A well-thought-out vacation rental business plan is key to upgrading your business and ensuring your success as a host. As you are starting a vacation rental business or increasing the number of Airbnb properties in your possession, such a plan will help you stay on top of all your business requirements.
With a thoroughly detailed business plan, you will be able to secure the funds from lenders or investors that you need to develop your business. Furthermore, creating a viable strategic plan for your vacation rental business will help to identify potential risks before others start investing in your business.
A business plan is a set of rules and practices, frameworks, and goals that you can rely on when you need to make decisions for your business. The most valuable contribution comes from doing the groundwork. Thus, it is of great importance for your business success to have an elaborate business plan on hand.
It helps you define your complete business strategy for running a successful vacation home rental. It also helps you identify risks and chances for success. Furthermore, it is a useful resource to remind yourself of your business goals and ensure you’re going in the right direction.
For those who are just starting out, it can be a bit confusing to identify what needs to be included in a vacation rental business plan. We composed the following list to guide you through the whole process. Discover 12 essentials that every well-thought-out business plan should have.
Business goals are an important part of your vacation rental business plan. Specify your goals and key milestones to draw up an action plan. This will help you identify steps you need to take as well as track the progress of your business and keep an eye on the ultimate goal.
Make your goals specific by writing them down in detail. If they are too vague, it will be much harder for you to achieve them. It would be good to create some sort of a deadline, but be sure to give yourself enough time to accomplish what you’ve planned.
The following are great examples of milestones you can set:
The executive summary outlines the history of your vacation rental business, including your prior successes and accomplishments. With it, you can cover future goals for your business, as well as include information about your current properties, employees, and third-party vendors.
When potential lenders or investors read your business executive summary, they’ll be able to know what your business has to offer and why it is worth investing in. The following suggestions will help you outline what information to include.
Peak rental season and weekdays:
The company’s value proposition spells out the unique selling points (USPs) of the business. It provides an in-depth analysis of the unique offerings that your business brings to the rental market.
You should find characteristics that make your vacation rental stand out. By knowing your strengths, you will be able to show them in the best light and, thus, attract more guests. Find out how your property is different from the competitors’ properties by asking yourself the following questions:
Doing thorough research on your key selling points will help you position your property in the right way. Moreover, you’ll be able to come up with a couple of more ideas on how to improve your offerings to achieve maximum occupancy rate and profitability in your business.
This section of your vacation rental business plan should explain your business management structure. A sound management structure will improve productivity and ensure that all members of your organization can achieve their true potential.
Is the structure of your company, as a partnership or ownership by a single individual, living up to its potential? Spell out the management structure of your business in its current state, including any property management services you use.
The operations plan will help you make decisions regarding hiring, company standards, and the way you will keep up with the day-to-day activities of running your business.
Daily tasks include managing all the business aspects of your properties, such as taxes, insurance, reservations, payment processing, maintenance, and related administrative tasks.
Think about how your current setup has worked so far… Are there any improvements that can be made as you expand your business?
At this juncture, you’ll also need to decide what role you want to play in your vacation rental business in the future. Do you want to continue to play a key role or would you like to bring in additional staff to help spread out the responsibilities?
If you manage multiple properties, you might want to outsource some of your daily operations. Here are the areas you might consider to get assistance with:
In this section, you should cover the financial history of your business. You can do this by discussing all of your prior successes and how they have led to the state of your business today. You will also need to create a detailed financial plan and projections.
Your financial plan should include
For this part of the vacation rental business plan, it is a good idea to work with an accountant. This will ensure that your documents meet the financial reporting standards required by commercial lenders.
A customer analysis represents a study of your ideal guest. Knowing your audience and what they want and need will help you run a successful vacation rental business. Here, you’ll describe your target customers, including the types of Airbnb guests that your business attracts or you plan to attract.
Within your business plan, you should create different, detailed buyer personas based on the type of guests, or the ones you aim to attract. Creating such a detailed profile of your ideal guest (including info about their age to their income) will help you grow your business later on.
When creating an ideal guest profile, you should think of a fictional persona. Give him or her a name and age, a vocation, etc. to help know exactly what type of guests to target and how.
These guest profiles you can use time after time, in all aspects of your business to figure out how to get more bookings. With a good customer analysis, you will be able to understand what to expect from your guests, what they will like and dislike about your rental property.
Here’s an example of how to create an ideal guest persona:
Let’s say your ideal guest is John Smith, an interior designer in his early forties. He is a father of three and often travels with his family. This means that your rental should be family-friendly with a lot of entertainment options for kids. Think of all the amenities such a guest will look for.
Also, your rental should be childproof and free of any sort of clutter. Ensure enough empty space inside and put all the breakable items on higher shelves to avoid damage during the kids’ playtime.
Moreover, since he has a big family, you should also be sure that your rental has enough space to accommodate five people.
Carrying out competitor research is of great importance, especially for vacation rental businesses. You need to know who the other local short-term rental owners are. You should find out how they do their work, attract guests, what their pricing strategy is, and whether there are any special services or amenities that they offer, etc.
Do thorough research of the market for vacation rentals to find your direct competitors and analyze them. A competitor analysis will help you understand how your business can thrive and help you win bookings over your competitors. All this will secure your position in the short-term rental industry. Here are some suggestions to help you get started.
This will help you set up the right prices for your area and ensure more bookings. Guests are more likely to choose affordable rentals. Thus, fair prices will encourage more reservations.
If not, this can be a great opportunity for you to take action and offer additional services for guests. For example, transportation services can be a selling point for many guests who want to avoid the hassle of navigating a new city.
By knowing what your competitors offer, you can go the extra mile and provide even more unique amenities to ensure the highest level of guest satisfaction.
Your marketing strategy describes the tactics that you will use to achieve bookings and increase the occupancy rate in the future. Use this section of your vacation rental business plan to outline in detail which marketing techniques and tools you are going to implement to promote your property.
Your marketing plan should cover strategies for marketing your vacation rental property to the right audience. It should be diverse and include all relevant methods, including both online and offline marketing. Asking yourself the following questions will help you create a thorough marketing strategy.
Also, make sure to create a distribution plan for successful advertising. It should cover the costs for chosen methods and outline how you will handle channel management.
Moreover, the buyer personas you’ve created can help you with building a quality marketing and distribution strategy. Knowing the exact type of guests you are targeting helps you adjust your marketing strategy and market your vacation rental in a way that resonates with them.
In addition to financial documents, you should include more useful information. Indicate anything that can help build the case for the viability of your vacation rental business plan. Here are some ideas for documents to include:
The vacation rental industry allows a lot of room for change and growth. Thus, it is essential to think about the future of your business and what you can do to expand it further.
Once you’ve established profitable business and completed your goals, you should have a general idea of what the next steps are. The following are examples of goals you may want to include in your business plan for the future:
Once you complete this set of goals, you should think of the next set to secure progress.
As with all other businesses, investing is essential for your vacation rental business growth. The more effort, time, and money you invest in your business, the more revenue you will generate. Your hard work will pay off very quickly, resulting in a large number of returning guests and increased income.
Investing in digital tools and management software will help you stay in full control of your business at all times. You will be able to automate the key aspects of your business for more efficient management.
Vacation rental software, such as iGMS, can help you put your business on autopilot. By using advanced smart tools, you can streamline your routine operations and manage all your vacation rental properties across various channels.
What’s more, you will be able to reduce costs as iGMS allows you to manage your business without expanding your team.