Short-term rentals are thriving. Research shows that so far this year demand is up 27% compared to last year. That’s the good news. The less good news is that supply is outpacing demand growth, with a predicted increase of 21% available listings in the US expected.
The other less good news is the uncertainty of the economy leading to higher costs of living, including rising energy tariffs. So, how can you as a property manager navigate these challenging times to ensure your business remains financially stable, and better yet, profitable?
According to our research, vacation rental property managers have three key areas to focus on to improve cost management: your time, maintenance costs, and guest appeal. Here are our best tips for addressing these so you can secure financial sustainability in your rental business.
3 tips every property manager needs to know for financial sustainability
1. Efficiency monitoring
We hate to say it, but when it comes to rental property costs, there are likely a lot of ways you’re pouring your hard-earned revenue down the drain. Quite literally if you’re not already using an automatic water monitoring system. Without tech assisted Water Management you could be wasting up to 200 gallons of water every single day. This extra usage is caused by leaks, unnoticed issues that escalate into hefty damages, and unprecedented circumstances like a frozen water pipe. But, you can say goodbye to all of those costly factors by installing a Smart Water Valve + Meter which constantly monitors for changes in consumption to indicate leaks or maintenance needs. What’s more, the IoT-connected tech can shut off the water supply and contact you immediately when something goes wrong (such as a sudden drop in temperature).
The same applies to your energy consumption for heating and cooling your rental property. Without automated monitoring of your HVAC system through a smart thermostat, you could be over spending on bills and unnecessary machine maintenance (up to $250 more per property per year!)
These figures show why consumption efficiency should be your first point of call for optimizing your short-term rental property spending. But, luckily, with the right monitoring technology in place you can cut back on these costs and stabilize your finances in no time.
2. Streamline operations
To make your short-term rental business financially sustainable, you need to analyze your core operations. Are there areas where you can cut costs? Are your staff resources optimized? Is your time being used where it best benefits the success of your business? Or are you finding you’re caught up in minor issues…
This is where automation technology can help. Connect your rentals through IoT-technology to reduce common inefficiencies most property managers face. So, instead of having on-site staff present during check-in, make the process contactless with keyless smart lock technology. And, instead of spending your time allocating tasks, such as informing cleaning teams they can enter a rental, let the automated tech do it for you. With a smart access solution, you and your teams will receive instant notifications – smoothing out the entire turnover process.
3. Boost earning potential
Now we’ve covered how to reduce property costs, let’s dive into how your short-term rentals can tap into untouched potential and bring in extra profit.
If you successfully nail the above tip and have a fully streamlined operation naturally more opportunities to boost profits will arise. For example, if guests check out early and cleaning and inspection is completed efficiently, you can offer the next guests an early check-in for a small fee, and earn some bonus profit!
A more obvious way to boost your earnings is to maximize your occupancy levels. Stay on top of guest trends to appeal to what guests want and draw in a wider audience. Tailor your property to a range of markets including solo travelers and large groups like multigenerational families traveling together. Some of the biggest travel trends right now include smart home tech that guests know, love, and use in their own homes (keyless locks, smart thermostats), as well as a leaning towards sustainability.
And as always, monitor travel demand in your destination and adjust your average daily rates (ADR) to reflect this (on top of your usual peak season adjustments). But, don’t forget that your rates should reflect inflation. If you’re paying more for electricity make sure you adjust your nightly fees. Guests are aware of the economic shifts and will expect this. You won’t be alone either, the competition will be doing the same, with forecasts predicting a 6% increase in ADR this year. In doing so, you may be able to maintain a higher average profit on your short-term rentals by over 2% compared to last year.
Reaching financial sustainability may sound difficult, but it’s really not. A few simple changes like retro-fitting smart home technology that can monitor your property and automate your business process, and staying on top of guest demands, travel trends, and ADR rates, will make all the difference.
And, if you do it right, you’ll not only maintain stable finances, but you’ll also bring in extra profit that will boost your property portfolio’s ROI.
Itching to get started? Our team members can help you on your journey towards a more sustainable business, get in touch today.