Crystal Coast Vacation Rental Show

We all encounter uncertainty in finance. Today we’re going consider ways to increase the probability of success in your Short Term Rental (STR), even in uncertain times. Four will be prior to purchase and four will be for existing operations.

Navigating the short-term rental market during uncertain times requires a strategic approach. Whether we’re talking about a personal need for belt tightening or something taking place on a national scale, there are some common steps we can take to give us the best chance of success. Here’s a look at some key considerations, divided into pre- and post-purchase phases:

Before Purchase:

• 1. Thorough Market Research:
  • Analyze market trends, focusing on areas with consistent demand, even during downturns. Consider locations with diverse appeal (e.g., proximity to nature, essential services, and entertainment). In our area this usually translates to being closer to the beach.
  • Pay close attention to historical occupancy rates and average daily rates (ADRs) during past economic fluctuations. Often smaller beach rentals can have enough of a higher occupancy rate to more than make up for the lower weekly rate.
• 2. Conservative Financial Planning:
  • Avoid over-leveraging. Calculate potential returns based on conservative occupancy and rate projections.
  • Factor in potential increases in expenses, such as interest rates, property taxes, and insurance.
  • Ensure you have a substantial financial cushion to cover unexpected vacancies or repairs. Oceanfront maintenance is significantly more frequent than inland.
  • Owning a beach property means that each of these items can be exacerbated by a hurricane or a tropical storm. Being hit with the double whammy of repairs and no rent can put you in a precarious position.
• 3. Location, Location, Location:
  • Prioritize locations with inherent, stable demand. This could include areas near:
    • Healthcare facilities
    • Educational institutions
    • Natural attractions that attract year-round tourism.
  • Diversify your risk by avoiding markets that are overly reliant on seasonal tourism or discretionary spending.
  • Avoid areas that are hostile to STRs. More than one municipality has passed laws limiting the number of days you can rent. This can ruin your plan.
• 4. Flexibility in Property Type:
  • Consider properties that can adapt to different rental strategies. For example, a property suitable for both short-term rentals and what’s often called Medium Term Rentals. People often associate this with contract nursing, but the potential pool of renters is much more varied than just nursing. Along the Crystal Coast there is a need for this and it’s a great way to fill a smaller property a little farther from the beach.
  • Smaller, more affordable properties may be easier to fill during economic downturns.

After Purchase:

• 5. Dynamic Pricing and Promotions:
  • Implement a dynamic pricing strategy that adjusts rates based on demand, seasonality, and economic conditions.
  • Offer promotions and discounts during off-peak seasons or periods of low demand.
  • Monitor competitor pricing closely.
• 6. Enhance Guest Experience:
  • Focus on providing exceptional guest experiences to cultivate positive reviews and repeat bookings. When we make an upgrade we make sure to share it on our website and social media channels. (You do have these, right?) Make sure your guests know that you are striving for constant improvement.
  • Invest in essential amenities and comforts that appeal to a broad range of travelers.
  • Prioritize cleanliness and responsiveness to guest inquiries.
• 7. Diversify Marketing Channels:
  • Don’t rely solely on one platform. Explore various online travel agencies (OTAs), social media marketing, and direct booking options.
  • Target specific market segments, such as business travelers or remote workers.
  • Even if you have a great property management company, nobody cares about putting people into your property as much as you do. Take ownership.
• 8. Adaptability and Flexibility:
  • Be prepared to adapt your rental strategy as economic conditions change.
  • Consider offering longer-term rental options if short-term demand declines. Again, this can be medium term rather than the traditional long term.
  • Maintain a flexible approach to cancellations and refunds.
  • Sometimes things can be a bit counter intuitive. Early on we allowed rentals of less than a week. We found that rather than creating more rentals, this blocked longer rentals and we discontinued it.

Owning an STR can be hard. There is no guarantee of success. However, with a constant eye towards improvement we can push the odds in our favor so that when the inevitable difficulty comes we’re in a better position.

We will be at the Carteret Chamber of Commerce Business After Hours Expo April 29 at the Crystal Coast Civic Center. We will be promoting our exhibition spaces and are planning some great giveaways and promotions. See you there!

As always, if you are interested in the Vacation Rental industry or are already involved, we encourage you to join us at the Crystal Coast Vacation Rental Show October 18 and 19 at the Crystal Coast Civic Center. Subscribe and follow our social media links above and below to stay on top of what’s coming next.