With the right strategies and tools in place, managing a short-term rental (STR) business offers fantastic potential, with the chance to grow your portfolio in an exciting, fast-developing area.
For example, according to a report by Transparent, STR management is expected to see a 97% increase in revenue in 2023, and property managers saw 79% growth last year.
However, any property-related business can feel like a risky move, and STR management carries with it a lot of responsibility. You might be wondering, “How am I going to manage everything from checking guests in to keeping housekeeping ticking over? Should I hire a rental management company to take care of it all?”
In this article, we walk you through what you need to know, consider the pros and cons of using a property management company, and look at how you can use technology to manage STRs yourself. We cover:
- The advantages and disadvantages of being a short-term rental manager
- How to get into STR management
- How to manage STRs yourself
|Save time and scale your STR business
Hostfully automates short-term rental management without cutting into your profits
What is short-term rental management?
STR management is the supervision of properties that are rented out for up to six months, though they’re usually booked for between a couple of nights and 30 days. This makes STRs perfect for vacation-seekers, business travelers, and remote workers, but it also makes managing them more work than managing long-term rentals.
As a property manager, you’ll have a range of responsibilities, including:
- Promoting your properties
- Managing property listings and bookings
- Organizing cleaning and maintenance
- Handling check-ins and checkouts
- Communicating with guests
- Ensuring a fantastic guest experience
- Managing reviews
Advantages of being a short-term rental manager
Our recent report shows that the growth potential in the vacation rental industry is immense. And with few barriers to entry and the right modern tools, you can start capitalizing on this right away as you look to take advantage of the following benefits.
Lots of flexibility
With third-party property management companies and automation tools, you can be as involved or uninvolved as you like with short-term rental management. You may choose to just rent out your second home, for example, keeping it free for a few weeks in the year for your own vacation. Or you might want to invest in and manage a number of properties and maximize your returns.
High occupancy and rising demand
Research shows that short-term rental occupancy levels in 2023 are forecast to remain higher than pre-pandemic levels at over 56%, reflecting the fact that demand in the US STR market is expected to grow by 5.5% year over year.
So, though rising inflation and a lack of international travelers has curtailed some of the growth in the industry, there’s a lot of optimism, with domestic consumers continuing to seek out travel opportunities.
With just a small team and the right set of tools, you can set up a thriving short-term rental business. You can have your property available on the STR market in minutes simply by booking in a cleaner, taking some pictures, setting up an account on an OTA like Airbnb, and managing everything inside a great property management system.
And if you’re moving from long-term property management into short-term, you’ll bring contacts and expertise that make it easy for you to manage the properties yourself. Got a broken boiler that needs fixing immediately before your next guests arrive? You’ll definitely have the number of a plumber!
Disadvantages of being a short-term rental manager
Managing a short-term rental comes with a unique set of challenges. From overseeing housekeeping schedules to maintaining streamlined communication with guests, it’s more hands-on than long-term rental management. Let’s take a closer look at how.
Increased interaction with renters
Checking guests in, sharing WiFi information, providing local recommendations—you take on all these tasks and more when you become a short-term rental manager. And though there are tools to streamline this (which we explore later), the key takeaway is that STR guests require a far more attentive service than long-term renters.
More complex to manage
When you’re managing a long-term rental, as much as you might not enjoy having to get in touch with the plumber or electrician, such inconveniences are usually rare and generally quickly dealt with.
To manage a short-term rental business, though, you need at least one fantastic cleaner to handle turnovers between stays, and a reliable maintenance person to promptly fix any issues as they arise. You also need a solid way to create and schedule tasks to make sure everything is ready in time for each new stay.
What’s more, your housekeeping and maintenance team will grow as you scale.
Increased wear and tear
Unlike long-term rentals which might be rented unfurnished, you’ll need to furnish and possibly renovate a short-term rental. Then, you’ll need to keep track of everything so you can replace your installations when they get worn down or broken… And with a high number of guests, this can happen a lot!
As well as the day-to-day work being more intensive than long-term rental management, managing an STR carries with it more business risk. You have to deal with the off-season and general fluctuations in demand, when you may struggle to get bookings. And there’s also the local competition to wrestle with.
So, pricing, marketing, and awareness of the relevant local regulations are all important and ongoing considerations.
But, as we’ll see, there are plenty of tools you can use to help you mitigate this risk and capitalize on the massive potential that exists alongside it.
|Pro-tip: You can use our inventory checklist to stay on top of the amenities in your short-term rental. Download it for free.|
How to get into STR management
To succeed with STR management, you need to develop repeatable, digitized processes you can use whether you have one guest or 10. The tips in this section will help whether you want to scale your business or if you just want to nail managing one property.
Have a business plan
A business plan helps you create a roadmap for growth, attract financial support, and anticipate potential problems. It should set clear milestones that lead a clear pathway to realizing your business goals, and it should show your research and findings on areas like local regulations, target audience, and market opportunities.
You can use our vacation rental business plan template to see what a comprehensive plan might look like in practice.
Optimize your nightly rates
Within your business plan, you’ll need to demonstrate your pricing strategy. There are different approaches to this, but ultimately you need to find the sweet spot between maximizing revenue while remaining competitive.
As you can imagine, this is a challenging task with sudden surges and dips in demand, inflation, competitor pricing, and your own costs to factor in.
So instead of attempting to undertake this task manually, you can use dynamic pricing tools to optimize and automate your pricing updates based on hundreds of data points. Here are the dynamic pricing tools you can integrate with Hostfully:
Technology like dynamic pricing automates crucial areas of short-term rental management. This doesn’t just save you hours of work each week, it also eradicates human error and helps you provide the best possible service to your guests.
Here are some other solutions you should consider using:
- Channel management to get your property out to as wide an audience as possible
- Direct booking sites that allow you to easily create a brand and generate more revenue from your bookings
- Centralized calendars so you can organize your team’s schedules alongside reservation information
- Task scheduling to simplify operations
- Guest messaging to help you manage guest concerns and queries
- Digital guidebooks to provide guests with valuable information throughout their stay
- Accounting and finance tools so you can process payments, manage your payroll, and see reports
- Self check-in tech to increase guest independence
- Smart home devices such as noise monitoring to provide you with greater remote control
Managing STRs yourself vs hiring a property management company
Between messaging your guests and organizing your teams, managing short-term rentals is a full-time job unless you can delegate to others. Meanwhile, rental management firms can save you a lot of time, but they also take a big chunk of your profits.
Here, we explore what you need to know about self-hosting vs using a rental management firm.
Property management company services and fees explained
Property management companies can handle everything from marketing your properties to adding those special final touches like fresh flowers and toiletries. Management services include:
- Overseeing booking inquiries, reservations, and cancellations
- Rental price optimization
- Restocking supplies
- Arranging cleaning and maintenance staff
- Processing booking payments
- Managing check-ins and checkouts
- Communicating with guests
- Writing guest reviews
This extensive workload comes with a hefty cost. You can expect to pay property management companies between 25-50% of your rent payments.
Pros and cons of property management companies
Aside from the upfront costs, there are several factors you need to consider when deciding whether to hire a property management company. Here are the pros and cons:
|They know the markets they operate in and have a defined marketing process||You have to give up some control over your marketing and strategy, and may struggle to create a unique brand|
|They have extensive teams which makes it easier for them to manage on-the-ground operations||You have less visibility and control over who stays at your property|
|They can mediate guest issues and complaints so you don’t have to deal with them directly||You will have to share the revenue generated from your property|
Being your own STR manager
By making use of vacation rental tech tools to oversee management, you can cut costs and retain control of your properties. You’ll decide exactly which type of guests you want to attract, automate your marketing processes to engage them, and then wow them with great communication and a frictionless guest experience.
And, as we look at below, there are other tools you can use to reduce your workload, save on costs, and generate a sustainably strong return on your investment.
As well as avoiding property management service fees, you’ll have full control over your rates, what bookings you accept, and how to manage your revenue.
How to manage your short-term rentals with Hostfully
With Hostfully’s STR software, you can make every stage of short-term rental management easier. Having everything in one full-service platform means you’ll save time when managing guest communications, organizing your team, and managing your bookings.
What’s more, you can stand out from the competition with an impressive, ready-made direct bookings site and digital guidebook. Plus, Hostfully integrates with all the tools you could need as you scale.
Here’s a closer look at some of the tools and features you can implement:
- Channel manager
- Done-for-you direct bookings site
- Booking lead manager
- Automated guest messaging
- Team organization
- Guest screening
- Dynamic pricing and payment processing integration
- Smart home device integrations
You can reach more guests by promoting your property across several channels, but keeping your listings up to date is a lot of work. With a channel manager, you can edit details and pricing in one place and this will be reflected everywhere else. With the ability to make changes in real time, you’ll avoid double bookings too.
Direct bookings site
You can attract loyal guests with a pre-built, customizable direct booking website. With our templates, you can create a branded experience that converts new leads and encourages old guests to rebook.
Inside the booking pipeline, you can see all information about past, current, and upcoming reservations. You can send email reminders to keep guests engaged before their stay or tell past guests about new features and offers. And Hostfully pulls data from your direct booking site, as well as listing sites such as Airbnb, Booking.com, and VRBO, to show you leads for future bookings too.
Automated messaging allows you to engage with guests at every opportunity. With our message templates, you can streamline check-in, respond quickly to questions about WiFi and parking, and request reviews.
And then within our unified inbox, you can see all your communications in one place and chat with guests via WhatsApp. Remember, responsiveness is an important metric used by OTAs like Airbnb to assess your quality of service. So using automation in this area doesn’t just save you hours of time, it also helps you rank highly in search engine results.
Integrate Hostfully’s digital guidebooks with short-term rental management software to increase guest independence. With everything from information about parking to local recommendations available in multiple languages, you can use a branded digital guidebook to answer your guests’ most commonly asked questions.
When combined with smart locks, our digital guidebooks also facilitate self check-in. You can share a digital code or mobile key when your guests arrive and step back as they navigate their stay independently.
Keep track of your bookings and occupancy, and organize your team within a centralized calendar. You can check availability, hold dates, create tasks, and make reservations all in one place.
You can also integrate Hostfully with a range of other solutions to manage operations in one place. Some of the tools you should definitely check out include:
- Dynamic pricing to optimize your room rates based on the latest data
- Guest screening solutions to be sure your guests are who they say, and protect yourself against flagged guests
- Cleaning and turnover management to make coordinating housekeeping simple and stress-free
Future-proofing your short-term rental management strategy
Short-term rental management allows you to generate more revenue than long-term properties. But to capitalize on this, you need to be able to reduce your workload. Otherwise, between promoting your properties, replying to dozens of guest messages, and organizing cleaners, you could become overworked and stressed, and find it hard to grow your portfolio.
Property management companies are one way to reduce this workload, but if you hire a third party, you’ll have to give up some control over your properties and you’ll be faced with sizable management fees.
The other option is to automate your processes with property management software. A complete solution like Hostfully allows you to:
- Manage bookings and listings across several channels
- Optimize marketing with a direct booking site
- Integrate with other solutions so you can manage everything in one place
- Organize your team with a centralized calendar
- Automate guest messaging to save time
|Save time and scale your STR business
Hostfully automates short-term rental management without cutting into your profits