Who’s really in charge of your vacation rental business??

How was your 2023/24 Fall and Winter Rental Season? Challenging? You’re not alone. Let’s discuss what’s really been going on, what you can expect from your STR heading into summer 2024 and how to have more control over your vacation rental going forward >>

The Covid Coaster came to a grinding halt this winter

For the past 5 years running a vacation rental business has been a bit of a roller coaster, and not just in Canada or even North America, but globally. Things were generally ticking along at a fairly predictable pace until Covid 19 hit the planet at this time of year in 2020. The shut downs and travel restrictions caused first a bust  and then a huge boom in the rental markets. Short term rentals became the go-to booking source for people who were worried about staying in hotels with shared spaces. Online Travel Agencies (OTAs) like Air BnB and VRBO etc enjoyed a massive surge in both numbers of travellers and an increased number of rentals on the market. As international travel gradually opened up the numbers stayed strong, with staycations levelling out and more people travelling to other countries instead. 

At the pandemic’s start, Air BnB unilaterally decided to refund all of the reservations that were booked with hosts; no consultation with home owners prior to the decision. VRBO reacted with a wait and see approach which gave at least the guise of taking their home owners’ interests into account. At the end of the day (I really dislike that overused expression), the OTA’s had 100% of the control over your business if you were a host solely using them to market your property and bookings. 

Winter of 2024 has been a difficult one with a lot of learning opportunities for short-term rental property owners in Muskoka and across North America. Vacation rentals on the high end held their own and those offering unique theme-based spaces were well occupied also. And let’s not forget to mention any places in cities hosting Taylor Swift concerts. Those are no brainers. But properties in the middle of the road (3 bedrooms, nice decor, all basic amenities) had lots of competition and a smaller traveller pool looking for places to stay. And most of the properties out there fall into that category.

Don’t put all of your elephants in one basket

For short-term rental owners, there are probably a couple of elephants in the room right now. But all of the elephants boil down to the fact that you shouldn’t put all of your elephants in one basket. If you’re just using Air BnB to market and book your rental property then you’re really just paying them to use Their website to operate Your business. They have total control over the important details that govern your income.

Putting your property’s rental business solely into the hands of Air BnB and VRBO (amount others) is the same as if you set up an online store to sell your unique widgets, hired an agency to market them and handle the payments, and then let that agency not only add whatever surcharges they saw fit but also to have decision-making power over if the store should be shut down, taken offline, give refunds, display unwarranted poor reviews on whim. Why would you give any company that kind of power over your own hard-won business?

The OTA’s are helpful tools, but they shouldn’t be your entire toolbox. 

The Case for Direct Bookings Makes Itself

Direct bookings for your rental space are a stronger foundation for your revenue because they:

• Maximise Revenue: Make sure the money guests are spending is coming directly to you. Businesses just getting started with direct bookings stand to recapture 15-25% of every dollar spent on an OTA reservation. Your direct book listing has no extra fees or taxes because there’s no 3rd party.
• Never Underestimate Relationships: Direct bookings give you access to names and email addresses with each inquiry that you don’t have through the OTA’s. Using this self-growing list of contacts responsibly to keep guests, repeat guests and potential guests up to date on news about your property and the local area is a sure fire way to garner repeat, directly-booked visits. When past guests are receiving occasional email news directly from you or your property manager, not just about your property updates but also including what’s happening in your local area, you’re establishing a direct, trusting relationship with them. They’re not going to book with you every time you send an email, but when they’re ready to book, your place is top of mind. And booking through you is already an established, trusted transaction.
• Build Repeat Business: See above ^^ re relationtionships. Strong relationships equate to repeat bookings. 
• Support Flexible Booking/Cancellation Policies: Your property manager can entertain special requests, offer better cancellation policies than the OTA’s and pivot quickly and appropriately when unanticipated travel disruptions occur, without fear of repercussions from Air BnB or VRBO.

Talk about which clients had best success during the slow times.

Sugar coating what’s possible is a great set up for failure down the road, IMHO.