.
Steps to Building a Vacation Rental Business Plan
1. executive summary.
The title may sound intimidating but don’t let that fool you. An executive summary is an overall glimpse of what your business has to offer and why it is worth the investment. To put it simply, your executive summary is the cherry on top of the icing.
In simple words, it sums up what your vacation rental business plan is - which includes information about your properties, employees, future goals, prior success and accomplishments, and third-party vendors.
More importantly, the trick to outlining your summary is asking yourself the 5W’s and 1H (who, what, where, when, how, and why).
- Is it by the seaside?
- It is located in the city center, a short walking distance from tourist charms?
- Is it located in the countryside?
- Is the vacation rental family-friendly? Pet-Friendly?
- Is it a bachelor pad or intended to cater to business travelers?
- Is it a large, beach cottage- summer rental, or tent cabin?
- Is it Eco friendly?
- Is it targeted to attract families?
- Perfect for couples?
- Is your vacation rental suited for large groups?
Peak season and weekdays:
- Is it designed for summer or winter?
- Suitable all year round?
- Any festivals or events?
- Is it suited for business trips?
Reasons for the source of income:
- Is it for the extra income?
- Is it for your future pension when retiring?
- The main source of income?
2. Business Goals
Business goals are indicators of what success in your business appears like. Are you happy with the number of return guests? Are you content with a few bookings of the month?
Goals are what help identify steps and track the progress of your business. More importantly, business goals motivate you to achieve the ultimate which is a significant role in your vacation rental business plan. But for that to happen, business goals must be written realistically and detailed. Take note, an unclear goal is harder to achieve. Other than that, it’s ideal to give goals some sort of a deadline to accomplish what you aim for.
3. Value Proposition
Think about what makes your vacation rental different, who and what type of target guests you hope to attract, and how the business stands out from the other rental properties in the market.
In simple terms, the value proposition is the unique selling point of the business by knowing what are the strengths and using them to highlight to your advantage. Doing so will attract more guests and maximize your occupancy though keep in mind to do a thorough in-depth analysis beforehand that will help improve your unique offerings and achieve a profitable business.
4. Management Structure
Business management structure ideally explains the structure of the company whether it is a partnership or single owned individual, living up to its potential. Adding on, what is the current state of the business, and what property management services will you use?
To sum up and simplify, this section describes the business management structure that will help improve productivity as well as ensure all the members of the company accomplish their true capabilities.
5. Operations Plan
In this section, your operations plan is an insight into how your business will run. It is a simple part of your business plan as you most probably have even already planned it in your head.
More so, day-to-day activities include hiring new staff- do you need to outsource additional staff to help spread out responsibilities especially if you are having multiple properties, or do you want to take a role in being heavily involved in the business? How to keep track of your inventory or manage guest services? What about maintenance and cleaning , administrative duties, managing taxes, insurance , licenses, and third-party services such as property management software , etc.?
These are just a few questions to keep in mind when operating your vacation rental business. Additionally, think about how your current setup is and whether you require more improvements needed as you expand the business.
6. Financial Plan
In this section, think about how do you plan to finance the business ? Are you self-financing it or taking it out on a loan? Also, consider what the interest is like or what level of monthly payments can you manage?
Either way, the financial section outlines all the financial aspects of your business as well the history by discussing all of your previous success and how today it led to the state of your business.
Additionally, when creating a detailed financial plan and projections, it also includes:
- 12-month profit and loss projections
- 5-year financial growth
- An estimated balance sheet of expenditures
- Cost analysis
Take note, when acquiring funds or investors, it’s more ideal to work with an accountant to ensure that your documents meet the financial reporting standards required by the commercial lenders.
7. Marketing Strategy & Distribution Plan
This section plays an important role in your business plan, especially for all new hosts. Take note, the presence of OTAS’s and listing sites like TripAdvisor , Booking.com , Airbnb are quite essential for your business. Therefore, your distribution plan should consider which channels will you be advertising, how much they cost, how will you handle channel management , and when you get a booking, what are the terms of payment- is it PayPal, bank transfer, or cash/card? Note that, your distribution plan will benefit you from understanding how you will advertise your business in order to generate bookings .
More so, your marketing strategy should cover tactics on how will you market your vacation rental to key targets which include both online and offline marketing such as what social media platforms will you use, will you design and print flyers for local tourist boards, invest in paid advertising, etc. Doing so will help you achieve booking and increase the occupancy rate in the future.
8. Revenue Management Plan
When running a vacation rental business, you need to be on top of your ongoing expenses, incoming profits, and not to forget the overall finances of your business. Apart from that, you also have to include details of rates you aim to charge per night along with yield management and pricing tools you aim to use.
More so, remember to also include taxes, utility bills, staff costs, and your target monthly income in your revenue management plan. It might sound overwhelming to think about it but fear not as there are software tools such as QuickBooks to help with your revenue management plan.
9. Customer Analysis
How your business makes money is through your guests or customers. Without a doubt, it is significant to understand and know your audience, as well as their wants/needs, to help run a successful short-term rental business.
With that said, in this section, customer analysis is really where you describe and identify your ideal guest including creating different buyer personas based on the types of guests or customers that your business attracts or aims to attract.
More so, when building a detailed profile of ideal guests include information such as their names (fictional names), age, income, profession, or whether they are a family or not? These are just a few get-to-know information that will help you understand what type of guests to target and how.
Take note, to achieve more bookings, these guest profiles created can be used time after time in all aspects of your business. And with good customer analysis, you will identify and understand what to expect from your guests, their likes/dislikes about your vacation rental property.
10. Competitive Analysis
Other than understanding your own business and market, it is also important to carry out competitor research for your vacation rental business in order to thrive and help win booking over the competition.
Investigate and do thorough research of who the other local short-term owners are and how they do their work. Apart from that, find out and analyze what is the pricing strategy of the other competitors, who their target customers are, what additional services and amenities do they offer and if so, what are they? And also, what type of OTAs do they use for booking and marketing?
By doing a competitive analysis, you will understand and strategize on finding opportunities for your business to be on the top of the game. More so, there are some great software tools to help out in data analysis.
Think about the future of your vacation rental business and how you can expand it further. More so, what are the plans and goals as well as key milestones in accomplishing these targets such as how much do you want to take a month or how many guests do you plan to host in the first quarter, and so forth.? You may also want to include:
- Optimizing your daily workflow
- Offering more amenities and services
- Increasing net income
- Minimizing expenses
- Increase occupancy rate
- Expanding more properties
With that said, key milestones and goals are a useful tool to refer back and keep track of the progress as well as ensure you're in the right direction. After all, it is easy to remain where you are if no goals are set.
To help keep things running in a business, only the most vital information must be included in your business plan that is valuable to your business. More so, add an appendix for any supporting documents or information needed so that you do not require to look around when it is required such as tax information, or contacts when maintenance is required. This also includes:
- Contracts with third-party vendors
- Receipts and/or records of business purchases
- Tax registration details
- Information for maintenance and cleaning services, etc.
- Letters of support
- Vacation rental studies that you’ve cited in your business plan
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Vacation Rental Business Plan
If you are a sociable person, who likes meeting new people, is hospitable, and like to live in scenic and touristy locations outside the city, then a vacation rental business might be a good option for you.
A vacation rental business gives you the chance to experiment with your creativity, too. You get to choose the decor, the breakfast menu, and more. And if you are here, chances are that you either want to start or grow your existing business.
If you are planning to start a new vacation rental business, the first thing you will need is a business plan. Use our sample Vacation Rental Business Plan to start writing your business plan in no time.
Before you start writing your business plan for your new vacation rental business, spend as much time reading through some examples of Hotel & Lodging Business Plans .
The vacation rental industry stood at a massive value of 87.09 billion dollars in 2019 and is expected to grow at a rapid rate due to the increasing demand from millennials.
The major growth of this sector comes from millennials as they prefer privacy, access to cooking facilities, and many more such things that a rental has to offer over a hotel. BnBs are also more pet and kid-friendly, which has led to their rapid growth.
Also, millennials have more disposable income, which leads to more spending on travel, and hence more demand for vacation rentals.
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Things to Consider Before Writing your Vacation Rental Business Plan
Pick the right location.
Many people prefer to travel to serene locations that do not have a lot of traffic or noise around. And these are usually the locations where most of the BnBs are located. Though these locations are good to be at as it is your target audience’s preferred ones, make sure you don’t pick locations that don’t have access to basic facilities and supplies.
Focus on the decor
Focus on both utility and beauty while you decorate your place. Make it unique and, most importantly, Instagrammable. After all, who doesn’t like a little free publicity? Your unique decor can also make you stand apart from your competition and make your place look impressive.
Offer the amenities that your target audience wants
Several reasons make your target audience select a vacation rental over a hotel. From the size to privacy and affordability, make sure that your business ticks off most of those points to make your rental services a preferred location.
Have an online marketing strategy
Chalking out your business plan.
If you think that either of those is an overwhelming process, worry no more! Because a vacation rental business plan can help you through everything. A business plan can help you set realistic goals, forecast your finances, and design a business model that thrives.
Reading sample business plans will give you a good idea of what you’re aiming for. It will also show you the different sections that different entrepreneurs include and the language they use to write about themselves and their business plans.
We have created this sample vacation rental business plan template for you to get a good idea about how perfect a vacation rental business plan should look and what details you will need to include in your stunning business plan.
Vacation Rental Business Plan Outline
This is the standard business plan outline which will cover all important sections that you should include in your business plan.
- Mission Statement
- Vision Statement
- Customer Focus
- Success Factors
- 3 Year profit forecast
- Business Structure
- Startup Cost
- Funding Required
- Products and Services
- Market Trends
- Target Market
- SWOT Analysis
- Phone Prospecting
- Public Relations
- Ongoing Customer Communications
- Pricing Strategy
- Important Assumptions
- Brake-even Analysis
- Profit Yearly
- Gross Margin Yearly
- Projected Cash Flow
- Projected Balance Sheet
- Business Ratios
After getting started with Upmetrics , you can copy this sample vacation rental business plan template into your business plan and modify the required information and download your vacation rental business plan pdf or doc file.
It’s the fastest and easiest way to start writing your business plan.
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Download a sample vacation rental business plan
Need help writing your business plan from scratch? Here you go; download our free vacation rental business plan pdf to start.
It’s a modern business plan template specifically designed for your vacation rental business. Use the example business plan as a guide for writing your own.
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Take Your Rental to the Next Level with a Vacation Rental Property Business Plan
In 2020, the number of vacation rental users is projected to surpass 793 million people. This growth has been spurred by apps and websites that make it easier than ever to list and rent short-term rentals of private rooms, apartments, or holiday homes. There’s no doubt—vacation rentals are a booming business.
Do you own a property you’d like to use for vacation rentals, or are you thinking of investing in one? An important step to taking your business to the next level is developing a vacation rental property business plan.
Why You Need a Vacation Rental Business Plan
A vacation home business is more than simply listing your property and waiting for money to roll in. Beginner real estate investors can easily make the mistake of jumping in without a plan and then getting in over their heads. In order to be a viable business, you need to treat it as one. That starts with a business plan.
Your short-term rental business plan will help you outline your goals, define the strategy to guide your business, identify potential risks, and help you secure funding from lenders or investors. It can also be a useful tool as you move forward. You can refer back to it to make sure you’re going in the right direction.
What to Include in Your Short-Term Rental Business Plan
For property owners venturing into the vacation rental business for the first time, knowing how to write up a comprehensive business plan can be tricky. For veterans who have a plan already, it’s good to periodically review it to ensure that it’s up to date.
This sample vacation rental business plan template will help you either get started or make sure your plan is still on the right track.
1. Executive Summary
Don’t let the title scare you. An executive summary is just a short section that sums up your vacation rental business—what it entails and what it has to offer.
Things to include:
- The history of your business, with prior successes and accomplishments
- Information on current properties, employees, and third-party vendors
- Future goals for your business
Use who, what, where, when, how, and why to ask yourself questions about your business. Then answer them in your executive summary. For example, where is your vacation house located, what kind of rental is it, and who is it for?
2. Company Description
The company description explains the Unique Selling Points (USPs) your vacation rental business brings to the market.
- Your unique characteristics and offerings
- Target customers (the type of guests your business attracts or you hope to attract)
- How your business stands out in the market
Ask yourself how your business is different (and better) than other rental properties out there. For example, is it better because of location, price, amenities, or interior?
3. Industry Analysis and Strategy
To be successful in the rental business industry, you need to be strategic with your vacation property management business plan.
- Where you currently stand in the vacation rental market
- The size of the market
- Current trends and expectations
- Your strategies for achieving bookings in the future
- Technology that may be required to grow your business
- The online and offline channels you plan to use
- Costs for technology, marketing, management, etc.
Analyze the area where your property is located. Is it a popular vacation spot? Do people travel there for business, leisure, adventure, etc.? How many rentals are in the area? What are the peak times for tourists? The local tourism department or chamber of commerce can be a valuable resource. Consider enlisting a property management company that also offers strategic marketing services, like Grand Welcome .
4. Customer Analysis
Your guests, or customers, are how your business will make money. Therefore, it’s important that you understand them so you can successfully target them. This is the section where you really identify and get to know your target market, so you can make sure your business is giving your guests what they want.
- Buyer personas that identify the types of guests you want to target
- What your customers want/need from a rental property and a vacation
Think of how your customers would answer typical get-to-know-you questions, like: What do you do for a living? What age are you? What is your family situation? Why do you like to do for fun? Where do you like to travel/vacation?
5. Competitor Analysis
Every successful business plan needs to not only understand their own business and the market but also understand competitors. Find your direct competitors and analyze them so you can find opportunities for your business to come out on top.
- Who your direct competitors are
- How much they charge per night
- Typical amenities competitors offer
Investigate what other vacation rentals near you charge, who their target audience and clientele are, what types of rentals are most popular (luxury or basic), and what websites/agencies they use for booking and marketing. There are some great tools out there to help, most of which offer short-term rental and data analysis.
6. Operations Plan
Your operations plan is an explanation of how you will run your business. You probably have a lot of this figured out already, so this section might be simple. If nothing else, it forces you to consider all the details of the day-to-day activities involved in operating your business.
- Hiring of new staff
- How to keep track of inventory
- Other administrative duties
- How to manage guest service (customer communication, complaints, etc.)
- Maintenance and cleaning
- Managing finances, taxes, insurance, licenses, payment processing, etc.
- Third-party services like pricing software, etc.
Evaluate how your current setup has worked so far. Are there areas of your short-term rental business model that could use improvements? This is also a good time to figure out the role you want to play in your business. Do you want to be heavily involved or bring in additional staff to spread out responsibilities? Who will be in charge of what?
7. Revenue Management Plan
You need to keep on top of your incoming money, expenses, and general overall finances when running your vacation rental business. This is the section where you determine all of that.
- Projected vacation rental rates
- Yield management and pricing tools
- Utility bills
- Staff costs
- Target monthly income
- Other costs (supplies, license renewals, etc.)
There are several great tools and software solutions available to help you make a revenue management plan. Quickbooks is a popular option.
8. Financial Plan
It’s a fact: A vacation rental property business takes investment upfront. The financial section of your business plan outlines how you plan to finance your new business, including the initial property investment and costs for preparing the property.
- How you will pay for a property
- Savings that you will invest
- Loan information (length of the loan, interest rates, monthly payments, etc.)
- Financial projections
If you are looking at acquiring funding or investors, the financial plan section needs to be more detailed. Include a 12-month profit and loss projection, estimated balance sheet of expenditures, 5-year financial growth plan, cost analysis, and cash flow projection. You may want to work with an accountant.
9. Supporting Documents
You want to make sure only the most important and vital information is included in your vacation rental business plan, but there are other things that would be valuable to have on hand for your business. You can add an appendix for any supporting documents or information that helps keep your business running, like:
- Information for repairs: local plumber, electrician, sprinkler service, etc.
- Tax registration details
- Contracts with third-party vendors
- Receipts and/or records of business purchases
- Backup of online bookings and calendar
- Vacation rental industry studies you’ve cited in your business plan
Make your appendix as complete as possible so you don’t have to go hunting around during tax season or when you have a leaky pipe. By taking the time to compile this information, you can also find where gaps might exist in your planning. It’s better to have a plumber already vetted and in mind before water is dripping from the ceiling on your guest.
Vacation Rental Business Plan Example
We’ve given you the essential components to include in your business plan, but if you haven’t created a business plan before, it can be helpful to look at an example to get a better idea of what that looks like. Here’s an Airbnb business plan template to help you out: Fast Business Plans features a downloadable vacation rental business plan that can be adjusted for vacation rentals.
A comprehensive business plan may also include roles and responsibilities, a SWOT (strengths, weaknesses, opportunities, threats) analysis, sales forecast, pricing strategy, and sustainability and expansion strategy. At the very least, this info can be included in the appendix so you have it if you need it.
Putting Your Vacation Rental Business Plan into Action
A business plan is a great start to grow your vacation rental business. And while you can do it all on your own, you don’t have to. The right strategic partners can help you achieve your goals and objectives, steer you around potential pitfalls, and save you a lot of stress and headache.
To maximize your vacation rental business, here are two major options you can take:
1. List your vacation rental property with Grand Welcome to earn revenue with our easy and comprehensive management program.
The four steps to listing with us are:
- Plan goals and sign agreement
- Evaluation and setup
- Finalize property details
- Your property goes live
2. Open a vacation rental management franchise with Grand Welcome Franchise and work at home on your own time while our experts’ team helps you overall. S tart the business with low initial investment with big upside potential. Do you have any q uestions? Click below to get more information and resources about the franchise opportunity.
- Learn why you should choose Grand Welcome Franchise .
- Read our Vacation Rental Franchise FAQs .
- Request your free Franchise Information Kit .
The guide to a strong business plan for your new vacation rental business
- June 29, 2018
If you want to start a business in the growing market for vacation rental, there are essential factors to consider (check this article on What you must know when you start your own vacation rental business ).
The decision to invest in new property is one to ponder. Many first-time rental business owners fail into their venture. The reason: the lack of a strategic plan and the focus on unreasonable goals: 100% occupancy and $50k+ in booking revenue.
Before you purchase your vacation home write down a business plan to guide you through your future decisions. You will have to take risks and deal with the unexpected in reaching your ideological goals. The method keeps you focused on the set of rules, tactics, and actions to follow for a successful endeavor.
So what is a vacation rental business plan?
It is a framework that will guide you through your business actions. The definition of your strategy from the start and a tool to refer to make sure you are focusing on your goals.
Your vacation rental business plan should include the company, industry, customer and competition analysis, separate strategies for operations, marketing, distribution, financial and critical milestones to reach. If you are a first-time business owner, knowing what to include in your strategic plan can be a bit complicated.
We will guide you through the priorities to consider in the following overview. Vacation rental success depends on a complete understanding of:
- your company,
- the industry,
- the customer,
- the competition
Research and write down in this section the Unique Selling Points (USP) of your vacation rental business, highlighting the unique offer you will put on the existing market.
Start by writing down the high points of your vacation home, and make a comparison to other similar rentals. See if your offer is better because of location (oceanfront or high on the mountain), price (cheapest rate, discounts) or home decor (rustic or minimalistic).
Success in any field starts with the necessary knowledge of the domain. Before entering the vacation rental business perform a thorough review of the industry.
- the general economic outlook,
- key market trends,
- consumer trends etc.
Landscape the industry by looking at the top vacation rental operators. Evaluate their price strategy, the clientele and their USPs, such as self-catered with the best meals around.
Advertising tactics are essential aspects to consider:
- research for offline and online strategies,
- collaborations with local travel agencies
- publish your property on the largest rentals websites online (but keep in mind to calculate
- the net earnings too, as such sites take big commissions)
Your guests should be the central element of your plan. It is impervious to know right from the start who are your customers and separate them into important segments.
Make one or several profiles for your ideal customers to understand and target them better. The customer analysis includes everything from your customer age to their occupation and lifestyle, habits and preferences.
A clear customer profile will help you address their potential consumer needs and offer them the vacation they dream of. You will be able to understand and solve complaints once you know what they expect to find in a vacation home.
While you keep the focus on your business and customers, you should also keep an eye on your competition. Make a detailed analysis of your immediate competitors rather than whole industry.
That means that these rental businesses target the same customer as yourself. If your holiday home is on the coastline, your business rivals will be the other vacation accommodations with ocean view in the area.
Competitive analysis should be looking at the
- number of competitors and their prices,
- the barriers to entry the competition,
- competitors price,
- accommodation standard,
- level of amenities,
- other services like airport pick-up service, etc
This will help you set the guidelines for your daily operations. Take into account the people you will work with, the level of professional expertise, who will manage administrative work, cleaning team, etc.
The quality of staff will significantly influence customer relationship so this is an essential section of your business plan. I will stress out that you should probably hire someone to deal with reservations and complaints as this is the part that makes or breaks your business.
To achieve the goals you set for your business, you will have to advertise your offer. A good marketing strategy includes both offline and online tactics to target your customers.
The first action to make in marketing your vacation rental is to provide the best value money can buy.
If you know your customers well, place your ad so they can find out about your business. This could be announcement sites, specific real estate listing sites or local fairs and tourist attractions. Keep your marketing actions diverse: build your rental website , purchase online ads to reach internet users and hand out business cards and flyers for a traditional approach.
For a vacation rental business, the distribution strategy connects to its marketing channels. To be found by your future guests, it is essential to publish your offer on listing and travel sites such as TripAdvisor .
Consider which channels you will be using, the cost of listing and managing several channels. To receive online bookings, you will need to set up an online payment account such as PayPal . A vital detail is to sync your data listed on several channels to avoid double booking. Synchronizing tools such as iCalendar solves you this problem quickly.
The numbers section will include the rental rates, all your earnings, and expenses. The general finances might be an overwhelming part of the plan, but there are a lot of tools to help you out.
You should pay attention to the price strategy that should cover government taxes, utility bills and staff salaries. Set realistic prices that will ensure a healthy profit from each booking.
If you are yet to buy the property consider the cost of renovation and the expenses required for making it rent ready: home decor, utility, linens, etc.
Your business plan will need to establish your financial resources. These could be your savings if it’s self-financed (or the second job income). If you plan to take out a loan, make an interest rate analysis before and plan how you will pay it back. Prepare your estimations for expenses and earnings for the first five years, but the goal is to have profit.
If you set out your primary goal and the course to take you can track your progress by setting achievable milestones. For a holiday rental business, this could be a monthly earning target or the booking percentage. Set up a customer base growth rate per year to make it more manageable instead of targeting a fix number or bookings.
You should keep in mind that success comes in time so these milestones will help you break your strategy into manageable pieces. With a clear direction in your mind, effort and focus on excellence will ensure steady progress.
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