In 2023, the vacation rental market withstood strong headwinds, ranging from economic factors to an abundance of inventory and decreased demand. Our team of vacation rental market analysts teamed up to provide you with a comprehensive recap of 2023 and reveal crucial insights to set the stage for your success in 2024.
Watch their expert analysis here:
Key Insights for 2024
- Occupancy: Occupancy will continue to have competition from hotels, cruises and international travel.
- Projection: Flat to slight negative impact
- Portfolio Profile: Portfolio Profile is crucial. Great properties will continue to perform well. Tier II units provide the biggest challenge- either upgrade or let them go.
- Projection: +10 to –30 impact
- Proactive Planning: Planning is no longer optional. Operators have been able to grow without a well-thought-out strategy, non-existent marketing or a written budget. This is going to make– or break—vacation rental businesses in 2024.
- Projection: Existential
As a vacation rental manager, it’s important to ask yourself how these factors are impacting your business and what you can do to optimize success in 2024.
Examine your portfolio
Do your units capture guest demand in your market?
Many markets are seeing a shift from supply-constrained to demand-constrained, which requires a more vigilant approach. Our data proves that you need to be proactive and here is what you should do:
- Clearly articulate the right unit/market fit (for you and the market)
- Quality vs. Quantity?
- Evaluate & optimize your top performers
- Identify sub-par performers- either upgrade or set accurate expectations with owners
- Target ideal properties to grow your portfolio
Things to keep in mind:
- It’s better to keep an owner than acquire a new one.
- Do not let inventory growth impact your existing unit performance.
Maximize your revenue streams
Are you maximizing revenue with your rates and ancillary revenue streams? Revenue growth is the foundation of your business. You need to focus on maximizing every transaction with a diversified revenue stream.
Here are a few things to consider:
- Using a Revenue Management System is now a requirement for a successful STR business.
- A dedicated resource is important. Based on your business size and complexity, a full or part time resource is an option.
- Evaluate your costs and understand their bottom-line impact.
- Fees are an effective revenue lever- but they should be fair and add value to the guest.
Pro tips:
- Review ancillary revenue streams, like Travel Insurance, linens, beds made, payment fees, cleaning, early check in, rental items, concierge, mid-stay tidy ups, etc.
- Are these all part of your sales process? If you do not have any, you should look at which one makes the most sense for your business, your guests, your owners.
Invest in marketing efforts
Do guests know why they should book with YOU instead of someone else? Defining your value proposition helps tell and show guests the quality of the experience you deliver.
- Here are a few ways you can get started on improving your marketing efforts:
- Perform a Listing Audit – make sure all your property information is clean and accurate
- Reevaluate your marketing channels and update what works best for your business.
- Keep in mind it takes time to ramp up a new channel with reviews, etc.
- Update and optimize as OTA strategies change
- Prioritize your #bookdirect marketing efforts and make sure your OTA guests have incentive to come back and book direct.
Get involved in local advocacy
Is your community prepared for potential regulations? Invest your time and money into building relationships before regulations happen.
This can look like:
- Understand your economic impact in your community.
- Communicate with your local -and state- governing groups.
- Learn from others using Inhabit Government affairs and other industry resources.
- Be proactive and be prepared.
Bottom line
Many property managers cite economic concerns and increased competition from other vacation rental businesses as their main challenges for 2024. Using these data-backed insights and strategies can help put your business in the best position possible for the coming year.
If you want a more detailed view on how this data can improve your business this year, click below to connect with our team and get a personalized assessment of your business blind spots.