When it comes to renting out a property, there are two options: long-term and short-term rental. While long-term rentals provide stability, short-term rentals offer the potential for higher profits. However, operating in a high-interest economy like the one we’re facing today, comes with different financial pressures. In such a market, the temptation to switch to a long-term rental might arise if you’re concerned about stable income to cover mortgage and other home costs. But don't give up just yet. In this article, we'll provide you with tips on how to have a profitable short-term rental business in a high-interest market without switching to long-term rental.
Update Your Revenue Management Strategy
To have a profitable short-term rental business in a high-interest market, you need to have a good revenue management strategy. This means that you should keep an eye on your competition's rates and adjust yours accordingly. You can also use data to determine the best time to increase or decrease your rates.
For this, you can use revenue management software like Beyond. This tool will help you make informed decisions about your pricing strategy and optimize your revenue, which may often mean focusing on your occupancy versus squeezing out the highest rates on any given night, in order to maximize your profitability.
In fact, Beyond users are proven to consistently outperform others in their market:
- Beyond users consistently earn 8.9% higher revenue per night
- Beyond users usually achieve an 8.5% higher occupancy rate
Want to see what Beyond can do for your revenue and occupancy? Try us out – and get $5k in free bookings!
One of the pitfalls of having a long-term rental is that occupancy is stable but that means your total revenue may be less. However, for a short-term rental, you should prioritize occupancy as well. The more guests you have, the more revenue you can generate. Therefore, market your property adequately to increase occupancy levels. Make sure that your listing is eye-catching and includes all the necessary information to ensure it ranks high on online travel agencies like Airbnb. Also, you can and should use social media, advertising, and direct mail to promote your rental and encourage repeat guests.
Calculate Your Margins
It's essential to calculate your margins when it comes to running a short-term rental business. You need to determine your costs and deduct them from your revenue to find your profits. This will help you make informed decisions regarding pricing and marketing. You can use tools like Market Insights to calculate your margins and compare them with other similar properties.
Offer Special Amenities
If you want to attract guests in a high-interest market, one way to stand out is by offering special amenities. This could include high-speed internet, free parking, or complimentary breakfast. You can also go the extra mile by offering additional services like housekeeping or personalized tours. Providing a unique experience can help elevate your status in a crowded market as well providing you with additional high-margin revenue.
Focus on Reviews
Reviews are essential when it comes to short-term rentals. Potential guests read them to determine if your property is worth the price. Therefore, it’s essential to focus on getting positive reviews. You can do this by providing excellent customer service, responding promptly to guests' needs, and ensuring the property is clean. Follow up with guests after they check out to ask for feedback and encourage them to leave a review.
Switching to a long-term rental might seem like the only option in a high-interest market, but we hope we’ve convinced you otherwise. With a sound revenue management strategy, occupancy goals, calculated margins, special amenities, and a focus on reviews, you can continue to have a profitable short-term rental business, that is maximizing your profits today but will be poised to help grow your revenue once interest rates decrease.
Make sure to leverage technology like Beyond to help you make informed decisions. Remember, owning a short-term rental in a high-interest market can be challenging, but with the right mindset and tools, it can be a lucrative business venture.