The global vacation rental market is set to grow from $82.63 billion in 2022 to more than $119 billion by 2030, a compound annual growth rate (CAGR) of 4.7%, according to DoorLoop.com.
As entrepreneurs and investors, alike, seek additional income streams through vacation rental homes, travelers are ready to take advantage of these private houses and condos to level up their vacation experience.
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The average vacation rental owner typically nets a 5% to 10% return-on-investment (ROI), according to AirDNA. How can you maximize those profits while keeping costs stable? Here are five tips to boost your vacation rental profit without adding amenities or increasing your expenses.
Take Advantage of Dynamic Pricing
David Ciccarelli, CEO of vacation rental platform Lake.com, recommended using dynamic pricing to set competitive rates.
“For the uninitiated, dynamic pricing is automated price adjustment software used by Airbnb hosts to increase and decrease the nightly rate depending on demand, seasonality or special events coming to town,” he said.
Dynamic pricing allows you to maximize earnings at peak times. You can capitalize on that increased demand with a dynamic pricing tool.
“If guests are booking an Airbnb for an event, such as a music concert or festival that was just announced, they’ll book accommodations quickly,” Ciccarelli explained.
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Offer ‘Length of Stay’ Promotions
You can take a tip from the Disney World marketing playbook. Walt Disney World Resorts lowers the price on tickets when you purchase more days at their parks. Vacation rental platforms often allow the same type of sale.
Ciccarelli recommended offering discounts for longer stays — typically a minimum of one week — to help keep your rental booked.
“You could get more bookings by offering 10% or more, depending on how generous you want to be with your promotions,” he said.
Use Loyalty Discounts for Repeat Guests
Vacation rental owners can also use another common marketing tactic: Loyalty discounts. These may come in the form of 10% to 15% off for repeat guests, perks like early check-in or late check-out, or even anniversary deals, such as sending a 15% discount via SMS or email when the one-year anniversary of their last stay approaches.
Fill Empty Weeks Through Last-Minute Discounts
An empty vacation home could mean a last-minute getaway for your family or a chance to make some improvements that you might have been putting off. But that also means passing up an opportunity for income.
Give last-minute travelers a chance to claim your vacation rental at 10% to 20% off your normal price if they book less than seven days prior to check-in. You might help someone out who experienced a last-minute cancellation or found themselves traveling on short notice, while putting money directly in your pocket with a booking you wouldn’t otherwise have gotten.
“Be sure to set your minimum days notice to at least one day, so you don’t get any same-day surprise check-ins to deal with,” Cicarelli cautioned.
Collect Positive Reviews
When it comes to a successful vacation rental, reviews can make or break your business.
“Listings with an average rating of 4.9 stars or above enjoy an approximately 10% higher occupancy rate, a 8% higher average daily rate (ADR), and 18% higher revenue compared to listings with lower ratings,” according to an AirDNA article.
There are lots of ways to boost your ratings, but it ultimately comes down to providing an exceptional overall experience. This starts with rapid and open communication in the form of a welcome message and a clear, engaging guest guidebook.
Easy check-in, a thoughtful welcome basket, and, of course, a clean rental that delivers all the amenities it promises go a long way to garnering positive reviews.
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This article originally appeared on GOBankingRates.com: 5 Tips for Vacation Rental Owners To Maximize Profits
