I spend a lot of time with customers who have big visions of success in the short-term rental business and they often ask me questions about a property’s ability to generate profit. Many have use data tools like PriceLabs or AirDNA to help them understand the market and the opportunities that currently exist there. They tell me they’ve run the numbers and then ask me what I think. My standard response is that there is opportunity in every property and the ability to turn a profit comes from what you can make from what you are given.
Each property and each vacation home community have aspects that are attractive and elements that may be a turnoff to future guests. Remember, owning a short-term rental business is owning a hospitality business and with a wide variety of guests, it is important to remember that things that attract one person may detract another. Successful STR operators will also tell you that the property is only part of the winning formula, what you do with it and how you promote it can be just as important. There is truly something for everyone which is why I believe success comes from much more than just numbers. Numbers are indicators, but they don’t define your product. A STR is a business, and businesses thrive on brands.
The next time you go to an online booking service to look listings in a given area, look for what they are selling. Play secret shopper as a future guest in for AirBnB in Albrightsville or VRBO in Lake Harmony. Try to forget the numbers and look at what they are selling. What headlines, photos or content draws you in? Does it communicate a brand or a feeling? Does it set expectations? These images will be key components of building a brand and establishing a client base for your STR property.
Many of those that succeed in STR have found a way to “play to their strengths” and to put forth a brand that can go well above price. Photos in the listings and the descriptive text help set expectations are will bring you guests. One big decision you make as your STR brand develops is do you want to be a destination, or are you place to stay near a destination? That can help you determine the level and scope of investment in the property. Size, setting, proximity all help you frame your product and therefore help frame your search. “The Poconos” has a brand, your STR should have its own brand and focus. To explore how a property can succeed with its own brand, I suggest you watch and episode or two of CNBC’s Cash Pad.
If you search for listings in my list of STR-friendly vacation homes for sale in the Poconos you will see property descriptions that hit or miss on this concept of playing to one’s strengths. Think of how the property description in a real estate listing might reflect the property description in your Airbnb listing when you search. In your secret online shopper mode, then start to think what might not be stated and how that might actually be beneficial in defining your product. Ask yourself, can the property be a destination in itself or is it near attractive destinations. Can it host family gatherings? Is the strength indoors or out? Is it roomy/cozy, modern/woodsy, built for 2, 5, 8 or 22? Does it cater to a certain age group? Is it Kid-friendly, pet-friendly, couples-only, built for families? All of this will help your brand and may help you decide if a property fits your vision of having a STR. It will also help you understand what you might have to invest in the property to help achieve your vision which is another reason that those numbers you run are not always the numbers that you eventually see.
As part of your search for a vacation home investment, I encourage you to come to the Poconos, stay in an Airbnb and witness this first-hand. Look around at what will someday be one of your competitors. Find other listings on Airbnb and try to match a few with real estate listings and see how that product that got you to book may tie to the last real estate sale. Did they play to their strengths or did they make the brand? Thinking of your STR in this product and brand focused prospective may make your search a little easier and all a little depth to the discussion about numbers.
Great article. Yes, agree 100% that the property is only part of the formula. It’s marketing and differentiation that can help set it apart. I think often we lose sight of that the actual “product” or “service” you are selling to your target audience.