Whether you measure it by GDP or unemployment, whether it’s a fleeting downturn or a true trough, whether it’s actually happening or we’re just worried about it happening, economic recession is on everyone’s minds these days. And it’s an especially big concern in the vacation rental industry.
In the first half of 2023, many vacation rental property managers have reported unexpected soft spots in their booking calendars. And that trend is borne out by data. In fact, Key Data Dashboard reported a decrease in year-over-year calendar occupancy in all regions of the country, except the Hawaiian islands, in February 2023. At the same time, 2023 RevPAR has taken a hit, since, while ADR increased somewhat overall, it didn’t increase enough to offset the dip in occupancy rates.
But there is good news, too. With business travel back on track, low unemployment rates across the country, and an appetite for good deals, there’s plenty of opportunity for vacation rental property managers. Especially for those who are proactive in guarding against spiking costs and putting in place protections to weather the economic turbulence.
Take these steps now to recession-proof your vacation rental property management business:
1. Optimize your vacation-rental revenue.
If you’re relying solely on OTA pricing algorithms to determine nightly rates for your properties, you’re not maximizing your revenue potential. Airbnb, Vrbo and other platforms offer pricing tools that use basic comps data to calculate rates.
But if you really want to optimize your revenue for all properties, in real time, you need to use a purpose-built dynamic pricing tool. These tools use thousands of data points, and machine learning, to identify fluctuations in supply and demand, and price your vacation rentals accordingly. And they integrate with your PMS, and with OTAs, to make pricing adjustments automatic across channels.
This revenue management tool, which charges 1% of revenue, offers dynamic pricing, market insights and more than 25 PMS and OTA integrations, and has its own channel management option.
With more than 50 available integrations, PriceLabs offers lots of versatility, along with dynamic pricing and market insights, at a flat monthly per-property fee, with volume discounts for additional properties.
One of the newer revenue management tools on the market, Wheelhouse claims to help its users increase their revenue by 10% to 40%, and offers a 1% of revenue pricing plan and a flat-fee plan.
2. Focus on guest experience.
It goes without saying that a happy guest is much more likely to become a return guest. And a return guest has a much lower acquisition cost than a new one. Happy guests are also much more likely to leave 5-star reviews for your property, which serve as earned (rather than paid) marketing gold.
Make sure your guest experience is excellent from first touch to checkout, and provides the 5 essentials:
- A smooth reservations process.
- Easy check-in and access to the property.
- A thorough and enjoyable house manual.
- An immaculate and well-equipped property.
- 24/7 guest service availability.
Superb guest service does not have to be expensive. Using digital smartlocks, automating pre-stay communications, outsourcing housekeeping, and digitizing your house instructions (and awesome concierge-style upsell opportunities like excursions, dining reservations and equipment rentals) saves you on labor costs and the cost of human error.
So does supplementing your in-house property management team with professional remote guest services experts. Look for a remote staffing service that recruits, vets and manages real hospitality and property management professionals, rather than using general virtual assistants or a call center. Expert remote team members can improve guest experience immeasurably, and can save you up to 60% over hiring local employees.
3. Reduce energy costs at your properties.
The energy needed to run a vacation rental property can account for anywhere from 10% to 20% of your total operating expenses. The actual cost will depend on multiple factors including the size of the property, maximum number of guests, amenities such as hot tubs and HVAC systems, and the local utility rates.
But no matter what type of property, or utility rates, you can significantly reduce your energy costs by taking these steps:
- Install energy-efficient lighting. LED lights use up to 90% less energy and can last up to 25% longer than conventional incandescent bulbs.
- Upgrade to energy-efficient appliances. ENERGY STAR-certified appliances including washing machines, dryers, dishwashers and refrigerators use anywhere from 10% to 50% less energy each year than their non-energy-efficient counterparts.
- Use programmable thermostats. A programmable thermostat lets you adjust temperature remotely, reduces temperature when the property is not occupied, and can save you up to 15% on heating and cooling costs.
- Seal air leaks. Air leaks around windows and doors can make your HVAC system work harder than it needs to. Sealing air leaks with weather stripping and caulking is a relatively simple maintenance task, and can help to reduce energy costs by up to 10%
4. Streamline your property management operations.
As a professional vacation rental property manager, you’re likely already using a PMS that manages properties across channels. But aside from managing pricing, reservations, availability, and booking transactions, these automations can improve efficiency and help you avoid unanticipated costs.
Communication with your guests is not for confirming bookings and answering guest questions during their stay. You can automate messaging to follow up with abandoned bookings, confirm check-in and check-out times, schedule reminder messages, deliver access codes, offer upsells and booking extensions, and request reviews post-stay. Use high-quality messaging templates and a friendly tone to maximize guest experience, and create automated triggers to eliminate additional labor hours and improve efficiency.
Housekeeping coordination tools have an upfront cost. But the money you can save in additional labor, guest chargebacks and the cost of poor reviews makes using one of these tools a good recession-proofing guardrail. Housekeeping platforms such as Breezeway, Turno, Doinn and Properly let you automate cleaning scheduling, cleaning checklists, room-by-room cleaning instructions and remote inspections.
Housekeeping tools can also reduce your inventory tracking costs–and the cost of not having correct inventory when guests arrive. Look for a tool with an all-in-one inventory management dashboard that lets you see which supplies are running low and where. Your inventory dashboard should also give you historical insights into what supplies were used, where and when they were used, and what staff member was associated with that supply.
5. Reduce your marketing costs, but don’t eliminate marketing.
It can be tempting to all but eliminate your marketing budget when revenue slows significantly. But that’s not the right call. Especially if you want to recession-proof your vacation rental business. That’s because halting marketing now will lead to an even bigger dip in bookings, revenue and return-guest business down the road.
Instead of cutting out marketing, get strategic with how and where you promote your properties. And substitute pricey paid advertising with targeted, content-driven marketing.
Implement a low-cost social media marketing strategy. Smart social media marketing doesn’t mean spending hundreds of dollars a month on paid social advertising. To get the most bang for limited bucks, choose two or three social platforms to focus on. Make sure these social accounts have updated descriptions and links.
Create regular content–daily, or at least a few times a week–for different formats on each of your targeted social accounts (posts, stories, reels, etc.). Tag photographers, industry colleagues and influencers, when relevant. And make sure to respond to DMs quickly, before those inquiries go cold!
Earn and encourage five-star reviews. You and your team work hard to give your guests a fantastic experience. Capitalize on that effort and attention by appropriately encouraging the five-star reviews.
Ideally upon the guest’s departure (and no more than a day or so after) reach out, say thanks, emphasize that their enjoyment is your mission, and request their five-star review. Use your PMS to automate this process, and make sure to respond immediately to any concerns they voice or questions they have.
Update and optimize OTA listings. Professionally shot photos (and lots of them), a detailed description and a listing title that highlights the property’s most attractive features are just the beginning. Regularly updating your listing with new features–a new jacuzzi tub in the master, new beach toys, allowing pets–has an impact. So does swapping out photos. And tinkering with filters.
Not only do these updates give potential guests a more current impression of your property, but they can trigger OTA algorithms to push your properties further toward the top of guest searches.