Whether you're new to renting holiday homes or a 20-year veteran, it's a good idea to examine your business plan and marketing strategy to make sure you're targeting the right groups of travellers, aligned with market trends, and maximising the financial potential of your home.
Here is a suggested strategy to help you build your own effective model.
1. Do a Situational Analysis
Even if you are experienced at managing holiday rentals, it pays to do an on paper assessment of your target renters. If you're brand new to renting, you may have to do a little bit of research into your area to determine which groups you should target.
Try to determine which demographic groups the majority of your guests belong to, such as: gender, familial status, household income, and education level? It's likely that other belonging who call into the same category as your past guests will also enjoy your home.
What geographic area are your guests from? Do they travel from overseas? Do they fly or drive to your destination? If they drive, how far is a typical journey?
What do your guests do in their leisure time? What do they want out of their holiday?
Market Needs & Trends
Look at your local holiday rental market as a whole. Are there any traveller groups that don’t seem to be well catered for? Has your local area undergone any major changes in the past year? 5 years? 10 years? Look for trends in the number of visitors, demographics of visitors, new construction in the area, sharp increases or decreases in the value of property, significant increases in property taxes, or new or proposed regulations regarding short-term rentals.
SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis
Completing a SWOT analysis will help you determine where the strengths of your holiday rentals business, where you can improve, and what opportunities exist in the market, and what threats loom on the horizon.
What does your holiday home offer that other homes in your area do not?
What makes your home special?
Are your rates competitive?
What do you do as an owner that is better than other owners in your market?
Examine your online adverts. What does your ad do well?
What do other holiday homes in your area offer that you do not?
Are there any areas where your home could be improved (facilities, décor, furnishings, etc.)?
Examine your portal website listings. What could be improved about your ads (better photos, better written descriptions, etc.)?
Are there any improvements being made or attractions being added in your market (have the beaches been given a special award, or is there a new activity centre opening)?
Does your property cater to any of the following growing market segments: retirees, business travellers, families with grown children?
Is the area opening up to travellers from a new geographic region?
Are there any new property developments coming to your area (i.e. increased competition)?
Has there been a significant increase in property taxes for second homes?
Are there any new regulations being imposed on holiday rentals in your area?
In positioning your holiday home, you should consider who you are competing with for business, what they offer, and how their pricing compares to yours. After you've compiled a list of your biggest competition, take note of where they currently advertise, which marketing tactics they've chosen to implement. Then launch your counter attack, by applying strategies that will more effectively or persuasively reach the target customers you have in common.
Other Holiday Accommodations in Your Holiday Market
This could include other holiday rentals in your area, as well as hotels, bed and breakfasts, all-inclusive resorts, hostels, caravan parks or camp sites.
Other Holiday Destinations
Often you're not just competing against other accommodations in your area. You may also be competing against holiday homes and hotels in surrounding areas, or even other markets altogether.
Holiday Rental Benefits
What does your home have to offer travellers?
An amenity is anything included in your home that may be of interest to potential guests. The next time you're at your vacation home, go room-to-room and make a list of the items in each room. Download the Equipment and Facilities Checklist
to see if you’re missing anything.
Who is your home perfectly situated for? Families with small children? People with disabilities? The elderly? Travellers with pets?
2. Determine Your Marketing Strategy
What are your most important goals for marketing your holiday home? To receive enquiries? To book a certain number of weeks? To generate a specific amount of revenue?
When setting your marketing strategy, it's important to determine how you plan to market your retnal. That is, who your home is suitable for, and how you plan to ? Many holiday home owners make the mistake of trying to target uncomplimentary groups of travellers. For example, if you have a large property in the Algarve, Portugal, creating a home that is too family friendly (for example turning ample sized bedrooms into children’s bedrooms) could alienate groups of adult friends on golfing breaks or girls getaways. However, become too broad in your appeal, and you could seem bland or irrelevant to travellers.
Most marketing activities conducted by holiday rental homeowners fall into the categories of online advertising, offline advertising, and word-of-mouth marketing.
websites like HomeAway.co.uk
or OwnersDirect.co.uk Specialised
websites like your local tourist board Personal
websites (your holiday rentals business website)
Print media like newspapers and magazines
Radio or TV
Collateral material like business cards, fliers or vouchers
Customer relationship marketing efforts to past guests, or friends and family discounts Marketing Research - Get to Know Your Target Customer
Take the time to do some research about your target renter. The best way to do this is by talking to past guests, friends, and family members about what they enjoy about your home, what could be improved, and whether or not it fulfils the requirements they are looking for in a holiday home.
You can also download our Guest Feedback Survey
to send to your previous guests Become an Expert on Your Local Area
Travellers will often look to you for advice about your area. Put on your travel agent hat and learn about the area attractions and restaurants that may interest your target renters. Stay Current with Events in Your Market
It's important to stay abreast of events in your area. Consider subscribing to the local newspaper in your vacation home market or set up Google News Alerts to come to your email. Follow Industry Trends
Staying educated on the holiday rental industry will give you a leg up in marketing your home. Keep an eye on our Industry News
section, for the latest reports.
3. Get Your Financials in Order (Budgets and Forecasts)
Even if you do not rely heavily on rentals to cover the expenses for your home, it's important to determine how much money you have coming in and how much you have going out each month.
How much rental income do you hope to generate from your holiday home this year?
Formula for projected revenue for primarily weekly rental markets:
(Number of Peak Weeks x Peak Rate) + (Number of Off-Peak Weeks x Off-Peak Rate) + (Number of Weekends x Weekend Rate) Formula for projected revenue for primarily nightly rental markets:
(Number of Peak Nights x Peak Nightly Rate) + (Number of Off-Peak Nights x Off-Peak Nightly Rate)
What do you expect to spend this year to keep your holiday rental running? Note:
This formula does not include capital improvements.
Calculating your projected cash flow should help keep you aware of where you stand in relation to your rental goals. In addition, consider setting milestones or benchmarks for where you should be when. If you hit a milestone and determine that you're not on course, then it's time to implement a contingency plan.
During which months do you get the majority of your income? Be sure to factor in payment schedules, but to simplify the cash flow process, do not include any refundable deposits (otherwise you'll have to also include the refund in your expenses).
Determine when you will have money coming out of pocket. Which expenses occur monthly (e.g. mortgage, utilities, etc.)? Quarterly? Annually? Don't forget about seasonal fixed expenses like such as home or grounds maintenance.
What potential difficulties do you foresee in renting your holiday home? Brainstorm all of the potential problems you could face in your rentals process, and create a plan and a backup plan to deal with each one if it occurs. By preparing contingency plans, you won't be caught off-guard when a less-than-ideal situation arises.
4. Determine Your Personal Keys to Success in Renting Your Home
After creating a marketing plan for your holiday rental home, you should be able to answer the following questions:
Who is your target market and how is your home best suited for them?
What is your home's theme or position in the market?
Which marketing vehicles should you use to reach your target renters?
How many peak weeks, off-peak weeks, and weekends do you need to rent to break-even on your fixed expenses?
What are the potential risks in renting your holiday home and what can you proactively do to prepare for them?
What you define as success may be different to what other owners in your area would. The key to personal success in renting is to set goals for yourself and your holiday rental. By setting goals before you begin, you always have a number of booked weeks (or nights) to work toward and will more likely stay motivated and fulfilled.
Copyright HomeAway.co.uk, January 2011