You need to run a vacation home just like you do a business—income has to be equal to or greater than expenses. Here in Orlando, September is the beginning of our slow season. What I like to do during the two or three slower months (September and October) is review our rental booking policies so we can be more profitable next year. Here are a few ideas you might want to consider making to your reservation policies in 2016 to be more profitable.
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4 Vacation Rental Policies to Boost Bookings & Maximize Profits
Use Smart Pricing
Here in Orlando we have about eight weeks of high booking season, during which you should price your vacation home at the top of the market. After all, it is called high season because there are usually more guests coming to town than there are vacation homes. During low season, price your nightly rates near the bottom of the market. During low season, guests are looking around trying to find themselves the best deals, so offer them the absolute lowest price you can.
I like to look at my high and shoulder booking seasons as the time of year when I need to maximize my profits for my vacation home. I look at any bookings that I receive during the low season as freebies since I am not really counting on getting a whole lot of bookings during these slower times.
Perform Yield Management
You should keep a record of everyone who has booked with you in the past and send them an email offering them a great rate if they would like to rent your house out again. What you are trying to do here is build a base of business, and by doing this, it will allow you to do a little yield management to make more money.
If you are not familiar with how “yield management” works, it is really simple: If you have 14 nights already booked in your vacation home for the month of February, then you raise your nightly rates for the open nights just a little, after you secure another booking in February, you raise the other open nights a little more. You will be surprised at how much more money you will make at the end of the year by just raising rates a few dollars here and a few dollars there.
Implement a Reservation Fee
Here is breaking news: The easier you make it for guests to do business with you, the more guests you will end up having. During low season, make your non-refundable reservation fee really low. You might even want to consider doing a fully refundable reservation fee. After all, a reservation fee is really put into place to make sure that your house is booked and if someone cancels you still get paid some money. During low season, if someone cancels, you are not really hurt that much since we are looking at low season bookings as icing on the cake. Now, with high season bookings you should charge a very high reservation fee because if someone cancels during high season, this could affect your income at the end of the year.
Charge a Property Protection Fee, Not a Security Deposit
It is unfortunate that in this day and age, if someone does damage to vacation home and you ask them about it, most of the time they deny that they did the damage. A few years ago we went to charging everyone a property protection fee of $75. This fee is non-refundable, and it works just like insurance on the vacation should any damage occur while the guest is staying in the house. We find this works much better than security deposits since the guests who were doing damages to the property were also disputing the charges as well.
These four simple tips should help you secure more bookings during the low season and maximize your profits during the high season. You also need to keep your eye on all your expenses and make decision accordingly—after all, a penny saved is a penny earned.
Do you know other ways to maximize your rental income?
Leave your comments below!