2016 Resolutions Not Only For A New You, But For A New Approach To Your Vacation Rental Business

Each year millions of people create resolutions in their life in an effort to positively impact personal relationships, health or other facets of daily life. Many of us also create a set of personal goals to achieve in the New Year. With so much time, attention and thought dedicated to personal improvement, we wanted to shift the focus this New Year to Business Improvement or Business Resolutions for 2016.

Each year we encounter too many vacation rental managers that operate their businesses in a lax hospitality state of mind, more like a relaxed family run operation. These types of operations are generally centered around service, but that may be only attribute. While providing great service is a key tenant of a successful vacation rental operation, a professional vacation rental management company is centered around properties, people and process.

The access to third party listing sites and the ease of setting up such distribution channels has allowed numerous entrepreneurs the opportunity to establish a vacation rental business. However, owning and operating a vacation rental business is a far cry from progressively managing a professional vacation rental business. With the ever-changing landscape, creating a consistent and meaningful profit for your business is more important than ever, and without a doubt, as challenging as ever.  Sustainable profits and business operations require professional prudent decision-making grounded in fact based, data driven metrics and the application of strong financial management.  Operating the business in this manner is the dividing line between a vacation rental hobby and a progressive vacation rental business.

The following business resolutions are designed to impact profits, while creating a professional business operation. As we travel the country working with vacation rental managers of all sizes, the areas below often represent the biggest opportunities for the average vacation rental manager.  Let’s get started:

We will start with the center point of every vacation rental operation, talk macro business operations, strategy and then work towards more granular aspects of the business.

  • Properties, People and Process – I’m a huge fan of Marcus Lemonis, star of The Profit, which airs on CNBC.  Marcus’ mantra is People, Process and Product. We have applied his over arching strategy to the vacation rental business and developed Properties, People and Process, as a macro center point for a professional, progressive vacation rental business.
    • Properties – Is your operation accepting of all properties or just specific segments of the market in which you operate?The most successful vacation rental companies that we work with have a plan surrounding their property mix that properly leverages their operational structure and the market in which they operate. Having the right property mix ties directly into gross rental revenue and ensures that the business is not overly weighted in one specific area or that the business is creating an inventory mix not suited to travelers seeking their destination.As an example, having an excess of a particular property type, such as two-bedroom, two-bathroom condominiums may work well if your market is primarily condominiums, like in certain areas of the gulf coast, and if the average guest demographic presents strong demand for that inventory type.  However, if you’re operating along the coast of the Outer Banks, condominiums are not as attractive for vacationers seeking that destination.  A continual review of properties in your rental management program, or those desiring to join your rental management program, focused on profitability and ease of management will ensure that your company has a balanced portfolio and is not overly weighted in inventory that does not generate a reasonable return.For too long, vacation rental managers thought the number of properties correlated to increased profits.  Still today, a primary benchmark around the industry is number of properties.  It’s often times not about the number of properties, simply the right mix of properties that drive increased profits.In today’s landscape travelers are more discerning and their expectations are much loftier. Owners that are not willing to properly maintain and upgrade their rental property become a liability to your business and decrease the return necessary to operate a professional business model. Does your operation have proactive ways of keeping owners engaged in the proper care and upgrading necessary to continually and consistently deliver on the expectations of the guest?
    • People – Jim Collins, author of Good to Great, preaches the procurement of the right people for any organization.  The vacation rental business is no different.  Having intelligent, service-oriented personnel is a must in any vacation rental business.  Clearly communicating the company’s goals and objectives is imperative in leading a successful operation and getting not only the most, but the best out of your personnel.  The goals and objectives of your personnel are best managed when clear, measurable results are identified for all parties involved.  If you can’t measure it, you can’t manage it. Providing your team clear direction will help ensure your team is pulling in the same direction and is operating as effectively as possible.
    • Process – Here is where we get a bit granular. Assuming your vacation rental business has good inventory with a clear plan to maintain and grow your properties, and your business has the personnel capable of success then the devil is indeed in the details, or in our case the Process. In any vacation rental business, we can draw distinctions between processes relative to Accounting, Operations and Marketing, but to progressively manage a professional vacation rental business you must leverage the results of each for combined decision making and solutions that benefit the overall business.Financially managing your vacation rental business with sound generally accepted accounting principles is critical to the evaluation of the everyday operation as well as the relationship marketing initiatives have to the generation of gross revenues.Does your vacation rental business produce a monthly financial package that succinctly ties revenues and expenses to items such as budgets, bank accounts, trust accounts and cash flows? If so, is the financial package properly reviewed to assist in the short-term and long-term decisions necessary to maximize profits? If the answer to either question is no, then you have your first business resolution of 2016.Operationally, a progressively managed professional vacation rental business is set apart from the others by utilizing work flows, systematic forms and quality rules that create successful and consistent guest, and owner, experiences through accountability. In addition, having a clearly defined organizational structure, as an operational process, creates efficiencies in leadership. Setting the proper expectations for personnel and having the processes in place to track results and establish accountability creates an environment where the employee knows specifically what is expected and has the tools to properly execute.Examples of these processes include items such as inspection forms for inventory, routine maintenance checks with detailed results for owners, proper evaluation of housekeeping fees versus expenses and revenue orientated goals for reservations employees. Many operational work flows and tracking mechanisms can leverage an ever-increasing array of software solutions or may simply require a proven and streamlined check-list. Understanding the profitability of certain tasks or departments often require a simple evaluation using proven formulas utilized throughout the industry. As your second business resolution, make 2016 the year you review, initiate and / or improve your operational work flows and the systematic forms behind each process and evaluate each process for profitability.Of course, no conversation on progressively managing a vacation rental business is complete without a look at revenue generation and the marketing behind it. As mentioned earlier almost anyone can ‘grab’ a few units and set up points of distribution with a wide variety of electronic channels, but is this really effective marketing? For most participating in distribution channels is not an option, but rather a critical part of overall revenue generation. While we certainly understand this, is your business leveraging tools and processes to determine the return on your investment? Could marketing dollars shifted from one initiative to another dramatically increase revenue without increasing expense? Having an understanding of how to evaluate the performance of marketing initiatives and the processes to routinely do so drives top-line revenue while minding the associated expenses.In addition to distribution channels how strong is your ability to market directly to your target guests and owners? Having a website that is completely compatible, and responsive, with all mobile platforms and provides full on-line booking capabilities is critical in today’s technology driven landscape. A cutting-edge web presence can also provide some of the most effective marketing initiatives at the lowest price points. For example, a website with excellent content and search engine optimization drives substantial traffic volume directly to your website at a minimal cost. Routine email marketing and / or triggered email messaging to both past guests and those arriving in the future also provide a very cost effective way to reach a targeted audience.

      As with any other process discussed, applying the same structured evaluation and tracking procedures to marketing efforts will create a clear picture on the business’ return on investment and how that contributes to overall profitability. For your third business resolution in 2016 evaluate your marketing platforms, such as websites, and ensure you have the processes in place to properly track the performance of specific marketing initiatives.

2016 is a New Year and in addition to the typical goals associated with self improvement we have hopefully inspired you to consider goals and resolutions for your vacation rental business. Take the mantra of Properties, People and Process into the new year with the intent of leveraging all three aspects to enhance your vacation rental business and increase your profits. If you feel Weatherby Consulting can help you achieve your 2016 business resolutions contact us for more information on our specific levels of service.