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5 Ways to Boost Your Bottom Line as a Property Manager

5 Ways to Boost Your Bottom Line as a Property Manager

The vacation rental industry is experiencing record demand and impressive year-on-year growth despite inflation and the pervasiveness of economic uncertainty. Even heat waves haven’t been able to keep travelers away from places like Phoenix.

But not all property managers are enjoying the fruits of this demand.

In fact, a recent poll of property managers by Hostaway showed that over 70% haven’t considered increasing their profitability in the last 12 months while a majority hadn’t reworked their owner contracts since they were first signed.

That’s why, as part of our monthly webinar series, we gathered three experts in the vacation rental industry — Marcus Rader, Co-founder and CEO of Hostaway; Maria Lopez, VP of Product at Hostaway and Josh Loe, VP of Customer Success at Hostaway — to discuss some simple tips on how you can increase your bottom line.

Top Line vs Bottom Line for Vacation Rentals

Top line is the gross sales or revenue of a business and is called topline because it is displayed at the very top of a business’ income statement.

Topline is a reflection of a business’ ability to sell its products or services. A growth in topline from one year (or quarter) to the next showcases an increase in sales.

Bottom line is the net income or profit of a business. This is calculated by deducting all the expenses from the top line.

For vacation rentals, top line is the total revenue you generate by selling stays in your properties. The more bookings you get, the higher your top line will be. Your bottom line is your final profit, having removed your operating costs such as staff payments, taxes, inventory costs, loan payments, depreciation, etc.

For property managers, owner payouts will also be a cost to be deducted.

How to Increase the Top Line of Your Vacation Rental

Why are we talking about top line in an article about increasing your bottom line, you ask? Because your bottom line is a percentage of your top line, and a bigger revenue generally results in bigger profits for you.

So how can you increase the top line of your vacation rental business with some simple tweaks?

1. Upsell gap days

If you have a gap day or two, right after or before a guest is staying, send them a message asking them if they want to stay the extra days. You can even automate this request through a vacation rental software like Hostaway.

This doesn’t cost you anything and is an easy way to increase your revenue.

2. Promote additional amenities

Travelers are getting pickier about their bookings and many are looking for specific amenities.

For example, if a guest is looking for a beachfront property, they may filter their search with ‘beachfront’ or ‘waterfront’. By making sure your beachfront property listing has both ‘beachfront’ and ‘waterfront’ checked as amenities, you can make sure you're not missing out on guests.

OTAs often change the way amenities are named or displayed, so make sure you check each of your listings often and update them appropriately.

Regularly updating your listings will also help you to continue to rank high on search, be it on Airbnb, Vrbo or other booking platforms.

With a channel manager like Hostaway, you can automatically update your listings through the platform or even bulk update your listings across the many OTAs you list on.

3. Promote additional fees

Additional fees are a great way to incentivize your guests to pay more.

If your property is pet-friendly, for example, don’t include the cost in your base rate but add a markup and include it as a pet fee. With many guests, particularly families, looking to travel with their pets and pet fees being a norm in the industry, you can easily earn more revenue.

4. Adjust your markups for each booking platform

Don’t generalize your markups. Instead, adjust them for each booking platform.

Take into consideration each OTA’s direct commissions, payment processing fees, etc and adjust accordingly. You may find yourself even earning more on some booking sites over others.

5 Steps to Increasing Your Bottom Line | Top Tips for Vacation Rental Property Managers

How to Increase Your Bottom Line for Property Managers

Step 1 – List all your costs and fees

The first step to increasing your bottom line as a property manager is to figure out your financial picture. List out all the expenses of your vacation rental and the fees you charge.

Step 2 – Do the math

Break this down by who – you, the property manager or the homeowner - is responsible for each expense and who gets paid what percentage of revenues.

Step 3 – Check your contract

Now check your contracts to see if the arrangement mirrors what is spelled out in your contract with the homeowner. Many property managers find that they are missing out on payouts because they are not following the arrangement specified in their contract.

Step 4 – Do this for all your properties

Follow these steps for each of your properties.

This can take time, but is fully worth it as you could find you are missing out on significant income for yourself.

It also makes sense to have similar if not the same contract arrangement with all of your homeowners. Different contract arrangements essentially mean you are running different businesses. This means more work. It also means uneven payouts and could be leaving you with a smaller bottom line overall.

Step 5 – Reconsider your payouts

Consider afresh if your revenue arrangement is working for you and if it is fair.

For example, there is a big difference between you charging 20% of the gross revenue as your cost vs just 20% of the nightly rate + cleaning fee. In the case of the latter, you are missing out on a percentage of all the other fees that guests are paying, even though you are doing the work to make those extra fees possible.

Also consider who should be responsible for expenses. Will the cost of cleaning be deducted from the homeowner’s payout or yours? Who will be responsible for the cost of payment processing for direct bookings? What about per stay insurance costs? If you decide to split a cost, what margin will you choose?

How Hostaway Can Help Increase Your Bottom Line

If you are a Hostaway customer, you can always contact the customer success team for advice.

Our experts can take a look at your setup and help you increase your bottom line, and even get you more bookings! As a high-level partner of all the major OTAs, the Hostaway team can also help optimize your listings on each.

Existing customers can email customersucccess@hostaway.com for help.

Ready to find out how Hostaway can transform your business?

Hostaway is proud to support thousands of Property Managers and Airbnb Hosts Around the world. We take pride in being Top Ranked in Vacation Rental Software Review Sites: Capterra, G2, Software Advice, Trust Pilot, to name just a few! Check out our reviews and read the Hostaway Case Studies from real successful and growing Short-Term Rental Managers!