10 Steps to Mastering a Successful Vacation Rental Business Plan
Are you looking to start a vacation rental business soon but aren't sure how to start? There are plenty of factors and possibilities you need to consider while managing the groundwork and the strategies for your vacation rental business.
Things may look quite complex right now, but we are here to simplify the process using 10 easy steps! After you finish all of the below-mentioned steps, you will be way more knowledgeable, experienced and insightful on getting your vacation rental business up and running in no time! Let's get started.
Importance of a vacation rental business plan
Your vacation rental business plan is simply an overarching set of rules, regulations, goals, and frameworks to help you make accurate business decisions. Not only will this plan help your business to get started, but it will also contribute to the long-term growth and profits of your business.
Many vacation rental owners regret not making the necessary calculations before investing.
Beyond making money and its process, having a business plan will ensure that you are on the right track, reaching goals under the designated time, and accurately measuring your progress and success.
For example, how will you know if your business is barely making any profits if you do not track the right KPIs as per your business plan?
A business plan will keep you accountable for your steps and track the measurable goals of your business while increasing your success and profitability.
Steps to Create a Successful Vacation Rental Business Plan
For people venturing into business for the first time, knowing what to add to your vacation rental business plan can get confusing. These 10 steps will also consist of the factors you should consider, aspects you need to take care of, and everything else to make the process smooth. Let's get started.
Step 1: Create an Executive Summary
Your Executive Summary should consist of a few short sentences that sum up your objective and the other aspects of your rental business. It should include all the information you want your guests, investors, and other stakeholders to know.
Here are some straightforward questions to help you outline what you can add to your executive summary:
Where is your vacation house located?
What is it? (Family holiday home, beach cottage, bachelor pad with one bedroom, etc.)
Who is your vacation house for? (Families, bachelors, couples, large groups of friends, etc.)
When is the best time to stay at your rental? (summer/winter rental, suitable for all year round or business trips only)
Why do you have this property? (Contribute to your retirement savings, the primary source of income, spare room for a side income, etc.)
Step 2: Set Business Goals
Your executive summary will now give you a broad view of what your business will be and how it will proceed further. You now need to set the right goals to solidify the vision.
Set SMART(Specific, Measurable, Achievable, Relevant, and Time-Bound) short-term and long-term goals that will help you measure the success of your business.
By the end of the first 6 months or a year, when you track your progress based on these goals, you can have a better view of how well your business is going and the areas you need to improvise for better results.
Step 3: Find the Value Proposition and Unique Selling Points
No amount of effort is enough if you do not have a suitable and attractive value proposition and a unique selling point that will compel your guests to always choose your business over others.
Outlining the value proposition and the USPs of your vacation rental shouldn't be tough. It should be about the characteristics, offerings, and everything else that makes your rental home unique in the market.
Answer the following questions that will help you find the strengths and uniqueness of your vacation rental:
Is the house close to the beach?
Are there any main public transport lines?
Is it situated in the middle of nowhere to help guests completely switch off from stressful environments?
Is your house the cheapest accommodation around?
Do you offer any particular discounts at certain times of the year?
What makes your decorations unique?
Do you provide a huge log fireplace for families to chill and unwind on the winter nights?
Is your house the best value in your locality?
Step 4: Conduct an Industry Analysis
There are tons of vacation rentals set before yours. If you want to outshine the other businesses, you need to have a strategic and competitive business plan for your venture. In this section, by carrying out industry analysis, you basically analyze other businesses, trends, expectations in the industry, etc.
Follow the below-mentioned questions to get started with your industry analysis:
Is it classified as affordable or good value?
What do the other vacation rentals near you charge per night? Is it less than $50 or higher than $300?
Who is the target clientele? (Families, couples, students, etc.)
What standard of accommodation do your competitors offer? Do they have more luxury units or basic rentals in the locality?
Are most rentals in your area self catered or Bed & Breakfast?
What websites/agencies do your competitor vacation rental businesses use?
Do they also collaborate with any local tourism agencies?
Are they missing out on agencies that you only know about?
Do they offer airport transfer/pickup services?
What amenities do they offer at their rental house?
Step 5: Conduct a Customer Analysis
The next step is to learn more about your potential guests. Ensure to create different buyer personas, as these will help you target the right customers to grab more bookings in the future.
An ideal buyer persona should contain the details of your target customers, such as their age, income, age, members in the family, interests, demographic information, location, pain points, and others. It should be everything they need and expect from the vacation rental property.
You can also note the common complaints while booking their stays and target these aspects in your following advertising strategies.
Step 6: Outline your Business Operations Plan
Your operations plan is all about how you will run your business on a day-to-day basis. Starting from the staff hired and the standards set for them to the administrative duties and inventory stacking.
You may need to deploy robust software to promptly deal with customer bookings or chatbots to answer customer queries. Depending on your requirements, this is the time you need to lay out the needs and demands of your business and strategize the operations.
Your business operations plan should also consist of a strategic task management plan.
Analyze how often the rooms will be cleaned and who will be responsible for equipping the guests with all the amenities whenever required. Before you launch your business, you need to strategies the task delegation process, which will help you find out the right people to hire for your business.
Step 7: Create a Marketing Plan
In this section, think about the different online and offline strategies, such as campaigns, promotions, etc., that will help you advertise your business. Your strategies should help boost your brand awareness and the number of bookings in the long run. This is when your buyer persona will come in handy, as when you know the people you are trying to target, your strategies get more directed and efficient.
You also need to think about the right online travel agencies that can benefit your business. Plan about how much it will cost you and how you'll manage multiple advertising channels and customer queries about your business.
Look for different tools such as a channel manager, etc., that can assist you through all the bookings, dates, arrangements, and other necessities to save you time and energy for other core business activities.
Step 8: Plan your Finances
No business can ever sustain itself without a suitable revenue management plan. You need to track and update your incomings, outgoings, profits, and overall finances. If you feel overwhelmed with the numbers, you can always hire a finance manager or an automated tool that takes care of your finances.
Let's check out some quick questions to help you create a solid revenue management plan for your business:
How much will you charge per night?
What level of taxes do you have to pay to the government?
What could be your predicted utility bills?
What level of average monthly loan payments can you manage?
What could be the average staff costs?
What is your target monthly income?
Do you need to take out a loan to start this business? What could be the average interest rates?
Do you have enough savings to invest in your business?
Step 9: Track Key Milestones of Your Business
To succeed in your business, you need to create good milestones and stick to them. These will keep you motivated and guide you in the right direction in your journey.
Some good examples of milestones for your inspiration are:
How much do you eventually want to earn every month?
How many bookings do you want in the first quarter?
What should be the average rate of growth in your bookings per year?
How many returning clients do you want to gain per year?
Step 10: Sort out the Miscellaneous Requirements
The final step is to manage your miscellaneous management and business processes. It could be anything from the miscellaneous documents to the people you need to call during an emergency, such as:
Tax registration documents
Contact number of the plumber in case of problems with pipes.
Receipts for the amenities/items purchased for the business
Key Takeaways
A good business plan will help you understand whether it is truly a worthwhile venture. Thus, it is always advisable to create your vacation retinal business plan before investing in the property. This way, before you get strapped with $200,000 debt, you can be assured of securing a business plan that will yield you profitable results. Ensure to enjoy the process and not stress it out. Focus only on quality over quantity. The better experience you offer, the more bookings will follow and invest accurately in the best advertising strategies. You are now all set to finally create your first business plan, refer to it and get your vacation rental business started this year!