Before you took the leap into short-term rentals, you should have created a basic budget forecast to ensure your projected income could cover all expected expenses and still provide enough revenue to compensate you for your effort.
Now is the time to revisit that budget and make some more advanced calculations now that you know what you’ll be paying in service fees and commissions to listing platforms. As you are finalizing your budget, remember that it is extremely unlikely that your rental will be occupied every night of the year (AirDNA predicts occupancy rates for short-term rentals will average 58.9 percent in 2021, which would be a good place to start for your own calculations.)
Ideally, the nightly rate you need to charge in order to meet your revenue goals is less than or equal to the average nightly rate in your market.
Settling on the right price for your short-term rental will always take time, but you can cut down on the time significantly by analyzing the local market.
Although there’s no magic formula to determine how much you should charge for a night or a week in your short-term rental property, there are a few factors that can help with the calculation.
Spend time on various booking platforms checking out your competition. Look for rentals in your neighborhood or city that sleep the same number of guests as your property and record the nightly rate. You will also want to make adjustments for any major differences, like whether a washer and dryer is included or the overall condition of the property.
Guests are often willing to pay more for amenities like hot tubs, high-speed WiFi and certain entertainment (which could mean a closet full of board games or kayaks for water properties). Not all amenities should influence your nightly rate — guests expect essentials like towels and hand soap, and they won’t be eager to pay a premium for them.
Not all five-bedroom properties are created equal: Guests will pay much more for a rental located right on the beach than one just a block away. Consider all points of interest near your property (this could be major landmarks, recreational opportunities, shopping or nightlife districts or anything else that brings tourists to your area) and calculate how close your property is to each of them. In addition to reflecting your location in your nightly rate, be sure to mention points of interest in your property description (more on that later).
A condo near a ski resort will bring in premium rates during the peak season, but the property will likely sit vacant during the summer months unless the rates are significantly lower. The same goes for waterfront properties located in climates where there is a significant swing in temperature between winter and summer.
Seasonality applies to more than changing weather patterns — it is any predictable fluctuation or pattern that happens regularly. If there is a particular music festival or holiday that brings many out-of-town visitors to your area, be sure to adjust your rates accordingly.
The value of your short-term rental property will likely depend on the night of the week or time of the year, which means you need to be flexible (to a degree) with your nightly rate. Dynamic pricing is an approach to short-term rentals in which you adjust the nightly rate based on the real-time demand. All major booking platforms allow hosts to set custom rates for certain dates on the calendar, but additional tools are available to help analyze demand and adjust pricing instantly.
If you choose to take a manual approach to dynamic pricing, set your prices while looking at a calendar that lists all major holidays and local activities (including sporting events, concerts and conferences) that might bring big crowds to the area.
Although an empty property won’t bring in any revenue, a nightly rate that is too low can cause problems of its own: You’re more likely to receive booking requests from guests who won’t respect your rules, and discounting your price too much can also discount your property’s reputation. Always keep a minimum nightly rate in mind and avoid going any lower, even if you’re looking at a few nights with no reservations.
First impressions matter, and guests will judge your short-term rental by the cover. Many short-term rental hosts will tell you that photos are the single most important aspect of any listing.
Although some booking platforms will allow you to attach more than 100 images to your listing, quality is better than quantity when it comes to photographs. Aim to include between 12-20 high-quality photos of your property in each listing, although larger properties or ones with unique design elements should include more.
Include at least one photo of every room in the home (yes, including bathrooms!), but the more important areas (like the kitchen and family room) should include photos taken from multiple angles.
Think of common questions guests might have when booking a property — Is the kitchen equipped with the major appliances I’ll need to prepare a meal? Is the living room large enough for our whole family to gather for a movie? Are the stairs too steep for my elderly mother to climb? — and answer them with photographs.
Surprises aren’t usually a good thing when it comes to short-term rentals, so avoid negative reviews by showing guests exactly what they can expect at your property.
Although most guests care far more about what’s inside the walls of your property, don’t forget to include exterior photos in your listing. Include a few photos of the property grounds, especially if there are outside amenities like a fire pit or expansive garden.
Don’t be afraid to wander off your property to take photos of the surrounding neighborhood, as guests may be interested to know there’s a great playground or cute coffee shop a few blocks away.
According to Airbnb, hosts with professional photos attached to their listings earn 40 percent more on the platform. The cost will depend on a number of factors including your location and the size of your property, but the average cost of real estate photography is $100-$300 for a batch of images.
Some photographers will even offer design and staging services for your photos, but expect to pay a premium for those add-ons.
If you’re not ready to invest in professional photos yet, your cell phone can still get the job done. The more light you can add to the room, the better: Open all curtains and flip on all lamps and overhead lights for pictures. Turn your phone to the side so your pictures are horizontal and take your time to avoid crooked angles.
(Tip: If you have an iPhone 11 or newer, use the ultra wide camera to capture better pictures of your listing. Open the camera app and set the zoom to .5X, which will allow you to capture more of a room in a single shot.)
Which would you be more likely to click: “5-bedroom rental on a lake” or “Spacious 5 BR family getaway w/ private dock”? Catchy titles can make an impression and boost interest in your property.
Some hosts come up with cute names for their rentals, but that’s not a requirement for a good title. Instead, focus on including words and phrases that will cause someone to take a break from scrolling in order to read more or swipe through a few photos.
A catchy short-term rental title will include an adjective that describes the property (think: luxury, cozy, rustic, stylish, Insta-worthy) and give an overview of the type of rental (think: home, cottage, apartment, room, yacht). If the property is close to a major point of interest, try to work that into the title.
Many booking platforms limit titles to around 50 characters, so be efficient with your words and use abbreviations when necessary.
Like many aspects of a short-term rental, titles have room for trial and error: If bookings are slow, tweak your title to see if you can attract more interest with different words.
If a potential guest is reading your property description, you’re off to a good start: You already hooked them with your listing title and photos — but don’t lose them with a boring or short property description.
The average person will only spend 8 seconds looking at a webpage before shifting their attention elsewhere. That means a proficient reader will only make it through about 30 or 40 words of your description before moving on, so make every word count.
This doesn’t mean your description should only be a few sentences long — in fact, that’s a red flag to many guests. Instead, you’ll want to pack the most compelling information about your rental into the first few sentences and then break up the rest of your description with subheadings and short, punchy paragraphs.
Start with a sentence that expands on your listing title, offering more information about the most compelling features of your rental. Property details (the number of bedrooms and bathrooms) should be included in the first paragraph, as well. If your property is located near major points of interest, be sure to include that near the beginning of your listing (“located just a scenic 10-minute walk from the boardwalk”).
Break the rest of your description up into smaller sections, ideally separated by bolded section titles. In these sections, you can go into more detail about your property, the surrounding area and the experience you’re offering.
If your property has any quirks that guests might not love (maybe there’s no parking on-site or there are train tracks nearby), it’s a good idea to disclose that information in the listing. On most platforms, guests will be asked to review the accuracy of your listing, so you don’t want to risk being accused of misleading your guests or hiding information.
If there are any house rules that you expect guests to follow, be sure to list them in the property description (in addition to sending them to guests in pre-arrival communications). If quiet hours are enforced after 10 p.m. or your property isn’t suitable for young children, make sure to clearly explain these policies so guests are aware before they book their stay.
Many booking platforms will communicate all fees to guests during the check-out process, but it is important to double-check that all service, cleaning and pet fees or security deposits are clearly communicated before a guest enters their credit card information.
Nothing is more frustrating to a guest than clicking on a listing for $100 a night and then finding the price is actually double that amount when all the fees are added. Sometimes this can’t be avoided on sites like Airbnb (although a new “Simplified Pricing” feature on the platform allows hosts to absorb all the fees and offer a clear nightly rate to guests), but avoid using artificially low nightly rates to hook guests on direct booking sites.
The COVID-19 pandemic has reminded both guests and hosts the importance of paying attention to cancellation policies in place, as there is usually a clear winner and clear loser when a reservation needs to be canceled. Still, plans change and some emergencies (or global health crises) cannot be avoided.
Guests want to book with confidence knowing their reservation won’t be canceled by the host at the last minute, but they also want the flexibility to back out of their reservation if something comes up. For that reason, most booking platforms encourage hosts to offer flexible cancellation policies and reward those that do with higher search rankings.
No matter how strict or flexible your cancellation policy is, many guests will still ask for exceptions or refunds if they need to cancel. It is easier to stand by your policy if it is clearly communicated throughout the booking process.
Major booking platforms offer different levels of cancellation policies for hosts to choose from, which provides consistency across the platform so guests can better compare their options.
Booking.com allows hosts to define their own cancellation policies, but the platform recommends allowing guests to cancel for free until 1 or 2 days before check-in. Alternatively, hosts can mark their listing as non-refundable and guests will not receive any money back if they cancel at any time.
Booking.com hosts are asked to be as clear as possible about their cancellation policies and must define the free cancellation timeframe (if one exists) and how much a guest will be charged in the case of a cancellation or no-show.
Google Vacation Rentals does not give guests the option to sort properties based on cancellation policy, but hosts should still include this information in their description on the linked booking page.
The good part about direct booking websites? You set your own rules. The bad part about direct booking websites? You’re responsible for enforcing your own rules (or dealing with the consequences if you forgot to clarify a policy). Transparency is essential when offering guests the ability to book your short-term rental directly, so as long as you clearly explain your cancellation policy and ask your guests to agree to it before booking, you will be covered. Be sure to require a deposit or pre-payment if you don’t plan to offer free cancellations, as guests won’t take kindly to being asked for payment after they’ve already cancelled their booking.
According to 2nd Address, a short-term rental research company, nearly half of all properties were listed as pet-friendly in 2017 — and those properties were rewarded with more bookings and more revenue. The company found that properties that allowed pets were 4 percent more likely to be occupied each night and brought in 16 percent more revenue (not including the associated pet and cleaning fees).
Although there are plenty of horror stories from hosts who have allowed pets — hair covering the sofa, cat markings along the baseboards, lingering pet odors — most short-term rental hosts are able to avoid these problems with a thorough cleaning process between guests.
If you choose to allow pets on your property, make sure your listing clearly outlines any restrictions on breeds, number of pets or types of animals. Hosts can choose to charge a fee per animal per night or charge a flat fee to allow pets on the property. Many guests are also happy to pay a refundable pet deposit in case their furry friend causes any unexpected damage.
Note: Most major booking platforms require hosts to accept service animals even if the property does not typically allow pets. Hosts cannot charge pet fees for service animals, as they are not legally considered pets, and guests are not legally required to disclose the presence of a service animal (although they are encouraged to do so). If you or a family member are allergic to pet dander, explicitly state in your listing that your rental is animal-free due to severe allergies — booking platforms will typically allow you to cancel reservations with service animals if there are health concerns involved.
By listing your property on various booking platforms, you’re already reaching a large pool of potential guests — but why stop there? With a little bit of extra effort, you can amplify your listing and increase your revenue.
A Facebook or Instagram page for your short-term rental can be a fun way to reach new guests, but be prepared to put in time and effort into growing your audience. Social media requires consistency in order to be effective. If you’re willing to give it a try, consider asking guests to share photos from their stay or ask for permission to share their reviews to your page.
Email marketing is an extremely effective way to increase reservations, but collecting email addresses can be a challenge when many booking platforms require you to communicate through the app rather than exchanging private contact information. Consider leaving a guest book at your property to collect email addresses from your visitors. Hosts can also add a log-in page to their Wi-Fi network (called a captive portal) that requires guests to enter their email address in order to access the internet, but this requires advanced technical knowledge or a paid service.
Once you build an email list, use an email marketing platform like MailChimp or Constant Contact to send occasional emails or special offers. Email marketing is a great way to lead guests to your direct booking website and avoid paying service fees and commissions to booking platforms.
People trust travel recommendations from their friends and family far more than what they see on the internet, so take advantage of word-of-mouth advertising. Ask your guests to tell their friends about their stay if they had a good time, or encourage them to post photos of their vacation on social media.
If you’re serious about growing your short-term rental business, paid advertising can be a smart investment. Digital marketing can be complicated and it is easy to waste money on advertisements that never reach the right people, so consider hiring a professional to help set up your campaign. Popular advertising options for short-term rental include local tourism sites or directories, Facebook and Google Display Network. Depending on which advertising platform you’re using, you can target your ads to different audiences (like people who have searched for rentals in your area in the past, or those that are interested in family vacations).