Published on August 12th, 2020 | by Bibhuranjan0
Are Online Vacation Rentals a Saturated Marketplace for Property Investors?
With the influx of vacation rental websites, laws and regulations being implemented to control as well as tax short-term rentals, plus the competition stiff with a growing number of super hosts, many feel the early opportunity to get into the vacation rental market has been missed. However, that depends on how you are willing to break down the barriers to entry into this now very competitive marketplace.
One of the problems with brand new properties listing themselves on vacation rental websites is the price. Going in at a high price with no feedback on the listed property or at prices similar to super hosts is never going to work. People are naturally suspicious of such properties. With so many horror stories now out there, most people looking to book a vacation rental will not book unless they can see some kind of feedback.
All this being said, now is, in fact, a great time to get into the vacation rental property market because there is so much information out there already available to you. All you need to do is copy the blueprint of an already successful Airbnb Superhosts.
Market penetration these days is based on price. This means property owners new to the vacation rental scene need to take into consideration the 4 Ps of marketing. Price, place, promotion, and product.
Below we have listed each P and what needs to be considered to break down the barriers to entering the vacation rental property market in order to gain positive feedback and eventually raise the rental price of the property to increase your bottom line.
Starting with the product is quite important when we are talking about vacation rentals. The product is effectively the size of the property and its available amenities. This should not be too hard to figure out in terms of how to get the price right for the property. Just look at the price other similar properties are being offered at.
The best market research you can do is use the filters on the vacation rental website in question to match your property. Next, look at the competition – in particular, you should be looking at superhosts. These are hosts that have already managed to create a successful profile, and so you should be able to base your eventual price per night, week, or month according to the established super hosts.
Much the same as the product, you will need to look at how much superhosts are charging for similar properties in your area. You will also need to take into consideration how close your property is to the local train station, how easy it is to get a taxi, how close are restaurants, shopping centres, tourist attractions, the beach and so on.
This is made much easier if there are properties nearby already with positive feedback. You can do some of your market research to try to get a feel for the competitions’ occupancy rates and then base your pricing around the information you gain from your analysis.
Promotions are generally seasonal or attached to more granular deals configured in the pricing section of your listing. For example, you may want to offer discounts in off-peak periods. Furthermore, you can offer cheaper deals for last-minute bookings or for inconvenient one- or two-day gaps on your calendar that you would like to fill just to increase your bottom line.
Other promotions can include referrals, which can be stated in your house manual or on your listing. Another option is to also let guests know you have a website dedicated to your vacation rental property where booking via the branded site is 10% or 20% cheaper. You would not be able to advertise this on sites such as Airbnb, but you can let guests know about this when they stay.
Get the housemaid to provide the website address and ask guests to register to the site for support during their stay. If you offer a self-check-in service, then leave the website address with the key, or if you personally meet the guests, then even better because you can provide them with the website right there and then. Another good tactic here is to create your guests an account in advance and give them their username and password to log on to your website to stay in contact with you.
As a result of this, your guests can send messages via the website, see your private promotions, and look at how much cheaper it is to book via your branded website compared to the vacation rental website they originally booked through. Another advantage of this is that if they enjoy their stay, then they may refer your website to friends, family, or work colleagues.
It is easy to create a vacation rental website these days because there are so many site builders available.
Taking into account all the factors above, you should now be able to come up with a price per day, per week, and per month for your property. You will also need to change this price according to the competition and seasons. If you are just starting on a website like Airbnb, then make sure that you lower the price of your property and let people know why you are offering a lower price.
You could say that the price is low because you have no feedback on this property. You are looking for your first few guests, and this is the cheapest you will ever get a property of this description in this location. In short, you need to be honest with anyone that is looking at your property.
However, try to take into account that low prices can often attract bad clientele. Just because you are looking for feedback on your property it does not mean you should let just anyone stay. Make sure that anyone inquiring about your property has feedback from other hosts.
Although you are asking for people to trust your property even though you have no feedback, it can be dangerous if you accept someone into your new property that does not have feedback themselves. The reason is that the low price you are offering is going to attract more budget travellers that can often be the fussiest clientele compared those willing to pay more.
Researching price is also extremely important. Now the one thing that happens with some websites is ‘double pricing’ according to the region. To get accurate prices, you will need to mask your IP.
Hopefully, this information gives you a good indication of how to start to become a successful vacation rental property owner. All you need to do is treat your vacation rental property like you would any other business. Careful planning and some proactive research will almost guarantee a successful business venture – especially if your property is in a tourist or business catchment area.