With increasing numbers of travelers jumping into the vacation rental market, a vacation rental management company could have a higher chance to expand its market share. Why is market share important to your business? Simply put, the percentage of the market your company controls is a key indicator of your competitiveness, success, and profitability. Basically, this metric indicates how well specific revenue-generating efforts are working to achieve your financial goals.
Unfortunately, achieving financial goals in the current economic climate can be quite difficult. Facing an onslaught of economic woes, many short-term lodging management companies are forced to develop and adopt a series of cost reduction strategies in addition to the strategies they put into work to increase revenue and improve profit margins.
If you’re also looking for the best ways to cut vacation rental management costs in order to boost your business’s profitability, here are a few things you can do.
Maintain Your Vacation Rentals on a Regular Basis
A piece of property in pristine condition is what most travelers expect when they book a vacation rental. However, keeping your vacation rentals in tip-top shape will allow you not only to meet guest expectations but also to avoid costly repairs down the road.
Another way routine maintenance can help you reduce operating costs is by decreasing energy consumption. For example, a clean HVAC filter can lower energy consumption by as much as 15%. As well, regular plumbing inspections could help you prevent different problems that might otherwise lead to higher water bills as well as cosmetic and structural damage that may cost a fortune to fix.
Besides cutting short- and long-term costs, regular maintenance can also extend the service life of different appliances and reduce the likelihood of unexpected failures, which can be costly to you and inconvenient to guests.
Our suggestion is to work a maintenance schedule into your owner’s contract to ensure that the maintenance occurs on a regular basis.
Focus More on Direct Bookings
VRBO, Airbnb, Booking.com, and HomeAway are some of the short-term rental sites you can use to attract guests and increase your market share. However, you could also advertise your properties for free on different social media sites, including Facebook, Instagram, Twitter, and Pinterest, and even set up your own website, which is now a surprisingly easy and affordable thing to do.
When you acquire guests via your own website or social media channels, you won’t pay any of the fees that booking platforms typically collect when someone books through them. As a result, you can keep the corresponding amount of money—which could run into several thousands of dollars a year or more, depending on how many properties you manage and how often they’re booked—for your company.
Maximize Your Business Tax Deductions
While finding different ways to reduce operating costs and boost revenue can increase your profitability, the fact is that taxes can whittle away a significant portion of your income. Here are a few ideas on how you can lower your taxes through deductions:
- Take advantage of start-up deductions. If you’ve just started your vacation rental management company, you can lower your tax bill by deducting some of the costs associated with creating and launching the business.
- Record all “ordinary and necessary expenses”. The charges associated with property management, including cleaning, maintenance, repairs, utilities, trash removal, pest control, and insurance, as well as advertising and professional services, such as accounting and legal fees, are usually deductible in the year they’re incurred.
- Deduct business-related expenses. The costs incurred for office supplies, equipment, and software solutions also qualify as deductible business expenses.
- Keep track of interest and depreciation. If you use any form of credit to finance different business purchases, the interest is usually deductible. In addition, depreciation, which is a non-cash expense deduction, can reduce your taxable income and increase your company’s profitability.
Use a Comprehensive Lodging Management Software Solution
Increasing operating costs, staff shortages, and the unpredictability in the vacation rental market are unsettling for a vacation rental management company. However, choosing a software solution that perfectly fits your business could help you cut operating costs, reduce your dependency on staff, and overcome many other challenges.
In addition to the tools and features that can help you get more bookings and increase the average revenue per unit, the right PMS solution will allow you to automate a series of processes. This will completely eliminate manual tasks and address a series of issues, including overbooking and inefficient guest screening.
By using a comprehensive lodging management system, you’ll also be able to keep track of all the current and future reservations, and even estimate the total revenue you can earn from the vacation rentals you manage. Being able to estimate cash flows and total income can help you make wiser budgeting decisions for your business. In addition, a complete software solution integrated with an accounting module will allow you to generate different reports that indicate how profitable your business is, how you can increase revenue, and how you can cut operating costs.
To discover one of the most comprehensive lodging management systems, which can help you save time, increase efficiency, reduce costs, and also provide a positive experience for guests, get a personal demo today!