A key element to short term rental business success is diligently creating and maintaining your business strategy. Not only will well-informed rental projections be vital to proposals for new investors or homeowners, allowing you to set reasonable expectations and goals you can meet, but business strategies also enable you, as a property manager, to measure how well your company is performing.
Whether you’re a first-time host looking to start your Airbnb venture or an experienced property manager who’s keen to scale your portfolio in the coming year, we’ve created a guide to help you win at short term rental investment.
Step-by-step guide to Airbnb business planning
Step One: Set Your Goals
Before you set the planning wheels in motion, specify the goals you’d like your property/business to reach. Ask yourself: what is your preferred outcome? Are you planning to grow your inventory, and if so, what’s your timeline? What are your priorities: profit, operations, guest experience, or all three? The answers to these questions will be different for every property manager/portfolio, and so each business plan will be unique.
Step Two: Assess The Market
Now you have a rough idea of your goals, it’s time to assess the market. Are there industry trends influencing what short term rental guests expect from alternative accommodation? If so, you may decide to adjust certain aspects of the investment plan, such as decorating or marketing allowances. Don’t forget, if you already have active short term rentals on your own website, as well as on Airbnb’s booking channel, you can identify the amenities guests are searching for through DemandIQ, for real-time insights into current guest demands.
It’s also important to identify your target audience at this time. Will your properties be tailored for short stays, or are you aiming to attract mid-term stay guests? Is the accommodation suitable for families? Do you have areas fit for business travelers or digital nomads? Knowing your audience will help you effectively create a targeted business plan.
Step Three: Benchmark
Once the basics have been set, you now need to know exactly what’s going on in your destination market. Real-time insights of direct competitors will allow you to set a baseline for your property. To do this, utilize benchmarking tools to create customized competitor data sets that measure key performance indicators, such as average daily rates (ADR), availability, supply and more, for comprehensive analysis from nearby short term rentals.
These insights are vital for setting your business strategy as market-informed nightly rates ensure you strike the right balance between high-profit and guest-appeal.
Step Four: Budget Management
To ensure your business strategy has long-term viability, use a Budget Management dashboard to monitor your company’s or individual unit’s performance. At a glance, you’ll be able to view historical and forward-looking (on the books) data, year-over-year growth, supply projections, market conditions, and more.
The dashboard allows property managers and hosts to amend a budget at any time, view progress bars to keep track of budgeting goals, and access all relevant KPIs. If you have a new property without any historical data, the ‘mirror-a-unit’ tool can help you create a budget by using similar data sets as a baseline.
To see for yourself how easy it is to set up a Budget Management dashboard, check out this quick video tutorial.
It doesn’t matter if you’re new to the market or a long-time investor, you can instantly level up your short term rental business using these four simple steps for creating and maintaining a strong business strategy.
Ready to get started? Book a demo in with one of our team members for a detailed walk through of our short term rental data dashboard products.