Getting started as a multi-property vacation rental manager can be daunting—from setting up all the processes to navigating unfamiliar terms and software. Luckily, when setting out on this journey, you have a few options to consider off the bat, such as whether you join a vacation rental franchise or decide to go it alone. While joining a franchise program can have many benefits, it does involve making certain sacrifices. Either way, you need to know what your options are to make a fully informed decision.
First things first, what is a franchise?
While most often associated with the restaurant industry, franchises are a low-risk way to enter any market, especially when you lack expertise in certain areas. They work by providing access to a brand’s trademark, including their entire tried-and-tested business system. In return, you pay an initial fee—and ongoing royalties—to gain the right to operate under their brand. Franchises, including vacation rental franchises, have long been a stable method of entering a market and can be very profitable for the franchisee (that’s you).
Franchises in the hotel and hospitality industry
Familiar names like Hilton, Marriott, and Hyatt are franchisors within the hotel industry. They’re the ones issuing franchises and controlling the overall direction of the brand. Investing in a hotel franchise offers franchisees a strong brand portfolio right away and a higher chance of business success. Over the past ten years, hotels have turned over ownership to franchisees, and now over 80% are running as franchised operations. Franchises can serve as a win-win business model if both the franchisor and franchisee work in tandem toward success.
The vacation rental franchise model
With the property management market in the United States currently worth a reported $96 billion, vacation rental property owners are taking a page from hotel franchisors’ playbooks. In recent years, a few sophisticated vacation rental franchises have popped up. All of them offer a package of branding, marketing, and software tools that’ll jump start your chances of success. In this competitive landscape, hosts are weighing the benefits of vacation rental franchises to ensure their rental property doesn’t get overlooked.
By joining a vacation rental franchise program, you can increase your property management business under a well-established brand name, benefitting from both long-term prospects and short-term profits. The fact is, starting a vacation rental property business from the ground up is no easy feat, and owning a vacation rental franchise could be the best way to kickstart your vacation rental property lifestyle.
Is joining a vacation rental franchise the right fit?
Guests look for different things while on vacation—some want a cozy, homelike experience others care more about cleanliness and location. Whatever your property’s specific strengths, building a healthy vacation rental business will always require skills in operations, marketing, sales, and guest management. To know how you’re doing so far, a vacation rental business health check is one way to determine if your business needs an extra boost or a new approach.
Joining a vacation rental franchise gives you a surefire method to take care of these essentials. You follow the franchisor’s playbook, use the tools provided to you, and hopefully watch bookings roll in. That means you have more time to focus on developing unique selling points of your business that matter to you (such as offsetting your vacation rental carbon emissions).
Let’s take a look at a few pros joining a franchise program:
- Software: Property management platforms (PMPs) are an effective way to grow and scale your business. Fully developed solutions like these are part of vacation rental franchises, and you will be given the training necessary to use this technology to provide 5-star hospitality. Vacation rental franchisors will have this tool available for you. It may be a custom-built software tailored to the franchise’s unique structure, or may be based on one of the popular PMPs you’re used to.
- Clients: In the vacation rental market, word of mouth and who you know are vital for business. Renters can lead to referrals, repeat stays, or they may even seek out your vacation rental franchise to find a location for their next trip. A big advantage of vacation rental franchises is that the franchisor will already have its own list of internal clients. So right from the start, your properties will get advertised to an established and loyal group of motivated and quality guests.
- Resources: Most vacation rental franchises will have a methodology for success or training program for you. This is probably where you get the biggest bang for the buck. You’ll save the painful steps many vacation rental managers had to live (and suffer) through to get to where they’re now. The resources the franchise has at your disposal also means that you’ll skip many of the business maturity phases. You’ll go from starter to established in one step instead of five.
The cost associated with franchising
It goes without saying that franchising is an investment. You are buying into a brand that grants you access to a well-known name and its quality services. You can expect to pay an upfront fee and an annual licensing fee when you join a vacation rental franchise. This is not an easy decision to make and much of it depends on your own confidence in the brand and whether the affiliation will bring enough new business to offset the costs.
Hidden costs of vacation rental franchises
Apart from the financial fees, there are a couple of hidden costs to take into account when joining a vacation rental franchise.
- You relinquish control of your vacation rental property. Because you are joining a brand, you have to commit to their style of business. Beyond profitability, make sure you personally believe in the brand and are happy to be associated with it.
- It’s all or nothing. They have countless perks, but if you decide to branch out alone, you lose those resources in one fell swoop. And because you haven’t grown your business on your own, it may take some time to build your own professional relationships if one day you decide to leave the franchise. The disruptive effect of switching software and business processes while active reservations are still ongoing cannot be understated.
- Contracts can lock you in. It’s possible that when you join, you’ll have to sign a contract for a certain number of years. If you’re only joining a franchise to gain vital business expertise, this may be too much of a commitment.
Examples of top vacation rental franchise programs
There are a few key players in the industry, each offering distinct advantages :
- Book by Owner—Based in the United States, this company offers its franchisees access to their software, training programs, processes, and more. They look for local property owners and seek to build lasting relationships.
- Direct Booker—More than half of their 7,000 properties are managed by franchisees across Europe. Direct Booker is based in Croatia and is perfect for agencies and entrepreneurs alike.
- Happy Holiday Homes—Located in Switzerland, Happy Holiday Homes has rentals all over Europe. They’ve been successfully using the vacation rental franchise model for over seven years.
- iTrip Vacation Rental Franchise—iTrip is one of the top property management companies worldwide. With over 2,500 properties, they provide international distribution, training, and software to their franchisees.
- Pass the Keys—This full-service company is based in London and has grown immensely since its franchise model was introduced. Pass the Keys is perfect for new vacation rental property franchisees.
- Property Management Inc—Entrepreneur Magazine labeled Property Management Inc as, “The fastest-growing property management franchise in the United States.” The company is founded on four pillars of real estate management and provides excellent service options.
Alternatives to joining a franchise
Many people think about joining a franchise because they lack business expertise, but find the added commitments may not make the collaboration worthwhile. In these cases, investing in training may be a better option. Start with a short-term rental accelerator course or check out Mark Simpon’s Boostly for tips on how to increase your direct bookings. Also, be sure to subscribe to VRMB for insight from Matt Landau, and join industry-related groups on LinkedIn or Facebook.
If you already have a property and haven’t invested in software, the time is now. It’s critical to use a property management platform (PMP) that includes a direct booking site to maximize on rentals; a dynamic pricing app that integrates with your PMS; and an integrated cleaning and turnover app.
To run a smooth operation, it’s imperative to check all your blind spots. Once you map out your current operating processes, you will be able to eliminate bottlenecks and move full speed ahead.
Starting out is always a challenge, but with the right tools and information you have all the resources necessary to devise a plan and begin on your journey. Whether you choose to take part in a vacation rental franchise or decide to go your own way, it’s important to choose the right path for you. Reach out today to see how we can help.