With all the talk of a looming recession, it might feel like an uncertain time as you worry about how your vacation rental business might be impacted. A recent article in Bloomberg puts the probability of a recession over the next 12 months at 30%. Some economists are predicting a milder recession with a long recovery, some think it might last over a year, and others predict that this recession will be more about people buying fewer things as they return to in-person services. Whatever the case may be, it’s always a good idea to prepare your business in case of a downturn.
The good news is that there are steps you can take now to help make your business and your properties more resilient if a recession does happen. During any economic downturn, it’s about making proactive, impactful modifications to your business and leaning on the right technology to help ward off any ill effects down the line.
Recession-Proofing Your Vacation Rental Business
With these tips, you can help protect your vacation rental business from downturns.
1. Get the Most Bookings out of Your Next Busy Season
Most big players in the travel industry are predicting a huge surge in travel during the busy summer season, which is good news if your busy season is here. Even with higher costs of travel mostly due to inflation, there is still a lot of pent-up demand for travel. We recommend getting the most you can out of your next busy season to help prop up your business in case of a downturn in the future.
2. Do More with Less
There is never a better time to lean on data and technology to maximize your efforts. Utilizing a great dynamic pricing tool built specifically for the short-term rental industry will ensure that your properties are still getting booked at the right price at the right time. A good dynamic pricing tool will also impart valuable data and insights about your business, properties, and local market for you to act on.
3. Retain Your Strong Team Members
Your business relies on experienced strong team members, and during a recession they might be feeling financial stress. Losing good employees is never a good thing, especially during a recession, and your business will surely feel the ill effects if they leave. Reassure your employees that they are irreplaceable by maintaining high morale, communicating often, and ensuring that they feel taken care of by their employer.
4. Proactively Set Expectations with Owners
Chances are, your owners are also concerned about a possible recession, and it will go a long way to reach out to them to set their minds at ease. You will need to adjust your business to keep up with the market, so there might be big changes to the ways you normally drive positive outcomes and optimize revenues. Therefore, it's important you are setting owners' expectations early and often and educating them in these situations. If demand lowers, explain to them how you are shifting your strategy to focus on occupancy and adjusting minimum rates. You can also let them know that you are focused on protecting your best properties and modeling your properties after them. It’s important to communicate and demonstrate the value you bring to your owners and their properties, and to reassure your owners that you are staying ahead.
5. Be Flexible with Bookings
Driving for occupancy might be your best bet during a downturn, so being flexible with your bookings can go a long way. One way to do that is switching to longer-term bookings for stability. While these types of stays typically include lower rates, they can be a more durable option that will bring in steady revenue. We do not recommend dropping rates across the board or accepting reservations that are not up to your standards. This is a careful reconsideration of what is acceptable to you and your owners.
6. Diversify Your Portfolio
Having a variety of different listings at different price ranges could be beneficial during a recession. If your short-term rental business is mostly made up of luxury listings, look into adding to your portfolio to cater to more budget travelers. While the ultra-rich guests that usually book your luxury properties might not be affected in the same way, your occupancy levels for these properties may still lower. Having a diverse portfolio will open up new revenue streams and ensure that you are still receiving consistent bookings.
7. Ramp Up Owner Acquisition
There might be a silver lining during a recession: potential new owners. A recession might cause job loss or the need for some people to rethink the way they get their income, so they may be looking for new ways to earn money. Be on the lookout and be prepared for any new potential opportunities to add new owners to your business. This could be a win-win for your business and a new owner.
Beyond is here to help
With the ups and downs of the market, we know it’s difficult to keep up and know how your business needs to respond. At Beyond, we aim to be your best partner in revenue management strategy, helping you make the best decisions for your business. Our team and our platform work together to help you take the right action. Read more about how Beyond works for you.
Not using Beyond or new to dynamic pricing? Get all your questions answered and even see what Beyond can do for your business by contacting us.