4 Vacation Rental Policies to Boost Bookings & Maximize Profits
You should treat your vacation home just like you do a business—income has to be equal to or greater than expenses. Here are a few ideas you might want to consider making to your reservation policies in 2016 to be more profitable.
Use Smart Pricing
During high booking season 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 closer to the bottom of the market since guest are looking for the best deal.
I like to look at my high and shoulder booking seasons as the time of year when I need to maximize my profits and 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 on the property they rented. This will allow you to do a little yield management to make more money.
Here is an example of how yield management works: If you have 16 nights already booked in your vacation home for the month of March, then you raise your nightly rates for the open nights a little, once you secure another booking in March, you raise the other open nights a little more. You will be shocked 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
The easier you make it for guests, 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. During low season, if someone cancels, you are not really hurt that much. 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 property protection 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. 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.