From 7 Properties to 200 – Tips for Starting a Vacation Rental Agency
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As this business attracts more people who want to really succeed, many are seeing the benefits of either buying additional properties or helping others manage theirs.
Perhaps you are an Owner Manager. You have your own vacation rental properties – maybe a couple of condos or houses in the same complex or area. Many followers of this blog fall into that category.
But what should you do when you decide this is a business you’d like to become a full-time job? Perhaps you’ve been approached by other owners who have seen your success and would like you to replicate it with their properties. And they will pay you for the service.
Sounds good? Well, it can be a rewarding, fun and exciting venture; it can also be frustrating, disappointing and if you let it, soul-destroying.
In 2004, my own cottage rental business in Ontario was launched with a portfolio of seven properties. Three were my own, one belonged to my sister; two more were friends in the local area who were willing to give us a chance and the last one we cajoled to join us with a promise of a lifetime low commission.
There was strong competition but we steadily worked at growing the business over the last ten years and are now comfortably managing over 200 cottages with the expectation of capping it at 250 in 2015.
If we were starting again today, we’d probably do things a lot differently. Back then, the big listing sites we know today weren’t dominant. There was VRBO and a couple of others, but nothing that needed to concern us in our infancy.
We were still in the era of print catalogs in our area – Tyler’s Cottage Rental was a telephone directory size book that came out each November and was eagerly awaited by all the summer renters. They had one, maybe two grainy black and white photos to show off a property, with a description that read something like:
That was all prospective guests had to go on, and most were pretty happy to book on those terms. After all, it was a ‘cottage’ and expectations were fairly low. As long as there was an indoor toilet and a roof that didn’t leak, there were going to be no complaints.
Renters were expected to leave the place in the same condition as they found it – an old vacuum cleaner was usually supplied that often blew out more dust than it collected. They also supplied their own bed linens and the comforters that were provided has probably never seen the inside of a washing machine.
In short, we arrived in an industry that was ripe for revolution. And it has taken ten years to work on some owners to help them into the new era of guest centered hospitality.
Some have fallen by the wayside, refused to change and still maintain their sub-standard accommodation is what people want. And some actually do want ‘rustic’. They ask for a traditional cottage, just like they remembered as a kid. But, and this is a big but….their perception of the word is dramatically different today.
‘Traditional’ means a hand-hewn log home; ‘rustic’ is the word used to describe the $500 deer antler chandelier and thankfully, over time we have weeded out the most intransigent owners, but as with any business there are times when you just don’t want to compromise the bottom line by culling a property that produces income.
But we do now and if we were starting again today, they would not get a foot in the door in the first place.
Given what we’ve experienced in ten years in the business, here’s a couple of things we would do now we didn’t do then.
We never really had a plan for growth – no real targets or goals, at least not at the outset. With that would have come a strong set of standards – a benchmark for property selection. Instead, we grabbed everything that came along with few exceptions.
If we had spent more time thinking about the five and ten-year plan, we would have selected a booking system that would cope with a higher volume of properties
Reservation systems have come a long way – you only have to look at the exhibitor list at RezFest to see the vast range of options available.
You may only be dealing with a couple of properties now but if you don’t look ahead and set some goals you may end up as we did, with a mostly home-grown primarily manual system. Changing that to fit in with a proprietary package, however customized, can be a huge challenge too far down the road.
Goals for Owner Acquisition and Retention
You will not get far in the VRM business without new owners – and once you have them you need to retain them.
Trust me…taking on all-comers is not a good strategy. At the beginning, it feels as though you have to accept every owner and every property just to build the volume but if you have a standard you are not prepared to veer from, this is a good start.
Your primary strength is that you are an owner yourself – you have been there, done the work, made a success of renting your own place, and now you are sharing your expertise.
You know what works in your area and what doesn’t, where the target market lives and how they make their decisions.
In short, you are the expert – the one in the know. Now all you have to do is to sell your expertise to potential owners; the first part of this is to create a package of information
We didn’t do this until around four or five years in, because we relied on word of mouth and referrals. When we finally got around to creating a professionally presented brochure it was a game changer. We were credible, we had history and demonstrated a respect to our homeowners and a passion for marketing to guests that came across
Creating Partnerships with Owners
Our owners have never been ‘clients’ or ‘customers’. They are partners and with that designation comes responsibility for both parties. At the beginning, we offered the earth and then had to grovel if we didn’t produce the expected bookings and occupancy.
What we do now, and if we started again, would make this clear to owners at the outset; it is a partnership. We do our stuff – they do their stuff. We’ve agreed what that stuff is, and if we all work on our respective stuff, guests will benefit from the outcome of the partnership.
We have always said that the relationship we have with our owners is the backbone of our business – if there is a breakdown in that, it needs attention straight away.
And finally, nurturing is important too. Just because an owner has been with you for 10 years and everything always runs smoothly at their property, doesn’t mean they don’t need as much attention as the newest owner/partner. We all need stroking occasionally and it’s worthwhile remembering that.
Technology has dramatically changed this business. We have a completely new vocabulary – channel distribution, shifting demographics, organic search to name a few, and dozens of new platforms to choose from for marketing.
Back in the dark ages (that’s 2003 in vacation rental terms) we didn’t have the myriad social sharing networks, nor were there the big listing sites. It was relatively simple then – build a website, stuff it with keywords, and they will come. And in fact they did, but we realized in a very short time as all the new players came forward, we’d have to make some choices, create a strategy that included measuring the performance of every marketing activity and review it regularly.
I’m not good at numbers and have always shied away from anything to do with statistics. Getting into this business without having a handle on your numbers is like playing darts with a blindfold on. You have a good idea where your target is but no control over the chance of it being hit.
We didn’t begin really looking at numbers until several years in, whereas now you would have to be strategic with marketing from the get-go or a marketing budget (which I’m assuming you have) would dissipate very quickly.
Even a simple spreadsheet that shows all your marketing activity would be sufficient. As long as you make the effort to find out what works and what doesn’t, and track it for long enough to get some good statistics, you’ll be on the right path.
There is so much more to managing more than a few properties that I can cover here so if you have any questions on these points or any others pertaining to setting up an agency, let me know in the comments section below and I will do my best to answer them.