The Good, the Bad and the Ugly-Vacation Rental Survival Skills in Uncertain Times
There is no question we are living in unique times and if you own or manage vacation rentals you know the score: Guests 10, Owners 1. It is a “buyers” market and understanding the fundamentals of aggressive marketing, pricing and attitude, yes, attitude is critical to be and stay successful during these incredibly challenging times. There are some bright spots and some silver linings that the savvy manager or homeowner needs to capitalize on to stay ahead not only of the competition but possibly the foreclosure folks.
1) The Good: Gas Prices
With gasoline prices plummeting from record highs over the summer which led to a gnashing of teeth for both vacation rental guests and nervous homeowners prices have retreated nearly 60% to a national average of around $2.00 versus mid $4.00 during the height of the summer 2008 season. With prices at these new low levels even cash strapped guests may decide that the cheaper fuel and travel costs will allow them to take that winter vacation that they may have foregone over the summer. We shall see.
2) The Bad: Nightly Booking Rate Deflation
Vacation guest are an educated and savvy bunch. They know what’s going on economically out there and what is going on with their personal finances. They are to a guest looking for the best deal and with a significant increase in vacation rentals having been placed on the market either directly related to cash strapped homeowners looking for a hedge or even desperate homeowners looking to save their second home from foreclosure the vacation rental guest has more option (supply) and with economic conditions deteriorating the number of vacation rental guests has decreased (demand) which is a perfect storm for significantly lower nightly rates across the board. At Lake Tahoe we have seen a phenomenon where the luxury and smaller economy units are languishing on the market whereby the larger “mid-range” homes are being snapped up at a furious pace. It appears that guests are doubling up with 2-3 families using their personal economies of scale to maximize their buying power. In the past with consumers having much more discretionary income a family might have booked a smaller home and gone it alone. On the luxury side it appears that that discretionary cash has dried up at an alarming rate. Some of the largest rate cuts are occurring on the luxury end of the vacation rental market. The upside of all this doom and gloom is that consumers are out there looking for deals and if they can negotiate with the manager or homeowner they will still take that vacation. Be aggressive!
3) The Ugly: It’s The Economy Stupid (With Apologies to Bill Clinton)
Ok. It is UGLY out there and there is absolutely no need to rehash all of that ad nausea. What to do? As professional vacation rental property managers we have identified a number of courses taken individually or as a package to combat the economic attacks:
A) Price Competitiveness-Be aware of your competition and beat them to the punch
B) Be Negotiable-Plan to offer a 10-30% discount and set your rack rate accordingly
C) Staging: The property should show ABSOLUTELY it’s best face-stage the home as if your were selling it and make sure the photos are professional and unless you are a professional photographer leave it to the pros. Make sure you include a virtual tour and an easy to access web-based LINK to your photo albums.
D) Video Submission: Make a video either with stills or HD video-submit it for free to You Tube and Google Video. Unless you want a grainy look use medium to high resolution for your still photos and if using video make sure you use a high resolution and preferably a HD video camera.
E) Seatch Engine Optimization-SEO:Learn how to properly optimize for search engines all photos, websites and blog entries/posts. This will be left for another article.
F) BLOG,BLOG,BLOG: Again, this will be left for another discussion
Bottom line: Don’t assume what has worked in the past will work today today. Think as if you are the prospective guest and put yourself in their shoes.