Vacation Rental Business Plan: 15 Steps for Success (Free Template)
Investing in a vacation rental business isn’t a decision that’s made lightly. There are many factors to consider; however, as the short-term rental industry continues to grow , 2023 could be the perfect time to do so.
The success of any short-term rental business will depend on having actionable goals and clear objectives based on thorough market research, whether you’re a newbie or an experienced property investor.
It’s crucial to create a strategic vacation rental business plan before you hand over a deposit or receive the keys. A viable business and management plan will help you identify the risks and prepare you for the challenges ahead.
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In this article, we look at what a business plan is, give you samples and templates to use, and analyze the 15 steps your vacation rental business plan needs to help you get started.
What is a vacation rental business plan?
Simply put, your business plan is an overarching set of rules, goals, and frameworks to help you make decisions for your new business and its future.
Not only will a vacation rental business plan help you define your strategy, but you can repeatedly refer back to it to ensure you are going in the right direction.
Why do you need a business plan for your vacation rental property?
Vacation rental owners are eager to hit the ground running when they buy their first properties – who wouldn’t be? Any vacancy or downtime on the property means more money that’s coming out of your pocket. A vacation rental business plan will guide you through the initial steps and beyond, helping you maximize your profit and success as a host.
Beyond just making money, having a good business plan for your vacation rental will allow you to measure success and identify areas for improvement accurately. For example, it will help you focus on key metrics, such as your budget, local market insights, and expansion opportunities.
What’s the secret to a good short-term rental business plan?
It’s all about timing. Writing a business plan before buying the rental home is advisable, so you can truly judge if it is a worthwhile investment and business venture. Remember that a vacation rental is no small project, so before being strapped with $200,000+ of debt, make sure the ends justify the means by guaranteeing a secure investment through a well-thought-out business plan.
If you want to succeed with your business, we also recommend asking the experts; those who already have a thriving and profitable business in the rental market and those who work daily with rental owners worldwide.
That’s exactly what we did to write this article. We contacted Antonio Bortolotti , Cynthia Chan and Karen Spencer – all professionals in the field who are ready to get you through your business plan.
We asked them a few questions to help you craft the perfect vacation rental business plan template.
What should my vacation rental business plan include?
Knowing what to include in your strategic plan can be confusing for those venturing into business for the first time.
We want to make things easier for budding vacation rental entrepreneurs, so below, you’ll find the 15 steps to help you succeed.
You can follow this template with sample questions and example answers to make it easier to understand how to create your short-term rental management and business plan.
Step 1. Executive summary
For people outside Fortune 500 companies, writing an ‘executive summary’ can be a bit scary. However, it’s a lot simpler than you may think!
When you go to a bookstore searching for a new book to buy, you usually read the synopsis on the back to get a short, comprehensive idea of what it’s about, right? That’s exactly what an executive summary is.
It’s just a few sentences that summarize your vacation rental business and includes all the essential information you want to get across. This is so that anyone can read the first page of your plan and know, at a glance, what your business entails.
Start by asking yourself the famous five W’s: Who? What? Where? When? Why? This will ensure you include the key details.
Ask yourself the following questions:
Where is my vacation house located?
- Is it by the beach?
- Is it in the middle of the city?
- Is it in the countryside?
What is it?
- Is it a family vacation home?
- Is it suited to business travelers ?
- Is it a glamping accommodation ?
Who is it for?
- Large groups of friends?
When is it best to stay at my rental?
- Is it a summer rental?
- Is it suitable all year round?
- Is it perfect for winter vacations ?
Why do you have this property?
- Is this a spare room you’re renting out for extra cash?
- Is this to top up your pension if you’re retired?
- Is this your main form of income?
Of course, you do not need to follow this structure, but this will help you outline what information you would like to include in your executive summary, which you can then rewrite to make sure it sounds professional and eye-catching to the reader.
Note: If you are still unsure about the details of your Executive Summary, feel free to do it at the end of your business plan – it’s a case of saving the best until last!
Step 2. Business goals
Your executive summary is going to give you a broad overview of where your business is going, but the goals section will help to further solidify this vision. Goals are what help you to set markers for what success in your business looks like.
Are you satisfied with a couple of bookings a month, or are you expecting a full reservation calendar by the end of the year? You’ll need to set goals to help pin this down.
It might sound elementary, but it will help your business succeed.
Is your business goal Smart? Is it Measurable? Attainable? Relevant? Time-based? Setting good goals is the basis for any successful vacation rental business plan.
Step 3. Value proposition
As with any business, you’ll need to state why customers are going to choose your business. It’s difficult to take yourself out of the equation when evaluating your business. After all, you’ve poured your blood, sweat, and tears into this project, so why wouldn’t guests choose you?
No amount of effort is enough if it’s not adding any value to your vacation rental. Consider how your vacation rental will provide a guest experience that the other properties in your area simply can’t provide.
Step 4. Company analysis
In this section, you should aim to explain the Unique Selling Points (USP) of your new vacation rental business, outlining the unique characteristics and offerings it will bring to the existing market.
Ok, but how?
Performing a short analysis of your company and finding your USP is much easier than you think. All it takes is a few simple questions to figure out how you’re different (and better) than other rental properties out there. After all, once you are confident in your strengths, your guests will be, too!
Here are a few examples:
Is it better than others because of its location?
- Is it close to the beach?
- Main public transport lines?
- Is it off-the-grid?
Is the price of your accommodation better?
- Are you the cheapest accommodation around?
- Are you the best value?
- Do you offer discounts at certain times of the year?
Are the interiors of your property different or better than the rest?
- Do you offer a cozy, rustic getaway?
- Do you offer a fireplace where a family can sit at night?
- Is it a themed vacation rental ?
Step 5. Industry analysis
If you want to be successful in the rental business industry, you’ll need to be strategic and competitive in your company management plan. So, this section is where you state some key facts about current trends and expectations.
One of the ways to do this is by carrying out an industry analysis – this is basically looking at other vacation rental businesses and evaluating them.
This will help you develop a successful business strategy and ensure you’re the owner that comes out on top. After all, knowledge is power!
Here are some sample questions that will help start your industry analysis:
What do vacation rentals near me charge per night?
- Would you class it as affordable or good value?
- Is it less than $50 per night? Or Is it more than $300?
- Think about the figures you come up with in relative terms, weighing up the value of what the business is offering against the price they charge – this will help you start to price competitively.
Who is their target audience and clientele?
- Are they families?
- Couples looking for a romantic break?
- Do they target students and school groups who need large but basic accommodations?
Are they luxury units or more basic rentals?
- Are they upmarket rentals in the most expensive parts of your area?
- Or are they modest vacation home rentals that students could afford?
- Do the rentals tend to fall in one end of the price range, leaving a gap in the market?
Are they self-catered or Bed & Breakfast?
- Do they offer a light breakfast?
- Or do they offer a breakfast buffet?
What websites/agencies do they use for bookings and advertisements?
- Are all your competitors advertising on Airbnb, TripAdvisor, etc.?
- Do they collaborate with local tourism agencies?
- Are they all missing out on a popular booking website that only you know about?
“I recommend owners to focus on profit per booking, not occupancy rates. We’re in it to make money, not fill as many nights as possible (that comes next). We could all be 100% full if we undervalued what we were offering. That doesn’t make good business sense. Be prepared to spend more when you first start out, to bring a quality product to the market – you’ll soon reap the rewards mid-term this investment in your future business will bring.” – Karen Spencer
Step 6. Customer analysis
Your customers – or rather, your guests – are how you are going to make your money. That’s why it’s important to understand and target them properly. In your plan, create different buyer personas based on the types of guests you want to attract.
This is like a profile of your ideal customer, from age to income. You should try to make it as detailed as possible because it will help your business grow later.
These buyer personas will be used repeatedly in all aspects of your business to help you achieve more bookings.
People say that the customer is always right – but if you truly get to know your customers and what they want, you can ensure that you and your business are always right.
A customer analysis is just getting to know your customers and what they want and need from a rental property and a vacation.
Here are some key questions you should ask yourself about your ideal guest:
What’s their name?
- This may seem silly to name a fictional person, but it will bring your customer analysis to life and help you imagine the buyer persona.
What do they work as?
- Is he/she a high-flying banker?
- Is he/she a medical professional?
- Is he/she involved with a local school?
What age are they?
Do they have a family?
- No, they are single.
- Yes, only one child.
- Yes, several children.
Keep going with questions like this until you’ve built an entire profile of the person, which will then help you understand their values and spending habits.
Sometimes old cliches can be true – if you fail to prepare, you prepare to fail! Through this, you’ll be able to understand common complaints you will face, likes and dislikes they have in a property rental, and amenities the travelers will expect to find within the property.
Step 7. Competitive analysis
As well as focusing on your business, one element of your vacation rental business plan is conducting competitor research.
Take a look at the market to find your direct competitors and analyze them to see how your business can thrive.
Competitive analysis is similar to industry analysis, but this time you’re going to focus on your immediate competitors rather than the industry as a whole.
For example, if your short-term rental is a house by the beach, your direct competitors would be other accommodation providers on the beach.
With competitive analysis, you want to look at the people who may win a booking over you and use what you find to put yourself on top.
How much are my competitors charging per night?
- Competitor 1 – $100
- Competitor 2 – $150
- Competitor 3 – $200
- Using this information, you may decide to drop your prices below $100 to become the cheapest option among your competitors and increase your booking rates.
What standard of accommodation do they offer?
- Are they all standard camping sites?
- Or are they high-end units?
- Are they somewhere in between, suitable for most travelers?
Do they offer airport transfers/pick-up service?
- Yes, but for a very high price.
- Yes, and for a reasonable price.
Do they offer a wide range of amenities in the house?
- No, most don’t even offer WiFi.
- Yes, some offer basic things like a washing machine and television.
- Yes, all offer basic amenities, and some even include luxury amenities (like a swimming pool or gym).
Step 8. Operations plan
The operations plan is quite simply, an insight into how you are going to run your new business on a day-to-day basis.
It will consider whether you will hire any staff, what standards you will set, and how you will keep track of inventory and other administrative duties.
This will be one of the most straightforward parts of your business plan; chances are, you already have all of this planned.
Here are a few helpful prompts and examples in case you get stuck:
Am I going to hire any staff?
- No, I’m only renting out one room in my home, which I can do myself.
- Yes, I’m renting out several large apartments, and I have a separate, full-time job.
- No, my partner and I will do the work together.
Who is going to clean the rentals between guests?
- A cleaning agency?
- A neighbor?
Do I need to hire an accountant to help me handle the finances of my business?
- No, I’m comfortable dealing with all of those things.
- Yes! I don’t know the first place to start when dealing with taxes or business records.
Who will deal with bookings and customer complaints?
- Myself, with only one room it will be very manageable.
- I will hire an assistant to help with all of this administration stuff, I won’t have time!
- My daughter/son, it will be a good part-time job for them to give them an allowance.
- To keep things simple, you can also use software such as our own Lodgify vacation rental booking system and channel manager tool.
Step 9. Marketing plan
Explain which strategies you have decided will be best to use when targeting your key markets to achieve bookings.
Think about both online and offline marketing, as well as any campaigns or promotions you plan to run externally.
Your marketing plan is just how you’ll advertise your business to customers and how you’ll generate bookings. This is when your buyer persona (which you created earlier) will come in handy.
If you know the people you’re trying to target, you’ll know what websites they use and what type of marketing will be suitable for them.
Your marketing strategy can be really diverse and varied. For example, you could use several online marketing strategies like Google Ads and listing your property on different rental websites (or your own !). Still, you can also use offline strategies like leaving flyers or business cards at local tourist attractions.
For example, here are some questions that can help you sketch out your marketing plan:
What methods of online marketing should I use?
- I will just list my bookings on one travel website because that is enough for me.
- I will have my own, personal vacation rental website . My site, my rules!
- I have several properties to rent, so I will list them on several websites to increase traffic and booking numbers.
- I will pay for Google Ads in my local area.
What methods of offline marketing should I use?
- None, online marketing will be enough for me.
- I will print flyers and leave them in local tourist offices.
- I will give each guest business cards and ask them to recommend me to friends and colleagues.
Do I have a website?
- No, I don’t want/need to create one.
- No, but I want one! I need to hire someone to create one for me or try a professional website builder .
- Yes, I have one, and I’m going to hire a Search Engine Optimization specialist to help me increase the number of visits to it.
Have I got business cards ?
- No, I don’t need any.
- Yes, I have some but I won’t use them.
- Yes, I have some, and I’m going to use them as part of my marketing strategy.
“As all good things, being successful and keeping up with everything takes time, elbow grease, long nights and hard work. But if you have the passion, the clarity and the determination to succeed, you’ll find the formula to make your rental business successful.
While I’m not sure there is a one-formula-fits-all, there are a few things that helped me: a great website, awesome warm-hearted, personal communication skills, finely tweaked standards, procedures and operations, an open mind and willingness to widen your horizon by questioning what you’ve achieved and learning what’s next. Because we are in an ever-changing and challenging world and only those willing to adapt to the changes will survive.” – Antonio Bortolotti
Step 10. Task delegation and employee management plan
It pays off to dream big, but make sure you have the capacity to do so. How will you manage guest turnover if you’re planning to rent your property every night? Better yet, who will manage guest turnover? Depending on the scale, your goals will take some serious work to get there – make sure you’ve factored in how you will manage it alone or how you plan to delegate tasks.
If you know that you’ll need to hire some staff, be it a property manager, cleaning service , or maintenance person, you’ll have to plan for how you’re going to distribute and delegate the work. Using task management tools and including them in your business plan outline will help you to make the most of your teams’ efforts.
Step 11. Distribution plan
Websites like Airbnb and Vrbo are referred to as OTAs ( Online Travel Agencies ). For all new hosts, presence on OTAs and listing sites to get bookings is essential.
Your distribution plan should consider which channels you’ll be advertising on, how much they’ll cost you, and how you’ll manage them (hint: you might need a channel manager ).
A distribution plan will help you understand how you’re going to advertise your business to generate bookings, and it will help you identify what websites you want to be on to help your visitors find out about and book a stay with you.
Here are some helpful example questions that should get you started writing a distribution plan:
Which OTAs do I want to list my property on?
- Every OTA that is available? I need lots of bookings!
How much will this cost me?
- Is it free?
- Do you have to pay monthly to list on these websites?
- Do they take a commission off bookings you receive from that website?
Are there any tools available to help me manage all of this?
- Yes! A channel manager .
- A channel manager is a tool you can use to ensure all of your bookings, dates and arrangements remain in one place so you don’t get overwhelmed managing calendars from several different OTAs you’re using.
When I do get a booking, how will I receive the payment?
- PayPal account.
- Bank transfer.
- Cash/card payments directly from guests upon arrival.
“If a host’s goal is to maximize their revenue and bookings, it definitely makes sense to list on several platforms. Based on research from one of our partners, Tokeet, they found that some of their hosts had reported a 20% increase in bookings once they used a channel manager to list across several home-sharing sites. I would recommend that if a host is listing across several platforms, they should utilize a channel management program to make it easier to manage their listings and their calendars so they don’t double book.” – Cynthia Chan
Step 12. Revenue management plan
So, this is the numbers part. But don’t worry – revenue management is not as scary as it sounds!
In this section, you’ll have to include information about the rates you plan to charge for your vacation rental, alongside any details about pricing or yield management tools you will use.
When running a vacation rental business, you need to keep on top of your incomings, outgoings and general overall finances.
For people who feel overwhelmed by this, there are a lot of tools and software out there to help. To start with, we’ve written some quick questions to cover the basics of your revenue management plan to make sure your accounts and business stay well in the green.
How much will I charge per night?
- Fixed price: $100 per night
- I’ll use smart pricing, increasing the amount during busy periods.
- I’m still undecided.
What level of taxes will I have to pay to the government?
- I’m not sure – I need to research this before writing my revenue management plan.
What will my utility bills be?
- Water is $20 a month.
- Trash collection is $30 a month.
- Electricity will vary depending on how many guests I’ll have.
What will my staff costs be?
- Zero, I’m doing all of the work myself.
- Low, I’m paying my teenage children an allowance to help me with some household chores.
- High, I’m going to hire a cleaning agency, a marketing specialist, a website developer, etc.
What’s my target monthly income?
- Anything above $0 at the beginning?
“Set stretching yet realistic prices. Quality holiday homes can charge more (because they are worth more) than an average place. When it comes to setting your prices, you need to know what it costs you to welcome each set of guests and work up from there, ensuring a healthy profit per booking every time. The more you charge per week, the more revenue per booking, yet your changeover costs, your marketing costs, your time spent, will be the same.” – Karen Spencer
Step 13. Financial plan example
Think about how you are going to finance your new business. Of course, you’ve often asked yourself this question, ‘How am I going to afford this rental business?’ Will it be self-financed or are you planning on taking out a loan? Do you have no plan to spend any money because you’re simply renting out a spare bedroom?
These questions form your financial plan . It is just writing out, ‘Well, how am I going to pay for all of this?’ As we all know, money doesn’t grow on trees. Note down your estimates of expenditure and projected income for the first five years.
As with anything in life, proper budgeting and planning your finances will prevent any stress in the future, and it will mean that your business is ready to thrive.
So, what kind of information makes up a financial plan?
Will I need to take out a loan?
- No, I’m just renting out an existing property with everything ready to go.
- Yes, I will need a small loan to renovate this property.
- Yes, I will need a substantial loan to purchase the property/land where I’m going to build my rental.
What will the interest rates be?
Do I have savings I’m ready to invest into it?
- I don’t want to put my savings into it.
- Yes, I have a small amount that I’ll use for redecoration.
- Yes, I have lots of savings that I’ve been keeping for a project like this!
What level of monthly loan payments can I manage?
- None, my business has small incomings, so I don’t want to take a loan.
- $100 for a small loan?
- $750+ for substantial mortgage repayments?
“Sometimes not factoring in the cost of educating yourself is a luxury you can’t afford. The reason I’m part of online communities (I go to industry conferences like VRMA and I put together the Vacation Rental World Summit ) is because I’m the first one to not know everything.
I’m aware that if I want my business to thrive while this industry changes and crashes, I need to stay informed on what’s changing, adjust my strategies accordingly, and be prepared for what’s coming.
So I put together some of the best minds in our industry once a year – this year (2018) on Lake Como, Italy, in October – to enlighten us all on what we should be doing to ensure we have a sustainable and exciting business we keep loving for many years to come. – Antonio Bortolotti
Step 14. Key milestones and business future:
Write down your plans and goals for your business, plus what key milestones will help you achieve these targets.
When you start any project, whether it is going back to university, losing weight or starting a business, it is really important to track your project and also to track your progress. This section will be useful to refer back to and to ensure you’re on the right track.
After all, if you don’t set any goals, it might be easy to remain where you are.
Here are some good milestones to use for your rental business:
How much do I want to make a month?
- $500? $750? $3.000?
- This answer will be linked to your financial plan, so this is a good time to go back and look at what you wrote down in Point 10.
How many guests do I want in the first quarter?
- As many as possible – I know I’m still in the beginning.
What rate of growth do I want in my bookings year-on-year?
- I’ll figure this out in the second year, I’m just getting started at the moment.
How many returning clients do I want each year?
- At least 10?
- More than 20, I’m confident in the service I provide.
- As many as possible!
“The biggest hurdle that Airbnb hosts have to get through in their first few years of business is to get enough reviews on their listing so that guests are comfortable staying at your listing. The more reviews you have, the higher your listing appears in the search results as well, so the biggest focus for hosts should be to get as many good reviews as possible.” – Cynthia Chan
Step 15. Vacation rental business plan: Appendix
The appendix in your vacation rental business plan should include all of the relevant documents you have for your business, containing the vital information you need to keep things running.
What’s the number for a plumber, just in case I have problems with the pipes?
- Good point, I don’t have one!
- Yes, I have one, it is 123 456 7890.
Where are my tax registration details?
- I’m not sure, I’ll need to look for these and then add them to the appendix.
- I have them, ready to put in the folder.
Have I kept receipts of all of the things purchased for my business recently?
- Yes, I’m ready to add them to my tax records.
- No, I will buy a wallet to keep them in for future reference.
Have I backed up my online bookings and calendar somewhere?
- Yes, on Dropbox and an external hard drive.
- Yes, but offline, in my calendar in the kitchen.
What should you prioritize in your business plan for vacation rentals?
We know that with so many things to keep in mind for your business plan, it could be hard to focus on the most important ones. There are 15 steps, yet every piece seems crucial; what to do?
So we decided to turn to the experts: Antonio, Cynthia, and Karen for their suggestions!
“Looking at the way the industry evolves and its sheer competition, building a clear, easy-to-remember and appealing brand together with setting the infrastructure right is absolutely key. The main backbone of the brand is obviously your own fantastic and inspiring website: your personal Airbnb, your eBay, your Amazon, where you dictate the rules, and no one decides whether you live or die. But it must be productive and efficient.
This, of course, relies on among many things: carefully laying down a perfectly functioning operational structure, where you put in place automation, standardizations, and procedures to ensure your business runs smoothly even without you being at the desk 24/7.
Actually, owners do and should operate their businesses with little to no worries. In such a demanding and dynamic industry as ours finding the right combination of software that aligns with your individual business needs is key to accomplishing all this. And it’s not easy.
This is to keep firm in mind how the ultimate goal is to rely less on third parties for supply of bookings and more on their ability to excel as a way of driving guests and business home.” – Antonio Bortolotti
Brand consistency is vital for a business and should be established from the very beginning. A good branding outline in your business plan will keep your vacation rental looking professional.
Rather than emphasizing a particular aspect, Spencer points out the importance of quality throughout the entire business plan:
“Quality – in everything you do. From the product you bring to the market to the excellent customer service you offer your guests.” – Karen Spencer
It’s going to show if your vacation rental business plan falls short halfway through. You need to maintain high-quality standards and dedication throughout, so it can reflect in your vacation rental and result in happy customers and solid bookings.
Common mistakes found in short-term rental business plans
For many hosts, owning a vacation rental is their first business venture. With that in mind, many mistakes can be made along the way. Fortunately, we’ve covered you for what to avoid when creating your business plan. Here are some of the most common mistakes that vacation rental owners make with their business plans:
Of course, you want to welcome as many guest types as possible, but your vacation rental won’t be everyone’s cup of tea – and that’s okay! If you try to go too broad in targeting guest types, you’ll end up attracting none of them.
Some hosts don’t narrow down their target, and, as a result, their business suffers. Having too generic of a vacation rental will take away from the value you could be adding. Refer back to your value proposition: what extra perk do you want to provide customers? Once you have that, you can define exactly who those customers will be.
Ignoring the competition
You might think your vacation rental is the best on the block, but keep in mind that your competition feels the same way. Sometimes even the most luxurious vacation rentals are blown out of the water by their competition.
Rivals can outdo you in price, value, style, and availability! Try to evaluate your competitive edge from every perspective; how can you outdo the other vacation rentals in your area?
Unrealistic finance plan
We all want to make a million dollars in our first year of business, but that’s just not going to happen. One of the most common mistakes you can make is overestimating your revenue while underestimating your budget.
It’s great to think positively about your business and even be encouraged to dream big, but when it comes to money: make sure you’re being realistic.
Assuming standard home insurance covers you
Before you welcome any guests into your home, you’ll want to include vacation rental insurance in your business plan. Standard homeowner insurance will not cover the vast majority of problems that can affect short-term rentals. This is largely due to the increased likelihood of property damage caused by guest parties, misbehavior, and stolen items, making vacation properties high risk.
You’ll want to put in the time to research what policies protect vacation rental owners and which companies provide the best coverage and the best value for your short-term rental business.
Scaling your business with a vacation rental property business plan
So, are vacation rental business plans only reserved for newcomers? Of course not! If you’re wanting to restructure your business or scale it, having a new business plan is a great first step. A growing business usually needs a fresh slate, as the old business plan won’t cut it. With a larger business scale, you will need more staff, budget, time, and more.
Instead of building from your old vacation rental business plan, you might find that creating a new vacation rental business plan will be the best option as you’ll be approaching it with a fresh perspective and more ambitious goals.
Vacation rental business plan: tips & tricks
So, you’ve got a business plan full of really detailed information – great, you’re ready to go! Well, not quite. There are still a couple more things to consider before you put pen to paper and start with your own business plan.
With the industry growing increasingly competitive every day, with more websites opening up and listing your competitors’ rentals, you may be looking for that extra edge.
Here are four of our top tips and tricks to make sure you remain number one!
- Ever heard someone say that if you do what you love, you’ll never work a day in your life? This is completely true with vacation rentals.
- If you enjoy it and don’t let the stress get to you and affect your customer service skills, this will shine through to the guests, and you’ll notice they’ll keep coming back year after year.
You get back what you give out:
- With vacation rentals or with any business or skill, you will get out what you put in.
- If you invest time, money and effort into your business, you will reap financial and personal rewards.
- So many businesses in the tourism industry today simply put in the bare minimum to keep things running.
- For you to be number one, you need to invest more effort and time than your competitors, and you’ll notice very quickly that this investment has really high returns.
Quality over quantity:
- Don’t forget that most people will choose value over price, so don’t compromise one for the other.
Get yourself out there:
- Advertise, advertise, advertise! Really, the more places you advertise your business (your own site, OTAs, social media , etc), the more bookings you’re going to get.
- It is just a numbers game – the more people who look at your listing, the more guests you’ll have. Simple!
Your vacation rental deserves a proper vacation rental business plan. When you lead with a plan, you’re setting your new business venture up for success. It’s vital to detail every piece of information you can so there are no surprises when it comes to competition, operations, budget, and everything in between.
Even though your guests won’t see your business plan, implementing one makes sure your business runs smoothly and professionally, which helps contribute to the overall guest experience. We’ve even done the hard part by creating a vacation rental business plan template, so all you have to do is plug in your details, and you’re ready to move forward!
Download our free vacation rental business plan template
Don’t know where to start? Don’t worry! All you have to do is download our free vacation rental business plan template below and fill in your own information. Our handy guide includes all of the questions you need to ask yourself before starting your new venture.
We’ve consulted with the experts to make the best outline possible for your business to help you reach your goals. You can learn more about who Antonio, Cynthia and Karen are, when they started working in the holiday rental market and what they usually do to help rental owners like you to develop their business.
Antonio Bortolotti :
“I’m a property owner with a multi-property in Sardinia and I ventured into holiday rentals as a way of building myself an alternative to my previous life working for Alitalia.
My wife Cristina and I stumbled upon the ruins of an old house in Sardinia and it was love at first sight. We purchased part of it and renovated it; we rented it out to pay the mortgage and hopefully make some money. Fast forward 3 years later and we now own the entire villa with 3 units and I quit my job to focus full time on vacation rentals.
Meanwhile, I was invited to speak on stage at industry events to share how I turned rubbles to such great success – our units were outperforming all other rentals in the area by 4 times in terms of occupancy and duration of the season. I began sharing my know-how with my peers, and that led to hosting what’s become the Vacation Rental World Summit; an event that’s helped over 16,000 property owners and property managers in 50 countries since its first edition.
As a matter of fact, I want to thank you for asking me to respond to your questions by sharing with your readers the recording of Lodgify’s session on the principles of good web design that your very own Dennis Klett shared with us at the Vacation Rental World Summit edition held in Barcelona two years ago. While time goes by, certain things and principles never age.
Cynthia Chan :
“I’m Cynthia, and I’m one of the co-founders of Airhosts Forum . We’re the largest Airbnb host forum online, and we also have the largest Facebook page for Airbnb hosts.
We decided to start a forum so that we could get more information on how to be better hosts and also to help others who were in the same boat as us. Because there is such a need for a community where hosts can come together to share ideas, get tips and advice, and even just vent about their experiences, we quickly grew the community to the #1 Airbnb forum for hosts to come and discuss anything they wanted with other hosts.
We post reviews, useful tips for communicating with guests, information on Airbnb policies, insurance questions and much more, all with the aim of ensuring our members are kept up to date with all they need to know about Airbnb and hosting.”
Karen Spencer :
“I’m Karen Spencer, founder of The Business of Holiday Rental , and I help holiday homeowners to create a quality holiday home, to run it as a business, maximize their income and love what they do.
I’m a holiday cottage owner myself. I’ve worked for a holiday letting agency and have 10 years of experience in the self-catering industry, I’m a home stager and a formal departmental coach.
Combine all that industry knowledge, holiday home business know-how, corporate experience and training, and you get The Business of Holiday Rental. I can help you in group programs, working one to one, or in my off-the-shelf classes.”
Hi, Amazing article to learn from basics to advanced in vacation rental business. Thanks for sharing this wonderful article with us.
Fantastic article Jess as always. Even though we’re on our 2nd property and they both are doing well we are going to go back and go through the steps in the business plan. I bet it will help us refine our ideas for moving forward. Thanks again!
Well… consider yourself added to my blogroll. I have like six other blogs I read on a weekly basis, guess that number just increased to seven! Keep writing!
What kind of insurance is available?
I suggest you check out our article about the different types of vacation rental insurance available. You’ll find it here .
Riley & The Lodgify Team
Thanks for sharing this useful information! Hope that you will continue with the kind of stuff you are doing.
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Vacation Rental Business Plan Template [Updated 2023]
Vacation Rental Business Plan Template
If you want to start a new Vacation Rental business or expand your current Vacation Rentals business, you need a business plan.
The following Vacation Rental business plan template gives you the key elements to include in a successful Vacation Rental business plan. It can be used to create a short term rental business plan, a long term rental business plan or a plan for any kind of vacation properties.
You can download our Business Plan Template (including a full, customizable financial model) to your computer here.
Below are links to each of the key sections of a business plan for vacation rental businesses. Once you create your plan, download it to PDF to show banks and investors.
I. Executive Summary – The Executive Summary provides a brief overview of your vacation rental property and your value proposition.
II. Company Overview – The company analysis includes a detailed overview of your business venture including your legal structure and vacation rental properties.
III. Industry Analysis – This section will include market research that provide insights into market trends and the vacation rental industry.
IV. Customer Analysis – The customer analysis provides an overview of your target customers and rental market.
V. Competitive Analysis – The competitive analysis will identify your direct competitors and highlight your competitive advantage and unique selling points.
VI. Marketing Plan – The marketing plan includes your marketing strategy and advertising tactics.
VII. Operations Plan – The Operations Plan will include information on your property management services, processes, business goals and milestones.
VIII. Management Team – The management team section includes your team’s backgrounds, qualifications, and responsibilities.
IX. Financial Plan – The financial plan includes financial projections, a cash flow statement, profit and loss statement and balance sheet.
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Vacation Rental Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan
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The Complete Vacation Rental Business Plan (+ Template)
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What’s in this article?
Creating a vacation rental business plan isn’t just about securing financing or finding properties to manage; it’s also about having a roadmap for business growth.
Business plans anticipate possible mishaps so that you can prepare for them in advance. They also let you set milestones to guide your business development. Finally, vacation rental business plans can help you secure financing to fuel your business’ growth.
A business plan takes time and it can be intimidating to know where to start, but it doesn’t have to be. If you’re wondering where to begin or what to include, we’ve got your back! Using this comprehensive guide, you can develop a vacation rental business plan using the downloadable template provided.
Click to download (It’s free!)
Vacation rental business plan template.
What is a vacation rental business plan?
A vacation rental business plan describes the steps to reach your financial, marketing, and business goals . It should assist you and potential investors in understanding your short-term rental business’s profitability.
Along with describing the goals, strategy, and tactics, you should also use this plan as a guide to ensure you’re headed in the right direction.
Why do you need a vacation rental business plan?
A vacation rental business plan prepares you for the future as it anticipates goals, milestones, and possible mishaps. But a vacation rental business plan can also help you secure financing, plan for the long term, set clear goals that increase your chance of success, and budget sensibly.
1. Secure financing
Just like you wouldn’t lend your car to a friend who doesn’t know how to drive; banks won’t lend you money if you can’t prove that you’ll pay them back.
A vacation rental business plan is a way of letting potential investors know that you have a strategy in place to build a profitable business.
2. Plan for the long term
Planning for business growth allows you to choose tools and systems from the beginning that will scale with you. For example, without long-term planning, you might end up having to change your property management system (PMS) in the future as the needs of your business outstrip the feature set of the cheap solution you chose without future growth in mind. Being able to plan for what you’ll need as you grow will ultimately save you time and money.
3. Set clear goals
It’s easier to achieve success if you first define what success looks like and give yourself clear goals to work towards. These goals should be measurable and achievable, for instance, establishing you need a 60% occupancy rate in your first year to cover costs. If you’re succeeding in meeting some of your goals but falling short when it comes to others, you’ll be able to identify where you need to make changes in your business.
4. Budget with confidence
Running the numbers and having a plan that backs up your vacation rental property investment reduces the luck element of buying real estate. Having a business plan with financial projections allows you to allocate a realistic budget for renovations, furnishing, decoration, software, permits, and staff.
A business plan will help you anticipate cash flow issues you may face. For example, as your reputation builds, your property may have fewer bookings at first, so some expenses will be out of pocket.
What to consider before creating a business plan for your short-term rental business
Before you start writing your business plan for your STR business, you should:
1. Do your research
Make sure you research to understand local laws, the challenges presented by the location of your properties, and the types of units you’re going to be investing in.
Review local laws, regulations, or restrictions before buying a second property or turning your home into a short-term rental business .
You should also look into what’s being discussed in the media about the market you’re researching. There may not be a law yet, but there are rumors that vacation rentals will be prohibited and you should know about it.
Location can also determine your rental’s profitability. If you buy or manage a vacation property in an up-and-coming location, or a place that has a nearby attraction, your place might be in high demand. Location is also important when looking for possible cleaners or maintenance workers. A cabin in the woods sounds nice until no one wants to drive there to clean it or fix a broken pipe.
Type of unit
You should look at the market to understand which types of units you should be managing and what challenges they present, as well as how profitable they might be. You can rent nearly anything:
- Tree houses
- Glamping domes and yurts
- Apartments of different sizes
- Family homes
- A night in a Tesla parked in your garage ( yes, really )
Compare existing listings against similar units in your location to get an idea about how much guests are willing to pay to stay in them, how much demand exists in your area, and what amenities will set you apart from the rest.
Furnishing and renovations
Determine how much money and time you’ll need to renovate and furnish your unit. Find out what sort of amenities are expected in your area and what extra things you could invest in to give yourself a competitive advantage.
2. Choose your business model
If you’re buying properties to rent rather than simply managing properties on behalf of owners, there are several different business models to consider:
- House Hacking. If you’re accessing a loan for buying your primary home, you might get to invest less money but you’ll need to use the property as your home. In that case, you can use house hacking to rent your guest room or your studio to reduce the mortgage out-of-pocket payments.
- Glamping. Some countries offer loans for purchasing glamping domes or yurts. It’s also less expensive than purchasing a property and it can be quite profitable. You can rent your dome or yurt from $150-400 a night.
- Rent your property. If you take out a loan for a vacation home , you can rent the property to pay for the mortgage and make a profit.
- Rental arbitrage. This STR business model requires almost no initial investment from your end other than the costs related to renting an apartment. In the rental arbitrage model, you sublet an apartment on Airbnb , Vrbo , or any other OTA to pay for rent and make a profit. Your landlord should be notified and give you written consent if they approve.
3. Consider financing options
Your vacation rental business plan is also a way to pitch your company to potential investors. If you’re about to start a property management company , creating a business plan is a great way to formalize it.
Depending on your business model , you’ll have access to different financing options that have very different initial payment rates. When you know how much money you can invest upfront and who your target investors are, you can tailor your vacation rental business plan accordingly.
4. Determine profitability
Before you buy or agree to manage any rental property, you should run a competitive analysis to determine if it’s going to be profitable. You can use tools like Vrolio or AirDNA to estimate expenses, nightly rates, and estimated occupancy. Make sure you run your calculations on cautious scenarios. Never estimate 100% of occupancy. If it’s your first STR, estimate vacancy at around 45-50% .
Even Rob Abasolo from Robuilt who has various successful STR properties doesn’t run estimates assuming a perfect year. “I wouldn’t calculate my numbers based on a 100% occupancy rate ,” Abasolo shared. “When I’m running the numbers to see if a deal works, I’m typically running my calculations at an 80% occupancy rate .”
What to include in your short-term rental business plan?
Your business plan is a living guide that contains all your goals for your business and how you plan to achieve them. That’s why it contains goals, milestones , and an initial financial forecast. It’s an outline of what you’re planning to do, why you’re doing it, and how you’re going to succeed. You can present this as a one-pager or a longer form shareable document.
1. Executive summary
This section is an overview of your business, you should mention:
- Who you or the property owners are
- The skills you excel at
- Your experience in the business
- Your short and long-term objectives
- The location of your vacation rental (mention nearby attractions)
- Your business model (house hack, glamping, second home, or rental arbitrage)
- A broad description of your guest persona
- If it’s a seasonal rental, for example, a beach house for summer
2. Company description
In this section, you should get into more detail about your company. Talk about your mission statement, unique selling point ( USP ), and value proposition (more on this later!)
If this is your first investment property, create those statements and include them here. You can adjust future plans as your business grows.
3. Business goals
The first two sections of the business plan give readers a broad overview of where your business is headed. Here is where you get to explain in detail what you’re aiming to achieve with your vacation rental.
You can follow any goal-setting methodology that you prefer—S.M.A.R.T, H.A.R.D, or W.O.O.P. The important thing is that you set objectives for different aspects of your business. Answer the questions below to get some ideas:
- What’s your minimum acceptable CoC return?
- What’s the minimum occupancy rate you need to meet your expenses?
- What’s your expected monthly profit?
- What percentage of your total revenue goes into operations and expenses?
- Do you need to hire a team? If so, how will you rate their performance?
- What are the tools that you need to learn how to use?
- What aspects of your business can be automated?
- How are you planning to improve the guest experience?
- Are your listings SEO optimized? How are you measuring success?
- Will you promote using a mix of niche and popular OTAs ?
- What’s your plan to increase direct bookings?
- Are you using social media to promote your listing?
4. Guests personas
A huge part of marketing your property is defining who you are talking to. Do you want your property to be used by families, expats, digital nomads, or college students?
Defining your guest persona allows you to determine your value proposition , unique selling points , and marketing strategy . Include their:
- Behavioral characteristics
- Booking habits
- Preferred OTA
If you have a pet-friendly property and you want to attract dog owners, then, your marketing strategy will be more successful if you promote on niche listings like BringFido along with global listing sites.
5. Value proposition
Your value proposition is how your guests will perceive your property compared to others. Why should guests choose your property? What’s your added value?
Maybe you offer flexible check-in or you offer a discount to the local museum. Define how you’re improving the guest experience and write it down, that’s your value proposition .
6. Competitive analysis
Analyze your competitors and the industry to determine what makes your property different from others and how you can position that difference as a unique selling point ( USP ). This is different from your value prop. Your USP is how you’ll differentiate your property and listing when you’re selling it; the value proposition is how you’ll improve the overall guest experience.
For example, let’s say you bought soundproof windows and a memory foam mattress that guaranteed a good night’s sleep, that’d be your value proposition. If you offer one free night to guests who book a three-day stay, it becomes your unique selling point.
You can use tools like Zillow and AirDNA to look into your local competitors and ask yourself if your property is better than other competitors because you:
- Is it easier to access using public transportation?
- Is it closer to the beach or the main city attraction?
- Is it downtown?
- Is the price -value ratio better than the competition?
- Does it have discounted rates on certain days of the week?
- Does it have better amenities?
- Does it look clean and new?
- Does it have a copy that converts?
- Is the description clear?
- Does it have professional photography?
You should also define which listing sites your competition is using and see if there’s any room for improvement.
7. Operations and teams
Your operation plan is a rundown of how you’ll operate your business, how much it’ll cost, and which tools you’ll use. Some tasks you should outline include:
- How are you going to account for everything that’s in your property?
- How are you planning to restock the lost or broken items?
- How many times a year will you do an inventory check?
- Are you hiring a team to work full-time on your property?
- Did you already hire a cleaning and maintenance agency?
- Are you managing your Airbnb using software ?
- How are you managing different channels and distribution?
- Are you outsourcing your operations to a property management platform like Hostfully?
- Do you have a tool to keep track of your accounting?
- Are you hiring someone to do it for you?
- How are you keeping track of your escrow, insurance, and taxes payments?
- Are you adding smart keyless locks, plugs, and lightbulbs to save time and power?
- How are you communicating with your guests?
- Are you building any automations ?
- Are you using a vacation rental management platform like Hostfully to automate guest messaging?
List all of your fixed and variable costs including:
- Mortgage payments
- Staff members (if any)
- Hospitality tools like property management system, channel manager , and dynamic pricing
- Utility bills (water, power, internet)
- Credit card installments for furnish
- Taxes and insurance
You should have that information from your research stage and your profitability analysis. Then, based on your total expenses, you determine the minimum and maximum nightly rates that you’re able to offer based on a safe estimated occupancy rate .
So, let’s say your expenses are $2,300 a month and you’re estimating a 60% occupancy rate . That means that you’re expecting your property is booked for at least 18 days each month. That makes the minimum nightly rate $128. If you compare against similar properties and your rate is too high, you should look into a different market, see where to cut expenses, or offer a premium experience.
9. Pricing and revenue management
There are tools like Vrolio that allow you to define your base nightly rate based on your expenses and your competitors automatically. A good tip is to launch your property with a low nightly rate to get eyeballs on your property, get momentum, and start collecting reviews.
Having a pricing strategy for your vacation rental lets you start with a low nightly rate and once you have a set of positive reviews that make your listing more accurate, you can start adjusting your prices . A great way to ensure your prices are adjusted to match demand is by using a dynamic pricing tool. If you’re using Hostfully as your property management software, you can do revenue management from the same platform due to our integrations with:
10. Financial plan for growth and scaling
This is the section that investors really want to see. It’s what determines if your STR business is a good investment. If this document is for personal use, this section is still crucial for defining milestones and keeping track of possible cash flow issues.
You should tell your previous history by managing your personal or business finances. At this point you need to answer these questions:
- Are you taking out a loan? What’s the interest rate? Is it fixed or variable?
- Do you have savings?
- Are you splitting the costs with someone else?
- What’s your expected yearly ROI?
- What’s your expected CoC return?
- What’s your cash flow forecast?
- What’s your expected monthly income after expenses?
- What’s your loss projection?
- What are the yearly milestones that you expect your business to reach?
- Did you do a cost analysis?
11. Marketing and distribution
Just like you would with any other business, you should think about marketing your property. For vacation rental businesses, marketing and distribution go hand-in-hand. Each listing site or online travel agency ( OTA ) has its own audience. For example, Vrbo is targeted at families, while Airbnb is more suited for millennials and freelance business travelers .
For your marketing plan you should answer the following questions:
- Where does your guest persona search when looking for a place to stay?
- Does your guest persona plan trips based on location or based on the property? (For example, are your guests staying at your place due to location? Or because you have a cool property?)
- Which online marketing channels are you using? Paid ads, social media , SEO ?
- Are you listing in niche and global OTAs ? Which ones?
- Is your listing copy snappy and inviting?
Every business plan should contain an appendix. Here’s where you should add any relevant documents, graphs, calculations, and pictures. You can also include additional information that supports your background or business experience.
Common mistakes to avoid when creating a short-term rental business plan
Whenever you’re writing a business plan for your STR, you should beware of these common mistakes and try to avoid them:
It’s common to allocate less money than needed to:
- Pay for software like a PMS, channel manager , and dynamic pricing tool
- Staff (if you have any)
- Furnishing and decorating your property
- Renovations if you buy a fixer-upper
It’s common to think that if you target everyone you’ll get more eyeballs on your listing and that will translate into bookings. That might happen once or twice, but if your potential guest can’t relate to your listing description they’re not going to book it. Targeting your listing to your guest personas and promoting your property in the right distribution channels is a more effective use of your time and money.
Everyone thinks that their property is better, prettier, and more comfortable than the others. It’s a common mistake to underestimate the competition. Doing a thorough competitor analysis is a good way to prevent this.
Unattainable financial goals
Short-term rental businesses are often profitable, but they’re not magical. Make sure the goals you’re setting for your business in the financial plan are attainable and realistic. For example, make estimates based on your least expensive nightly rate and the minimum needed occupancy rate .
Do you need a vacation rental business plan?
Whether you’re financing or using your savings to pay for your vacation rental property , you need to make a business plan to forecast growth. Your business plan should include:
- Executive summary and company description
- Business, financial, operation, marketing plan, and goals
- Guest personas and value proposition
- Competitive analysis of your competitors and the industry
- Expenses, pricing , and revenue management
- Appendix for additional information
If you’re planning to automate parts of your business, consider incorporating Hostfully into your operations plan . We’re a vacation rental software that lets you automate your day-to-day admin tasks, manage different channels, and do dynamic pricing all in one place.
Frequently asked questions about vacation rental business plans
Do i need a vacation rental business plan.
You need a vacation rental business plan to outline your business milestones and goals. This document will be your guide in terms of how to manage your STR marketing, operations, and finances.
Having a vacation rental business plan helps you anticipate cash flow issues and see progress toward financial goals.
What does a vacation rental business plan include?
A vacation rental business plan includes twelve different sections to outline your strategy and tactics to make your business profitable. These sections are:
- About section or executive summary
- Company description
- Business goals
- Guest personas
- Value proposition
- Competitive analysis
- Operations and teams
- P ricing and revenue management
- Financial plan for growth
- Marketing and distribution
- Press & Podcasts
- Affiliates & Referrals
- Customer Support
- API Documentation
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Vacation Rental Business Plan Template
Written by Dave Lavinsky
Vacation Rental Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their vacation rental companies.
If you’re unfamiliar with creating a vacation rental business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a vacation rental business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your vacation rental business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a vacation rental business or grow your existing vacation rental company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your vacation rental business to improve your chances of success. Your vacation rental business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Vacation Rental Businesses
With regards to funding, the main sources of funding for a vacation rental business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for vacation rental companies.
How to Write a Business Plan for a Vacation Rental Business
If you want to start a vacation rental business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your vacation rental business plan.
Your executive summary provides an introduction to your vacation rental property business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of vacation rental business you are running and the status. For example, are you a startup, do you have a vacation rental business that you would like to grow, or are you operating a chain of vacation rental businesses?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the vacation rental industry.
- Discuss the type of vacation rental business you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
In your company overview, you will detail the type of vacation rental business you are operating.
For example, you might specialize in one of the following types of vacation rental businesses:
- AirBnB rentals: This type of business uses a platform such as AirBnB to market and rent out their vacation home properties.
- Luxury rentals: This type of business specializes in high-end vacation rentals of homes, condos, or villas.
- Beach house rentals: This type of business rents houses or condos for popular tourist destinations along the beach.
- Cabin rentals: This type of business specializes in renting out cabins for tourists going camping, skiing, or looking for a more secluded getaway.
In addition to explaining the type of vacation rental business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of clients served, the number of rentals booked, reaching $X amount in revenue, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry or market analysis, you need to provide an overview of the vacation rental industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the vacation rental industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your vacation rental business plan:
- How big is the vacation rental industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your vacation rental business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your vacation rental business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, schools, families, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of vacation rental business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other vacation rental businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other options for vacationers such as hotels, resorts, and RV parks. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of customers do they serve?
- What type of vacation rental business are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you make it easier for customers to book your rentals?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a vacation rental business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of vacation rental company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide amenities with your rentals such as food service, transportation, or housekeeping services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your vacation rental company. Document where your company is situated and mention how the site will impact your success. For example, is your vacation rental business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your vacation rental marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your vacation rental business, including answering calls, booking rentals, billing clients and collecting payments, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth rental, or when you hope to reach $X in revenue. It could also be when you expect to expand your vacation rental business to a new city.
To demonstrate your vacation rental business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing vacation rental businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a vacation rental business.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you keep an inventory of 10 vacation rental homes, and will you charge higher prices during peak seasons? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your vacation rental business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a vacation rental business:
- Cost of equipment and office supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of amenities and tourist attractions near your rentals.
Writing a business plan for your vacation rental business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the vacation rental industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful vacation rental business.
Vacation Rental Business Plan FAQs
What is the easiest way to complete my vacation rental business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your vacation rental business plan (or short term rental business plan).
How Do You Start a Vacation Rental Business?
Starting a vacation rental business is easy with these 14 steps:
- Choose the Name for Your Vacation Rental Business
- Create Your Vacation Rental Business Plan
- Choose the Legal Structure for Your Vacation Rental Business
- Secure Startup Funding for Vacation Rental Business (If Needed)
- Secure a Location for Your Business
- Register Your Vacation Rental Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Vacation Rental Business
- Buy or Lease the Right Vacation Rental Business Equipment
- Develop Your Vacation Rental Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Vacation Rental Business
- Open for Business
Don’t you wish there was a faster, easier way to finish your Vacation Rental business plan?
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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
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Other Helpful Business Plan Articles & Templates
Vacation Rental Business Plan Template
Vacation rental business plan.
You’ve come to the right place to create your Vacation Rental business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Vacation Rental companies.
Below is a template to help you create each section of your Vacation Rental business plan.
Liberty Vacation Rentals is a vacation rental company located in Boston, Massachusetts. We rent residential properties around landmarks and points of interest to provide convenient lodging for travelers. Our accommodations can be rented daily, weekly, or monthly. We also offer bed and breakfast-style rooms in addition to whole-property rentals. No matter how long you visit the exciting and historic city of Boston, you’ll enjoy a luxurious experience that will feel like a home away from home.
Liberty Vacation Rentals is led by Andrew Collins, who is a licensed real estate broker with 20 years of experience. He has spent much of his career working in different real estate agencies where he specialized in rentals for 5 years before specializing in vacation sales for the next 10 years. His skills and experience will make him invaluable to our company’s mission.
Liberty Vacation Rentals will offer luxurious vacation rentals for residents and tourists of the Boston, Massachusetts area. We offer several different property types:
We offer waterfront rental properties as well as properties located near downtown and historical landmarks. We also have bed-and-breakfast-style properties in addition to whole-property rentals.
Liberty Vacation Rentals will primarily serve tourists and business travelers that visit the Boston area. About 23 million people visit Boston every year, meaning there is an incredible demand for vacation rentals and other accommodations. Many tourists, especially those who are affluent, are looking for lodgings that are comfortable and luxurious. Liberty Vacation Rentals will offer these lodgings so that our properties can feel like a home away from home.
Liberty Vacation Rentals’ most valuable asset is the expertise and experience of its founder, Andrew Collins. Andrew has been a licensed real estate broker for over the past 20 years. He has spent much of his career working in different real estate agencies where he specialized in rentals for 5 years before moving to specialize in vacation sales for the next 10 years.
Liberty Vacation Rentals will also employ an experienced assistant to help with various administrative duties around the office and several contractors that will lead the repairs and renovations that need to be done.
Liberty Vacation Rentals will be able to achieve success by offering the following competitive advantages and unique selling points:
- Location: Liberty Vacation Rentals’ location in the downtown area is central to historical landmarks, tourist attractions, corporate centers, shopping districts, and restaurants.
- Business Amenities: All of Liberty Vacation Rentals’ vacation properties have basic business amenities including high-speed internet.
- Management: The management team has years of business and marketing experience that allows the company to market and serve customers in the same manner as its most sophisticated competitors.
- Relationships: Having lived in the community his whole life, Andrew Collins knows all of the local leaders, as well as many of the area’s newspaper reporters and other influencers. As such, it will be relatively easy to build the Liberty Vacation Rentals brand.
Liberty Vacation Rentals is seeking a total funding of $350,000 to launch the business. The capital will be used for funding capital expenditures, salaries, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office space build-out: $50,000
- Office equipment, supplies, and materials: $50,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $50,000
- Working capital: $50,000
Who is liberty vacation rentals.
Liberty Vacation Rentals is a vacation rental business located in Boston, Massachusetts. We rent residential properties around landmarks and points of interest to provide convenient lodging for travelers. Our accommodations can be rented daily, weekly, or monthly. We also offer bed and breakfast-style rooms in addition to whole-property rentals. No matter how long you visit the exciting and historic city of Boston, you’ll enjoy a luxurious experience that will feel like a home away from home.
Liberty Vacation Rentals’ History
After working as a real estate broker for 20 years, Andrew decided to start a new company that offers luxurious vacation rentals in the Boston area. He knew that Boston was a prime location for tourism and that there never seems to be enough accommodations to keep up with demand. He scoped out the areas for properties that would be valuable- specifically luxurious properties that are located near historical landmarks and the waterfront.
In March 2023, Andrew Collins incorporated Liberty Vacation Rentals as an S corporation. Since incorporation, the company has achieved the following milestones:
- Acquired a centrally-located office from which to operate Liberty Vacation Rentals headquarters
- Began recruiting key employees
- Acquired rental contracts with 10 different residential properties
Liberty Vacation Rentals Services
We offer waterfront properties as well as properties located near downtown and historical landmarks. We also have bed-and-breakfast-style properties in addition to whole-property rentals.
Over the past five years, the Vacation Rental industry has grown steadily, despite the challenges of the COVID pandemic. According to Allied Market Research, this growth is expected to continue as the Vacation Rental industry is expected to grow at a CAGR of 12.4% from now until 2031.
Millennials are the major force in boosting the growth of the vacation rental industry. Rising expenditure on travel, vacations, and accommodation among this generation is fueling the market growth. Travelers in this demographic are more inclined towards vacation rental property over hotels owing to the comfort, low cost, and additional privacy of these accommodations. In addition, many rental properties accept pets for additional fees or a security deposit and feature fenced backyards.
Furthermore, now that the world has moved on from the pandemic and the economy is recovering, people are eager to spend their disposable income on travel. They are more willing than ever before to spend top dollar to have the ultimate travel experience. This includes paying higher costs for more luxurious vacation rental accommodations. Due to all the above factors, the Vacation Rental industry is in a prime position to grow significantly and be highly profitable over the next decade.
Demographic profile of target market.
Liberty Vacation Rentals will serve tourists who travel to the Boston area. Many of these travelers are affluent, or at least have enough disposable income to travel to this historic city.
Liberty Vacation Rentals will primarily target the rental market, which consists of the following customer profiles:
- U.S. tourists
- International tourists
- Business travelers
Direct and indirect competitors.
Liberty Vacation Rentals will face competition from other companies with similar business profiles. A description of their direct competitors is below.
Boston Rentals is a luxury vacation rental company nestled just outside of Boston. They have a total of 10 rentals that all offer luxury accommodations. They are conveniently located near the airport, Boston College, and other popular tourist locations. Tourists who rent out these properties can expect elegant amenities, such as walk-in tiled showers with heated floors, soaking tubs, quality linens, fireplaces, outdoor grills, convenience kitchens, original artwork, XM Radio, Direct Dish Satellite, 32″ plasma flat screens, wi-fi, and large furnished screened in porches.
Established in 1928, MA Cottages is a collection of individual cabins strewn around Massachusetts. Each one offers a cozy cabin experience but is also equipped with wifi, satellite TV, heating and cooling, and modern bathrooms. Depending on the size, each cottage can accommodate anywhere from 2 to 8 guests. Though many of the cottages are nestled in more rural areas, they still offer easy access to Boston and other historic locations.
Bayside Houses is a local vacation rental company that offers house rentals along the bay. The houses can accommodate up to 10 people. Each kitchen is fully equipped and the living rooms have stereo and wifi access. Some houses have pools and other luxurious outdoor amenities. Each home is kept in perfect condition and offers a stunning view of the bay area near Boston.
Liberty Vacation Rentals will be able to offer the following advantages over their competition:
Brand & value proposition.
Liberty Vacation Rentals will offer a unique value proposition to its clientele:
- Offering rooms and entire residences suited for tourists and business travelers
- Offering multiple properties for rent in Boston, Massachusetts
- Providing excellent customer service
- Offering properties near the waterfront and historical landmarks
The marketing strategy for Liberty Vacation Rentals is as follows:
Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The company will advertise its products in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Website & SEO Marketing
The company will utilize the website and SEO to attract new customers. The website will be easy to navigate and provide all the information and pictures needed to show our properties’ amenities. The SEO strategy will also be managed to ensure that anyone searching “vacation rentals near me” or “vacation rentals near Boston” will see our company listed at the top of the Bing or Google search engines.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The company will use social media to develop engaging content, such as educational content about Boston and customer reviews that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand changing customer needs.
Offers and incentives are an excellent approach to assisting businesses in replenishing the churn in their customer base that they lose each year. The company will introduce special offers to attract new consumers and encourage repeat bookings, which will be quite advantageous in the long run.
The company’s pricing will fluctuate based on the season and occupancy percentages using a computerized yield management system. However, pricing will always place the Liberty Vacation Rentals in the mid-range, below luxury offerings, but above motels and other cheap accommodations in the area. Customers will feel they receive great value when patronizing our vacation rentals.
The following will be the operations plan for Liberty Vacation Rentals.
- Andrew Collins will be the Owner and President of the company. He will oversee all staff and manage the general operations of the company, as well as property management. Andrew has spent the past year recruiting the following staff:
- Jacqueline Miller will serve as the Office Manager. She will manage the office administration and accounts payable. She will also handle much of the marketing efforts until the agency becomes large enough to hire a marketing team.
- John Bell will be the Property Manager and Maintenance Director, who will provide all maintenance at the properties.
- Maria Hernandez will be the Customer Service Manager. She will manage all customer relations, including confirming bookings and answering questions.
- Andrew will outsource professionals to handle the accounting and human resources aspects of the business.
Liberty Vacation Rentals expects to achieve the following milestones in the following six months:
5/202X – Finalize purchases of initial vacation rental properties 6/202X – Finish all required maintenance and renovations 7/202X – Kickoff promotional campaign 8/202X – Hire and train initial staff 9/202X – Open Liberty Vacation Rentals 10/202X – Reach break-even
Key revenue & costs.
Liberty Vacation Rentals’ revenue will come from charging daily fees to customers who rent out our properties. The major costs for the company will include staff salaries, property maintenance, and brand-building. In the initial years, the company’s marketing spending will be high, as it establishes itself in the market.
Funding Requirements and Use of Funds
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Annual lease costs: $100,000
- Average annual property maintenance costs: $50,000
- Average number of customers per day:
Income statement, balance sheet, cash flow statement, vacation rental business plan faqs, what is a vacation rental business plan.
A vacation rental business plan is a plan to start and/or grow your vacation rental business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections. You can easily complete your Vacation Rental business plan using our Vacation Rental Business Plan Template here .
What are the Main Types of Vacation Rental Businesses?
There are a number of different kinds of vacation rental businesses, some examples include: AirBnB rentals, Luxury rentals, Beach house rentals, and Cabin rentals.
How Do You Get Funding for Your Vacation Rental Business Plan?
Vacation Rental businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Vacation Rental Business?
Starting a vacation rental business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Vacation Rental Business Plan - The first step in starting a business is to create a detailed vacation rental business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your vacation rental business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your vacation rental business is in compliance with local laws.
3. Register Your Vacation Rental Business - Once you have chosen a legal structure, the next step is to register your vacation rental business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your vacation rental business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Vacation Rental Equipment & Supplies - In order to start your vacation rental business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your vacation rental business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.