I began my career in the vacation rental industry 20 years ago. As a kid out of college, I accepted a job with ResortQuest, preparing federal tax returns. I was immediately fascinated by the vacation rental sector. I would explain my new position to anyone who would listen, yet everyone I spoke to asked me if I was in the timeshare business. In June 2000, vacation rentals were unheard of as a lodging option for mainstream travelers. Fast-forward to today: vacation rentals are listed in the toolbar on Expedia. The entire traveling public is now aware of our former cottage industry.
I would estimate that it has taken us 50-plus years to get to this point. There is a wealth of knowledge and experience available to us as vacation rental managers (VRMs), yet we rarely use it.
VRMs continue to search far and wide for the newest, brightest, most progressive widget in an effort to streamline, standardize, and supersize their businesses. The constant quest is actually hurting the business, and it’s time to slow down. It’s time to focus and consider our return on effort, seeking ways to become more effective and produce a meaningful profit.
As we embark on a new year, it’s time to align our business with our experience and become more professional.
Review Service-Oriented Processes
One of the quickest ways to increase the “experience” level in your business is to review your processes and develop a service-oriented approach to each issue. As problems arise, they require time and energy to resolve, yet we fail to recognize that the international vacation rental industry is actually thousands of years old. Jesus was born in a stable because there was no vacancy at the inn—or was it a vacation rental?
It’s important to note that there are no new issues in the vacation rental industry.
Someone, somewhere, has dealt with the same challenge before. We continue to have recurring difficulties in the business, yet we fail to make adjustments or implement corrective action. Developing company-standard resolutions to common issues and to frequently asked questions (FAQs) will help to ensure that your team is more consistent and effective, as in a more-experienced business. Leverage your own proficiency to start, learn from problems that arise, and err on the side of service. Details matter.
Choose Experienced and Professional SS&Ps
VRMs also have access to a tremendous amount of knowledge in our vendor partners. With that said, finding the right vendor partner is not always easy. VRMs must run a gauntlet of needs/wants in the business today. Software, services, and products (SS&P) are hurled at us almost daily, and VRMs must get better at navigating this onslaught of solicitations.
Generally speaking, business revenues are not increasing at the same rate as new SS&P are being purchased and implemented within the business. Experience is paramount when it comes to vendor partners and SS&P. There is an old adage, “Hire old doctors and lawyers.” The same could be said for the vacation rental industry.
Experience matters when deciding which SS&P to purchase, yet we fail to properly weigh experience when making a decision. Time spent in the marketplace, tenure of the vendor contact, the pricing model, service, and support should all be areas of focus.
Many fee structures, such as flat fees per property or a percentage of revenue, penalize the business. If the service being sold is so great and your business is going to make so much money as a result of a purchase, why not have an agreed-upon sale threshold?
Return on investment is often overlooked, and too many businesses are not getting the product and service they bargained for during the negotiation process. Often, VRMs wind up subsidizing an underperforming vendor partner.
It’s time to hold your vendor partners accountable for the service provided and stop rewarding poor performance.
What Does It Mean to be Professional?
As you begin to alleviate recurring issues and surround your team with more-experienced partners, the business inherently becomes more competent. Unfortunately, many vacation rental management companies are not grounded in sustainability, profitability, and professionalism. The best businesses in the industry are the most professional ones.
What does it mean to be a professional? Below are three key elements:
1. Treat owners and guests the way you would want your family to be treated.
Issues are going to arise; it is how those issues are handled that is important. Not every owner and guest is out to take advantage of the business. If the home was not cleaned properly or there is an issue during the stay, resolve these problems the way you would want to be treated. It’s okay to draw the line, but most VRMs don’t get to that point. Too many VRMs are combative when issues are presented.
One easy way to ensure problems are resolved in a reasonable manner is to follow the LEARN method:
• L = Listen to the owner or guest
• E = Empathize with the owner or guest
• A = Apologize
• R = React by offering a solution
• N = Notify the rest of the team about the problem so they can follow up with the customer and escalate for resolution if necessary.
How much would you reimburse/pay to avoid a negative review? Over the course of a year, I guarantee your aggregated reimbursement expense is less than what a negative review might cost your business.
2. Be a good operator/competitor.
There is entirely too much infighting in today’s environment, and too many VRMs are trying to game the system. The best businesses in the industry are not overly aggressive. Providing great service, clear communication, and quality properties is key to great business.
Service and professionalism sell.
If you have to tell an owner or guest how great your business is, it may be time to review your company. Consider the local market and competition as you conduct business. Your competence will be apparent to owners and guests, as you create a rental program that they actually want to use.
3. Being professional requires a VRM to be profitable.
Too many VRMs are not generating a meaningful profit. Certain VRMs are afraid of profits or are reluctant to charge for services provided.
Your business cannot be successful or be positioned as a professional vacation rental management company if you can’t afford to operate. Sell your service and don’t be afraid to stand behind it. Discounted fees, free services, and gimmicks will lead to a less-profitable and diminished business over time.
As you consider the business you want to build and operate, be attentive to experience and professionalism. A thoughtful, measured focus on these two areas will create a sustainable and hugely profitable business. The current bull market, robust economy, and amount of free cash flow will not last forever.
Providing exceptional service, clear communication, and well-maintained/clean properties will ensure your business has the attributes needed to navigate an ever-changing industry.
Regardless of the many changes in the sector, these things remain the same.
If you or your business are struggling to adapt to industry change, concentrate on being as professional as possible. And to make the most out of 2020 and beyond, focus on the details of your processes, leverage your experience, and enhance professionalism through service.
Excellent perspective and advice.