In recent days, there has been a lot of media attention about ChatGPT by OpenAI. ChatGPT uses machine-learning techniques (commonly called artificial intelligence) to generate human-like text. It does this by learning from trillions of data points found on the internet.
To see what the buzz was all about, we prompted the artificial intelligence with several questions about vacation rental management within the context of the predicted upcoming recession. We then converted the results into a fireside chat format.
The results were definitely interesting. While AI is still far from running your vacation rental business for you, we think some of the tactics outlined by the chatbot can serve as a great conversation starter during a brainstorming session with members of your team.
We hope you enjoy this human-like conversation with what is currently the world’s most powerful chatbot artificial intelligence!
Hey ChatGPT, thanks for joining us today
My pleasure. My name is David.
Just to make sure, is this David Jacoby, the President and Co-Founder of Hostfully?
Great, the AI named itself. This is getting weird, but let’s move on. Is it true we are about to enter into a recession?
No, there is no evidence to suggest that the US economy is in a recession.
Ok, then why are analysts predicting we are entering a recession?
Analysts are predicting a recession because of a variety of factors, including a slowing global economy, increasing business costs, and uncertainty surrounding trade policies. Additionally, economic indicators such as consumer spending, unemployment, and housing prices have all been showing signs of slowing down. These factors, combined with the risk of a stock market correction, have led analysts to believe that a recession is imminent.
That’s interesting. So let’s say we enter a recession, how will it affect vacation rentals?
The recession is likely to have a negative impact on vacation rental businesses. People may be more hesitant to spend money on vacation rentals when times are tight, and fewer people may be taking vacations in general. Vacation rental businesses may have to lower their prices in order to remain competitive and attract customers. Additionally, vacation rental businesses may have to focus on providing more value for their customers, such as discounts or special offers.
We like your idea of providing more value to customers, in this case homeowners. List ways vacation rental managers can provide more value to their homeowners.
- Offer 24/7 customer service support.
- Provide proactive maintenance and repairs for the property.
- Offer a comprehensive marketing package to help promote the rental.
- Utilize technology to make the rental process easier and more efficient.
- Provide detailed reporting of rental performance and analytics.
- Offer helpful tips and advice to help homeowners maximize rental income.
- Offer exclusive discounts to homeowners on items related to their rental.
- Develop relationships with local businesses to provide discounts to renters.
- Offer flexible payment plans to make it easier for homeowners to manage their finances.
- Provide a guarantee to ensure the property is always in top condition.
You also said that a good move in a recession is cost-cutting. Any advice you can give on doing that?
- Utilize Online Advertising: Take advantage of free and low-cost online advertising opportunities such as Google AdWords, social media advertising, and travel blogger networks to reach a larger audience and generate more bookings.
- Negotiate with Suppliers: During a recession, many suppliers are willing to negotiate prices for bulk orders. Make sure to take advantage of this and negotiate for discounts on supplies and services.
- Consolidate Services: Evaluate all services you use and look for ways to streamline and consolidate them. This will reduce costs while still providing the same level of service.
- Reduce Maintenance Costs: Regularly evaluate maintenance and repair costs and look for ways to reduce them. For example, consider outsourcing labor or switching to energy-efficient lighting and appliances.
- Streamline Operations: Implement operational processes and procedures that allow you to maximize efficiency and minimize costs. For example, use online reservation software and automated marketing tools to reduce the amount of time and effort invested in each booking.
- Offer Discounts: Offer discounts and specials for last-minute bookings and for bookings during off-peak seasons. This will help keep your vacation rental occupied and generate more revenue.
We like your second point. We often have line items in budgets that are recurring that we don’t think of challenging. What are some ways to negotiate bulk orders with suppliers in a recession?
- Offer to pay a larger deposit in exchange for a lower price.
- Ask for a long-term contract with a fixed price.
- Negotiate payment terms that are more advantageous to your business.
- Request discounts for ordering in bulk and for paying on time.
- Request a delay in delivery to allow for better cash flow.
- Request discounts for buying more of the same item.
- Request discounts for ordering a certain number of items at a time.
- Ask for a volume discount for ordering a certain number of items.
- Look for suppliers who are willing to negotiate on price.
- Ask for an additional discount for referring the supplier to another customer.
Some are saying the real estate market will slow down. There may be good deals to be made in the coming months. Should vacation rental management businesses buy properties in a recession?
The decision to purchase properties during a recession depends on the individual business’s financial situation and risk tolerance. Factors such as the availability of financing, the current market value of the property, and expected rental income should all be considered. Additionally, vacation rental management businesses should also consider the potential long-term benefits of investing in property during a recession, such as lower prices and potentially higher rental yields.
Speaking of deals, we’re likely to see businesses struggle and be cheaper to purchase. Do you think vacation rental business acquisitions happen more often in 2023?
It is difficult to predict whether vacation rental business acquisitions will happen more often in 2023, as this will depend on the economic and business environment at the time. However, given the rapid growth of the vacation rental industry in recent years, it is likely that acquisitions will continue to increase in the future.
Final question. Do you think starting a vacation rental management business is a good idea in a recession?
Starting a vacation rental management business in a recession can be a risky venture. It may not be the best time to start a new business as the economy is struggling and people may be hesitant to spend money on luxury items such as vacations. Additionally, there may be reduced demand for travel due to health and safety concerns, which could further reduce potential profits. That said, if you are able to secure enough customers to keep your business afloat and you have access to a steady supply of vacation rental properties, it may be possible to make a successful business in this difficult economic climate.
Hey ChatGPT, we mean David, we know your time is valuable. Thanks for this chat today
No problem! Have a great day.