12 Key Steps to Maximizing Vacation Rental Income

You bought your first real estate investment property and turned it into a vacation rental in hopes of generating a steady flow of income. A few months in, you can there’s potential to earn even more from your property.

The only catch: you don’t know how.

You’ll maximize your vacation rental income when you spend less time doing the operational work and more time strategizing business expansion. Think of it as automating the grunt work, adding a personal touch to elevate your guest experience, and marketing your property better.

Several factors like these can create a massive impact on your finances. This article will walk you through 12 such steps to shoot up your revenue exponentially.

We’ll cover:

What is a good profit margin for vacation rentals?
How to maximize your vacation rental income in 12 steps

What’s a good profit margin for vacation rentals?

Before we jump into the best ways to increase your vacation rental revenue, let’s first understand what you should ideally aim for.

A 10-20% return on investment from your vacation rental property is considered a good profit margin. Here’s how you can calculate the ROI for your property:

Calculate the annual rental income by multiplying the average monthly income by 12 or the weekly income by 52
Calculate one-time and recurring costs and expenses for the entire year
Subtract costs from the annual income to calculate profits, then divide the remaining amount by the original price of your property

So, let’s consider you own a vacation rental cabin in Spain worth $200,000. The average annual income from this property is $50,000, while your expenses amount to $20,000. Your total yearly profit is $30,000. When you divide the original cost ($200,000) by the profit value, the ROI percentage comes to 15%.

How to maximize your vacation rental income in 12 steps

While many people invest in a short-term rental (STR) property to earn passive income, maximizing this income takes a lot of proactive strategizing. We’ve done the legwork for you if you’re just getting started with revenue maximization and don’t know where to begin.

Let’s look at 12 best practices to scale your income without increasing your stress or workload:

1. Use automation to scale your business

The easiest (and most obvious) way to maximize your vacation rental revenue is by increasing the number of properties you own. More properties mean more income. But most hosts cannot expand their STR business because of the time and effort required to manage a single property. This is where automation can help you.

Automating different processes can significantly ramp up your operational efficiency and win back the hours spent on administrative work. Here’s how automation can help:

Channel distribution. With an automated channel manager, you can update your listings regularly, accurately track your occupancy, and enhance your property’s discoverability across different channels.
Keyless check-in. Smart locks allow guests to skip the long queues at the front desk and check-in safely into the property. You can also get real-time updates about their presence to schedule cleaning jobs.
Seamless guest communication. Automated messaging increases your response rate and assures guests that you’re always available—leaving a great impression about your hospitality.
Cleaning management. Automation also works to your advantage to effortlessly coordinate with your cleaners. With tools like Operto Teams, you can automatically set up cleaning jobs based on occupancy.

Jetstream integrates with Operto Teams to automate resource management and inter-team coordination.

2. Market your properties strategically

The demand for vacation rentals is booming—as evident by the fact that by 2025, every one in five people will have stayed in at least one vacation rental. As the demand grows, so does the competition.

So, how do you create a standout property that attracts more guests and increases your income? The short answer: through a kick-ass marketing strategy.

Here’s how you can level up your marketing game and tap into the rising demand in the vacation rental industry:

Be crystal clear about your guests. The first step to marketing your property well is to define exactly who you’re selling to. Identify the ideal target demographics and create guest personas for your marketing campaigns.
Let your social media shine. Think of social media as a springboard to spread the word about your vacation rental brand. Create a solid first impression and use these channels to show potential guests everything your property offers—whether it’s scenic views, immaculate rooms, or memorable experiences.

Here’s how Willmount Cabin appeals to interested buyers on Instagram. Its profile includes professional photos of the interior designs of the property and glimpses of the guests’ experiences, along with guest stories and reviews added in the story highlights.

Willmount Cabin uses professional photography to show interested guests the exquisite scenes they can enjoy at the property.

Leverage Airbnb SEO. Ranking high on the search results on the Airbnb app can bring more eyes to your property and potentially more bookings. So, add HD photos, deliver prompt communication, offer competitive pricing, and achieve the Superhost status to win over the Airbnb SEO algorithm.
Create a mailing list. Email marketing makes it easy to build long-term guest relationships and get repeat bookings or referrals from them. Maintain active communication with all your past guests through interactive and personalized email campaigns.

Put simply, effective marketing tactics can generate more buzz for your property. With great experience and reviews, you can easily translate this buzz into profits.

3. Get listed on more platforms

The oldest trick in the marketing playbook is to meet your audience where they are. Instead of pushing would-be guests to visit your Airbnb listing, you can potentially skyrocket occupancy rate—and your bottom line—by listing your property on multiple platforms.

Distributing on multiple channels protects you against random algorithm updates and sudden dips in click-through rate. To take your listing beyond Airbnb, you need a solid distribution strategy. Decide which platforms you want to post your listing on. This should align with your target demographics and their preferred booking channels.

Once you’ve shortlisted all the channels for distribution, you need a channel manager to sync and update your listings on every platform automatically.

An efficient service like Jetstream diversifies your audience across channels and saves you the manual effort of managing individual listings on every platform.

Jetstream does all the legwork to distribute and manage your listings on multiple platforms.

4. Update and optimize your listings

Putting up a listing is only the first step toward securing bookings. You have to spice up your listings to win higher search rankings and capture potential guests’ attention while they scroll through hundreds of options.

Here are a few tested tricks to optimize your listings to earn more clicks:

Make the title count: Your title should pique a user’s curiosity and excite them enough to browse the listing. Here’s an excellent example to follow.

5. Adopt dynamic pricing

Dynamic pricing uses machine learning algorithms to preemptively determine the demand for your property and update the nightly rates accordingly. This underrated tactic for revenue maximization has the potential to grow your income by 10-40%.

So, if there’s an event in town or an upcoming long weekend, a dynamic pricing tool like Wheelhouse will shoot up the pricing to make the most of the peaking demand. Wheelhouse gives you more control over your pricing with several customization options and powerful insights. What’s more, it comes as part of the Jetstream package.

Jetstream integrates with Wheelhouse to bring you over 10 billion data points to produce the most accurate pricing insights.

6. Charge extra for a pet-friendly space

Vrbo’s research shows a 50% increase in families traveling with their pets. Naturally, these travelers will search for properties using the “pet-friendly” filter. By allowing pets on your property, you can offer a much-needed amenity to your guests and unlock additional revenue for yourself.

Running a pet-friendly property requires extra costs related to maintenance and cleaning. This means hosts can charge extra for guests bringing their furry friends. Most pet parents agree to pay more for the privilege, so you can include an added cost in your rate while increasing your bookings for this sought-after amenity.

7. Add cleaning fees for more RevPAR

An additional cleaning charge can be another potential source of revenue maximization. This also shows prospective guests that you pay special attention to your property’s cleanliness. But adding a cleaning fee can backfire as well. Not all guests would agree to pay that extra amount.

Here’s how you can decide your cleaning fees without compromising on guest expectations:

Review your competitors’ charges and check if their fees are added separately or included within the final amount.
Compare your property’s size to other vacation rentals charging a cleaning fee. If it’s big enough, you can justify an additional amount for cleaning.
Analyze your cleaning facilities to assess the quality of cleaning fairly. You can charge an extra fee if you have a professional team of cleaners.

8. Screen your guests carefully

Reducing maintenance costs is another indirect way for hosts to increase profits. If you look at the main factors behind your maintenance expenses, damages caused by bad guests would probably be the biggest one.

But there’s an easy solution to minimizing these damages at your property: screening guests properly.

Guest screening might seem like an extra expense initially, but it’s a necessary investment to avoid bleeding out your revenue into fixing your property. You can vet every guest through a foolproof method, including essential checks like:

Contact details and ID proof
Length and purpose of the stay
Biometric tests to verify identity
Scans for emails and social profiles
Credit card verification and credit checks
Phone number and IP address verification

While this might seem an extensive process, you can automate and speed up guest screening with Autohost. The tool uses advanced algorithms and data intelligence to check your guest info without bias efficiently. With a solid screening process, you can easily cut down on unnecessary costs due to bad bookings and maximize the revenue.

Jetstream integrates with Autohost for fast and reliable guest screening that helps you steer clear of negative guest behavior.

9. Upsell perks and experiences

As with any business, upselling is a tried-and-tested way to increase your vacation rental revenue. You can upsell several amenities and experiences to your STR guests at different stages of their stay.

Let’s look at some common upsell opportunities:

Before the stay. Pickup and drop services to the property, parking at a discounted price, an early check-in for an additional fee.
During the stay. Rent-by-the-hour scooters for ease of travel or similar rental home offers, additional amenities like access to the pool, services like babysitting.
End of the stay. Option to extend the stay at a discount, a QR code to buy furniture available at the property.

Upselling your guests can elevate their overall experience while creating opportunities to generate additional revenue for you.

10. Personalize your guest experience with great communication

Communication takes the top seat in the list of factors affecting your performance as a host. In fact, maintaining a 90% response rate is one of the most crucial requirements for becoming an Airbnb Superhost.

You can significantly impact your guests and win 5-star reviews by adding a personal touch to your guest communication. Try these tips:

Automated messages. For example, you could send a pre-check-in message with the necessary instructions for guests getting ready to travel.
Guest profiles. Create super detailed guest profiles with the information you’ve gathered through interactions. Use these profiles to personalize your automated messages according to their details.
Instant messaging. Use social media platforms or instant messaging apps like WhatsApp to offer the convenience of quick communication.
Virtual concierge. Design a virtual concierge to give guests more control over their stay and get real-time assistance with any query or concern.

11. Get maximum five-star reviews

A sure-fire way to win your audience’s trust and maximize your revenue is to get more positive reviews. Getting great reviews creates a domino effect, bringing greater visibility, more referrals, and a surging number of bookings.

But how exactly can you get a 5-star review from each guest? By exceeding their expectations.

Use services like Operto Guest to share digital guides and local recommendations that enhance their itinerary. You can also add discount coupons for local eateries or destinations for guests to better experience the locale.

Jetstream integrates with Operto Guest, so you can create detailed guides and welcome books in multiple languages to help guests make more out of their stay.

12. Get more rebookings

Increasing the number of repeat bookings is another great tactic for revenue maximization. Offering discounts and referral codes can potentially increase your chances of getting a second booking from every guest, especially if they’re happy with the experience.

You can share these discount offers directly after their stay or during a low-demand season. This will go a long way in building healthy and long-term guest relationships.

This tactic works best for short-term vacation rental owners with their own websites. You can incentivize guests to book directly and avoid paying the booking fees on OTAs.

Revenue maximization made easy with Jetstream

The success of your revenue maximization tactics will depend on how well you’re able to list, distribute, and market your property, all while providing an amazing guest experience and scaling your business. Sounds exhausting.

Because maximizing your vacation rental revenue is a two-sided challenge when you’re already busy: you have to take steps to increase your profits without increasing your daily workload.

That’s why we made Jetstream. Armed with a powerful tech stack and a team of professionals, it does all the heaving lifting for you. So you can build your brand without losing any sleep.

Frequently asked questions about maximizing vacation rental revenue

What is the 1% rule for a rental property?

The 1% rule requires a property owner to earn at least 1% of the property’s purchase price in one month. A potential owner can make their investment only if the property can produce a 1% ROI.

What is a good way to advertise my vacation rental?

You can advertise a vacation rental in any of these ways:

Showcase your property’s indoor and outdoor views on social media
Take professional photos to best present your property to potential guests
Work on SEO to get organic visibility and traffic
Put your listing on multiple channels

How do you calculate the ROI of a vacation rental?

To calculate the ROI of a vacation rental, find out the annual revenue and annual expenses first. Then subtract the costs from the income to find your profits. Lastly, divide the property’s purchase price by the profits to see the yearly ROI.

12 Key Steps to Maximizing Vacation Rental Income - Jetstream (2024)