If you’re thinking about getting into the business of short-term rentals, congratulations on taking your first steps toward potentially expanding your real estate portfolio! Although it can be a great way to generate income and build financial stability with rental properties, there are some common pitfalls that even seasoned investors make when starting. Here we’ve identified five mistakes that new property owners should avoid so they can get off to a successful start in their short-term rental business.
1. Not knowing who your target guest is.
Knowing your target guest is an essential part of running a successful short-term rental property. Having an ideal “dream” guest in mind will guide you in understanding how to market your rental to draw in the people who fit that target market and need. Think about what the typical characteristics are of your target guest; are they more likely to be business travelers, young families on vacation, or retirees looking for a seasonal getaway? Consider factors such as budget, activities nearby, and amenities that might influence their decision-making process. Ensure you are marketing to the right target audience for maximum bookings. This could mean staying up to date with current trends in the tourism industry or diving into what type of person would value the experience you have to offer. Knowing your ideal guest will benefit the success of your short-term rental in meaningful ways!
2. Not having operational systems in place.
Owning rental properties can be a great way to earn a passive income stream. However, without proper operational systems in place, short-term rental operations can quickly become difficult and complicated to manage. An effective system that addresses rental operations, from bookings to cleaning and beyond, will help minimize risk while increasing the chances of success. By finding the right rental systems for your short-term rental business, you can save yourself time, worry, and possibly even money down the line. Investing in rental systems now is a wise choice that pays off later – don’t wait until it’s too late!
3. Not using dynamic pricing for rental rates.
Dynamic pricing for rental rates is becoming an increasingly popular decision for many rental providers, especially regarding short-term rental options. This type of rental pricing can save rental providers money and offer customers more flexible prices. By dynamically pricing rental fees, rental providers can cater to a wider range of customers who can be charged different prices depending on the item in question and the timescale of the rental. Additionally, dynamic rental rates make it easier to control the availability and drive mid-week visits while ensuring peak times remain profitable. The combination of these benefits undeniably makes dynamic rental pricing an attractive alternative that rental providers should consider seriously.
4. Not asking for a customer review or not responding appropriately.
As a short-term rental owner, customer reviews are the lifeblood of your success. Responding to customer review complaints in an appropriate and timely manner can be the difference between a one-time customer and a customer for life. Praising customers for their positive reviews is always appreciated and expected as good customer service. Customer reviews are essential and should not be taken lightly; they can make or break your business! So, it’s important to monitor customer feedback constantly and effectively manage any negative reviews that may arise. Being proactive with customer reviews can ultimately increase customer satisfaction and attract more guests.
5. Not generating direct bookings for your short-term rental versus relying on Online Travel Agencies (OTA).
It’s obvious why direct bookings are the most attractive option for any short-term rental owner looking to fill their vacancies. With direct bookings, you’ll save on commission fees and enjoy a direct customer relationship with your guests. You can create loyalty programs and build relationships that last beyond each stay. Balancing direct bookings with Online Travel Agency (OTA) listings is the way to go if you’d like to maximize your occupancy rate and profits. After all, OTAs have strong marketing capabilities with loyal customers who often return for more stays. Complementing direct bookings with OTA listings can help keep you from missing out on potential opportunities.
Find long-term success for your short-term rental business.
Taking the right steps to start a short-term rental business is key if you want your venture to turn into long-term success. To help ensure that happens, it is essential to avoid committing the 5 mistakes outlined in this post. These mistakes are; not knowing your target guest; not having operational systems in place; not using dynamic pricing; not asking for customer reviews; and relying solely on OTA’s for direct bookings. Once you understand these pitfalls, you can move forward with creating the ideal short-term rental experience for yourself and for the guests who will be staying with you. Doing so will open opportunities and pave the way for more successful times. There’s no secret formula to running a successful short-term rental business – but with knowledge and practice, success could be yours faster than you think. By reflecting on these tips before taking that first step, you can avoid costly blunders – it pays to research! So get out there and take action. Subscribe to our YouTube Old House Renovation channel. Watch our related video summarizing the 5 mistakes to avoid when starting a short-term rental business.
