Take everything you know about the vacation rental industry and throw it out the window. What’s up is down, and what’s down is up. The industry is in a state of flux. Change comes in many forms, including constant regulatory review, changes to terms and conditions, diligent financial management, and uncertainty. Vacation rental managers have undergone the most difficult year on record, and for some of us, the hits to the business keep coming. For others, now is not the time to relax; instead, it’s time to finish what you’ve started and implement meaningful change to weather any storm.
Why?
This may not be as clear as it should or could be, given that many of us have been so involved working in the business as compared to working on the business. Having grown up in a rural community, I think of the business like a garden. There is no doubt that you’ve been working tirelessly, but we cannot get caught up in working hard. We must look beyond the issue du jour. As a business owner, you have to play the long game. Consider your crop, plant the seed, manage the garden, and protect the long-term viability of your product.
I’m afraid that with all the distractions in the business today, we are not planning for tomorrow. I’ve often said, plan your work and work your plan, but how do we apply that in today’s ever-changing environment?
Long-term Thinking
First, start with the end in mind. What is your long-term strategy? Fortunately, developing a long-term sustainable business provides a meaningful profit and ensures that you have a viable business that can be sold, allowing you to capitalize on your investment. So how do we get there?
Adapting to Changing Regulations and Restrictions
In today’s environment, we need to be flexible and ready to pivot based upon regulatory pronouncements and key performance indicators (KPIs) in the business. By monitoring restrictions that may be coming down the pipe, we can have plans in place, staying ahead of upcoming operating restrictions. Being caught flat-footed by restrictions increases the time it takes to change direction.
Within your plans to stay ahead of restrictive pronouncements, we’ve found it beneficial to have varied policies. We have separate terms and conditions designed to more fairly respond to issues out of our control and are ready to implement them at a moment’s notice.
In the event restrictions are implemented, we have found this procedure beneficial and more efficient in navigating the situation at hand.
Managing Expenses
As if changes to rules and regulations are not enough, certain businesses have seen a boom, while others are trying to avoid a bust. In the event your business has seen unprecedented demand and results, producing windfall profits, you’re not out of the woods yet. Conversely, if you’ve taken a hit to profits, there is still work to do, but the road to recovery may not be as tumultuous as you may think because it is easier to ramp up than cut back.
As profits begin to swell, we often lose control of the business, allowing it to become bloated. It is imperative to reign in expenses that are out of control to ensure that when the tide does change, your business does not run aground.
Start by reviewing your expenses in your business to highlight those areas that have increased beyond responsible margins. As revenue and occupancy starts to decrease, expenses should also decrease proportionally. Having visibility into those accounts today will ensure your business retains more profits, ensuring more stability in the business.
The constant environment of change shows no signs of slowing. It is incumbent on us as business leaders to recognize the ever-changing environment and progressively navigate our businesses around any obstacle.
