By The Hospitable Team
Are you looking at the short-term rental industry as an investment opportunity? Or maybe you already own a vacation rental but want to increase your returns? Look no further — on our Hospitable Hosts podcast, industry experts will share their experiences and best practices with you.
In a recent episode, Hospitable.com‘s CEO Pierre-Camille Hamana sat down with Steve Barsh, Founder & CEO of Parker Chase Properties and former Managing Partner of Dreamit Ventures. The topic of discussion? Maximizing your vacation rental return on investment (ROI).
With years of experience in the short-term rental industry, Steve is the perfect person to share his insights on how to maximize profits in the STR business. During the podcast, Steve touched on five key aspects that are often overlooked by vacation rental owners and operators.
Whether you’re just starting out or looking to increase your returns, these tips are sure to help you succeed.
If you want to hear more insights from Steve and other industry experts, be sure to tune in to our Hospitable Hosts podcast!
Prefer to read the highlights? We’ve got a summary of the key takeaways below.
What do vacation rental investments and vineyards have in common?
Steve and his wife, who were living on the east coast of the United States, wanted to diversify their investments. It started 24 years ago with just one property, as the couple fell in love with Park City, Utah, and they decided to buy a place to rent to others. The family business now owns and operates multiple luxury properties.
While Steve has enjoyed operating and building companies in his career as a venture capitalist and a Managing Partner of Dreamit Ventures, building Parker Chase Properties became no exception. Steve notes that he had to consider many details along the way:
“When I think about vacation rental investments, I think about this analogy: getting wine from a certain vineyard. Where’s the vineyard? It’s in Burgundy. Well, where in Burgundy? It’s in this and that part of the town. Okay. Is it on the right or left of the hill? Close or far from the mountain? It matters because the way the sun and the fog settle on the grapes makes wine completely different in two vineyards that are just a hundred meters apart. I have that sort of knowledge of the short-term rental business — I understand it almost like vineyards.”
Keep on reading to get to know Steve’s 5 most underappreciated aspects to maximize vacation rental ROI.
Target an “ideal guest” for your property
Steve believes that the key to growth in the short-term rental business is targeting a specific persona, creating a unique experience for guests, and differentiating from competitors. Instead of buying and managing multiple low-end properties, investing in a high-end property that caters to a specific “ideal guest” can be more profitable and less operationally intensive in the long run.
At the same time, Steve also cautions against targeting luxury guests if hosts cannot provide an excellent experience, as it would result in a bad reputation. Investing in a high-end property requires understanding the ratio of investment to revenue, taking calculated risks, and having a solid financial plan.
“If I had to buy ten $200,000 condos and manage ten guest arrivals every Saturday or Sunday, it’s a lot of churn. I’d rather take bigger bites of the apple. My point is to pick an ideal customer profile, I don’t care which one it is, wherever you want to be on the stack… and then passionately go after it and make sure your team is lined around that.”
Boost guest experience as your competition strategy
As Steve notes, “There’s thousands and thousands and thousands of condos in this market.” That’s why it is crucial to understand your competition and what they offer, particularly if you want to target a specific customer demographic.
One way to differentiate your vacation rental from others is through its location. Steve points out that ski-in/ski-out, beachfront, or having a great view can make a significant impact on attracting guests. However, location is not the only factor. Furnishings, amenities, and personal touches can also make a property stand out.
“I want a guest to walk in there and be like, “Oh my God!” I want that reaction because I want to differentiate from the competition, on location, furnishing, tech and electronics, toiletries, and all of that. We’re delivering an experience. We think that our experience starts from the moment that a guest places the booking and this experience ends when they’re driving to the airport.”
Boost your guest experience — talk to your guests even when you sleep.
Budget wisely to maximize your guest experience
While Steve admits that he has a tendency to overspend, he does so only in categories that are important to delivering a great guest experience.
Steve’s approach to budgeting is strategic and calculated. For example, when buying a $2 million property, Steve budgets carefully for furnishings and electronics, but he spends more on items such as faster internet connection, quality kitchenware, plates, and glasses. He believes that overspending in these categories is essential to creating a point of differentiation and delivering a great guest experience.
“You have to constantly account for a little extra in the details. We might overspend in certain categories because I want people to have a great experience. It’s not a lot of money, but it helps deliver that for that target customer for that point of differentiation. That’s what we do, and we make it back really, really quickly.”
Teamwork and company culture matter
When it comes to maximizing returns from short-term rentals, teamwork and established company culture are critical. Steve emphasizes that it’s not just the host alone but also a housekeeping team and a management team that work together to achieve this goal.
Every team member needs to think ahead, and company culture needs to be lived and breathed every day, with “a simple North Star” guiding every decision. It’s also important to have a streamlined communication system that over-communicates with guests to ensure a seamless experience from booking to checkout.
“What we do at Parker Chase Properties, it’s a team, right? It’s myself, it’s the housekeeping team, it’s the property management team. For what we’re trying to deliver, when our guests stay, I need them all to think as if somebody was staying at a Ritz Carlton. So again, treating them like guests, not tenants — everybody on the team thinks that same way. They don’t need to ask me. They know the right thing to do.”
Set expectations and overdeliver
To ensure a positive guest experience, think through every step of the process, communicate effectively, and over-communicate if necessary. Steve highlights the importance of accurately setting expectations and going above and beyond to overdeliver.
“My main point is, if you are charging €2,000 a night for a place in Brussels, there’s a different set of expectations. Just like McDonald’s and a fancy steakhouse. Make sure you understand that if somebody’s paying €3, as long as you deliver €3 of value, it’s okay. But whatever you’re charging, make sure that you’re aligning with these expectations and hopefully overdeliver!”
Steve also discusses the concept of designing the guest experience and making sure to own it, providing a six-star or even seven-star experience. The key here is to exceed expectations by anticipating guests’ needs and providing exceptional service. Using automation technology like Hospitable.com and the digital guidebooks from Touch Stay can help in communicating effectively and enhancing the guest experience.
More than five!
Together with Pierre, Steve actually over-delivered (staying true to his advice for other hosts) and listed three more key aspects that are often overlooked by vacation rental owners and operators throughout our latest episode. You’ll have to have a listen to get the rest!
Explore the full episode and get all the latest industry insights from renowned experts in our Hospitable Hosts podcast!
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