What’s holding you back from being as successful as possible with your vacation rental?
Evolve recently surveyed owners from across the vacation rental landscape to find out. Over 1,000 owners responded to our 2018 State of the Vacation Rental Industry Survey to tell us what’s helping – or hurting – their vacation rental businesses.
We wanted to offer a sneak peek of what we found (the full report is coming soon!) because some of the results may surprise you.
Owners from all walks of the vacation rental industry are struggling with the same core challenges. It doesn’t matter if they have years of experience managing their properties themselves, if they’re working with a trusted property manager, or if they’re on the other end of the spectrum and are still looking for their very first vacation homes.
We’ve broken our findings down by audience, so click a category below to skip straight to the information that’s most relevant to you and your situation:
Top 3 Challenges for Owners Who Manage Vacation Rentals Themselves:
About 65% of our survey respondents said they own a vacation rental and manage it themselves. They do all the marketing, booking, and onsite management on their own. It’s a lot of work – but there’s also a huge reward when they get it right.
For these do-it-yourself homeowners, there are a number of challenges that are making it difficult to ‘get it right’ – and these challenges are preventing them from being as successful with vacation rental as they want to be.
1. Not getting enough bookings
One-third (33%) of owners who are managing their vacation rentals themselves say they are not getting enough bookings.
Not getting enough bookings is a huge problem because filling your calendar is how you generate rental income with a vacation home. It’s also a very common problem. Since HomeAway introduced Best Match, owners have been struggling to keep up with the changes and maintain their rankings in search results.
The best way to turn this around is to improve listing site performance. A lot of DIY owners continue doing things the way they always have, but times have changed. Guests’ expectations have changed. The changes aren’t going to stop, either – so it’s important to get and stay ahead if you want your VR business to thrive.
A few ways to build a stronger listing that travelers will pay attention to and book include: investing in professional photos, writing descriptions that match the listing sites’ recommendations, and asking guests to leave reviews.
2. Not earning enough money
Secondly, these owners say they’re not earning enough rental income. In fact, 21% of owners who manage their properties themselves revealed this is a top issue for them.
This is likely related to the previous challenge. If you’re not getting enough bookings, you’re probably not earning enough money either. Fewer bookings means less rental income.
If this is something you’re struggling with, it might seem like the obvious solution is to make more bookings. More bookings could help, but it’s not the only answer. Another route you can take to earn more income is adjusting your pricing strategy to maximize the rental income on the bookings you already make. For more details on these strategies and how they work, check out this post on pricing.
3. Not knowing what the best marketing strategy is
Over 18% of owners who self-manage their vacation rentals don’t know the best way to market their properties.
Most owners are using listing sites to get their properties in front of travelers, but they’re frustrated. Popular vacation rental marketplaces like Airbnb and VRBO constantly change their ranking systems. These updates make it harder for owners to maintain the results they easily achieved in the past.
Many aren’t even sure which listing sites are worth it anymore. If you’re in this boat, you can check out our infographic and blog post, which contain guides to help you decide which listing site is best for you.
What we’ve seen is that the best way to approach vacation rental marketing is to vary your strategy. Don’t put all your eggs in one basket by only listing your home on one vacation rental site. Promote your property across VRBO AND Airbnb AND TripAdvisor. Use social media to share your listing with friends and family. Anything you can do to reach more travelers will help you increase your opportunities to get bookings and make money.
Top 3 Challenges for Owners Who Use Property Managers:
About 20% of the people who responded to our survey said they use a property manager for their vacation rental. With professional management, maintenance, and marketing services, it’s easy to assume these owners would be protected from challenges that DIY owners encounter.
However, they’re actually running into many of the same issues.
1. Not getting enough bookings
Over half (53%) of owners who use property managers said their biggest challenge was not getting enough bookings. They’re struggling with this even though they’ve enlisted professionals to help them with this aspect of their vacation rental business.
This proves that no one is immune to the changes that have revolutionized the vacation rental industry. Property managers and DIY owners alike are struggling to keep up with the listing site updates and compete with the influx of properties on the market.
If you’re not getting as many bookings as you’d like, check out this blog post with some of the common issues we see and how we solve them. But you may also want to sit down with your property manager and find out if and how they’ve revisited their strategies for marketing your property in light of the industry changes – because they need to!
2. Not earning enough income
Mirroring the results of DIY owners, the second biggest challenge for owners who use property managers is related to money. Almost 38% said they weren’t earning enough income with their vacation rental.
What’s at the root of this challenge? Bookings are certainly one cause. If your calendar is empty, you’re not going to earn much rental income. Prices are another. As mentioned above, your nightly rates directly impact your ability to maximize your earnings. But when you’re working with a property manager, there’s a third cause: costs.
The average property manager charges fees of 30-50%. That takes a pretty big bite out of your rental income and can make it seem like you’re earning a lot less than you expect. An out-of-date marketing strategy paired with the high property management costs can mean empty wallets.
3. Property manager charges too much
This leads us directly to the third biggest challenge for this group: 22% said their property manager charges too much.
Property management fees can certainly add up. In addition to the 30-50% booking fee, some full-service managers also require start-up fees and then bill owners for maintenance.
Maybe you don’t have enough time to manage, or know you wouldn’t be able to do it all on your own, but is giving up 30% of your profit really the only way to do this? We’ve worked with a number of owners who felt like their property managers were charging too much and failing to meet expectations. After receiving suspicious charges from their property manager, they feel they have no choice but to try something else.
If you think you’re overpaying for the services your property manager is delivering, there’s an easy solution. You can manage your vacation rental yourself or find a non-traditional vacation rental management service like Evolve with lower fees and effective services.
Top 3 challenges for people getting started with vacation rental
15% of our survey responders fall into a different category. They are still planning their launch into the vacation rental game.
About half of them already had a vacation home and were thinking about using it as a short-term rental, and the other half were still on the hunt for a property to use as a vacation rental.
Why haven’t they gotten started yet? There are a number of challenges that are preventing them from making the leap into vacation rental ownership.
1. Not earning enough income
The top concern for ‘first-timers’ was money – 22% said they were worried they wouldn’t be able to earn enough income with their vacation rental.
It’s understandable that this is a top priority when you consider that 53% said income potential was the most important factor in their vacation rental purchase. They want to turn a profit first and foremost.
If you’re looking at vacation rental as an investment opportunity, you need to think with your head instead of your heart. Consider the earning potential of each property before you buy. Invest in amenities that will appeal to travelers. Outline a marketing strategy that will help you stand out from the existing competition.
And if you’re not sure where to invest, our Vacation Rental Performance Reports can help you determine the potential of specific markets across North America.
2. Unsure of how to manage the vacation rental
The second reason prospective owners listed was that they were still deciding whether or not they wanted to manage the vacation rental on their own or hire help. About 21% of prospective vacation rental owners said this choice was delaying their start.
This is a big decision, and it can significantly impact how much time you put into your rental, as well as how much money you get out of it. Ultimately, it comes down to a couple of considerations:
- How much time can you dedicate to managing your rental?
- Is your top priority earning income?
If you have lots of free time to spend learning about vacation rental, answering guest inquiries, and managing bookings, then you’re in a great position to manage your property yourself. If you don’t have a lot of time to dedicate to managing your rental and you need to cover your costs quickly, you might better off using a cost-effective vacation rental management service like Evolve.
3. Still looking for the right vacation home
Over 21% said they hadn’t yet found the right property to use as a vacation rental. It’s critical to find a property that has vacation rental potential if you are concerned about your ability to earn income. Proximity to attractions, in-demand amenities, ample sleeping space, and convenient location are all factors that you should consider as you’re looking for properties to use as short-term rentals.
If you’re in the market for a vacation rental, check out these related posts for tips on top markets and what amenities to look for:
- Where’s the Best Place to Invest in a Vacation Rental?
- How to Buy a Vacation Rental with Major Profit Potential
- Vacation Rental Performance Reports
Want the full report to learn more insights about the vacation rental industry?
Now that you know owners’ top challenges, are you curious about what they’re doing to succeed? Our 2018 State of the Vacation Rental Industry Report will tell you what highly successful owners are doing to set themselves apart from the competition. Enter your email below to subscribe to our newsletter and we’ll email you as soon as we release the report.
Evolve is giving homeowners the support they need to stay competitive as the vacation rental industry changes on daily basis. We’ve already helped more than 7,500 owners earn over $300 million with our fresh approach to vacation rental management.