5 Ways to Protect Your Short-Term Rental During a Market Downturn
How to Prepare for Market Downturns
Market downturns are terrifying for vacation rental owners. Things could be going better than ever with your short-term rental business and then, all of the sudden, the market changes and you find occupancy and revenue dropping lower than it ever has before. The key thing to remember, however, is that these downturns tend to be fairly temporary, and if you can get through them and come out the other side, your business will be all the stronger for it.
But how do you ensure that your short-term rental business makes it through a market downturn? Today, we’ve collected five different strategies that can help you make your vacation rental business recession-proof. Though none of these will guarantee you higher profits, they will help you to cut costs, stand out from the crowd, and attract more guests, even during uncertain times. If you're managing vacation rentals in Lake Tahoe, Breckenridge, Park City or Telluride, LocalVR has programs to help you even further enhance your vacation rental business.
#1: Smarten Up Your Rental to Cut Costs
Smart home technology has the potential to level up your rental, especially if you’re dealing with a market downturn, because it gives you the opportunity to cut your costs. Investing in an energy-efficient smart thermostat, for instance, can give you the ability to control the temperature of your rental and potentially save tons of energy bills. Smart lighting can also help you to cut down on electricity consumption, as you can control them remotely, right from an app on your phone.
Another advantage of upgrading your short-term rental with smart technology is that guests will thoroughly appreciate it as well. When they are searching through listings, especially in an over-saturated market that’s experiencing a downturn, homes with smart tech stand out from the competition and give you an advantage when it comes to bookings.
#2: Let Guests Stay For Longer Periods
One relatively simple way to protect your short-term rental during a recession or market downturn is to allow guests to stay for longer periods of time. Extending your maximum stay from a week or two to three to six months can attract a whole different sector of travelers, including people like contractors, university students, travel nurses, and other short-term employees that just need a temporary place to stay.
This strategy is not for everyone, but if your short-term rental is standing empty for weeks at a time due to an economic downturn, it might be smart to pivot your business and adapt a bit to the changing of the market.
#3: Elevate Guest Experience
Even during market downturns, there will always be people who want to travel and need a short-term place to stay. To attract more guests during these periods of time, it’s important to elevate guest experience and get as many five-star reviews as possible.
This means you should always keep up with guest communications, no matter what time of the day or night they might have questions or concerns that need to be addressed. Another way to elevate guest experience is to take into account any and all negative feedback that you receive from guests. It’s important to learn from your mistakes and improve upon your weaknesses if you want to have a successful vacation rental business, and the easiest way to do so is to listen to criticism from guests and try to work on it.
#4: Widen Your Distribution Net
Gone are the days of just listing your vacation rental on one or two popular distribution channels like AirBnB and VRBO. During a market downturn or recession, widening your distribution net can be a good strategy because it allows you to reach more guests than ever before, which increases your chances of landing more crucial bookings that will help keep your short-term rental business afloat.
Take some time to research all of the available distribution channels for your vacation rental, and even look into strategies for getting more direct bookings to help cut costs paid from distribution channel commissions.
#5: Don’t Just React–Plan Ahead and Take Charge
One key thing to remember when you’re facing a market downturn or a recession is that reacting too quickly can have negative consequences. For instance, if you hear bad news about the economy, don’t take that as a sign you should lay off half of your staff or turn around and sell your real estate investment. Instead, take your own measure of the situation, and plan ahead for eventualities. If things go down the tubes, then it will be time to take drastic action, but your business might be more recession-proof than you give it credit for.
On the subject of laying off employees, it’s important not to jump to that at the first sign of trouble. Finding loyal and knowledgeable employees can be a tough task, and while letting go of staff might be a necessary evil during a market downturn, be aware that good help is hard to find. Letting go of people who already have the knowledge and capabilities to complete their jobs might have negative consequences when the market begins to rise again.
A Property Management Company That’s Proactive During Downturns
During a market downturn, you need a property management service that you can trust will help protect you and prepare you for any eventuality. LocalVR is driven by local experts who watch the market closely to not only improve our pricing, but to help you withstand any and all downturns and recessions that may occur. To learn more about how our program can help owners like you weather just about any storm, take a look at our Program page.