How to Start a Profitable Vacation Rental Business

No matter where you are, the chances are there’ll be people traveling to your area, and will be looking for a place to stay. Starting a vacation rental business allows one to tap into the tourism market, and start a profitable venture that can easily turn into a fully functional business. 

What is a Vacation Rental Business? 

Vacation rentals are privately owned properties that are rented out on a short-term basis. Vacation rentals owners invest their time and money into these properties to try and boost revenue through getting regular bookings. 

Vacation rental owners generally list their properties on services such as Airbnb or Vrbo. These platforms are the first places people look when they are looking for travel accommodation, so they provide a greater chance of your property being noticed. There are also several other services like the ones previously mentioned. 

Let’s talk about the most important actions that need to be taken to run a vacation rental business efficiently and on a profitable basis. 

Find out about Regulations and Legal Requirements within your City

Vacation rental owners need to ensure that they are up-to-date with their local regulations and restrictions when it comes to short-term rentals, as going against the legal requirements can result in hefty penalties. 

In terms of how vacation rentals are taxed, this should also be understood clearly. Tax laws and regulations will alter in different states/cities. If you rent out your property throughout the year, this should be reported to the IRS.

Prepare a Clear Business Plan

Once all the legal considerations have been accounted for, one can begin the process of preparing a vacation rental business plan.

This is not a straightforward process, as many factors need to be considered. Here are some of the key factors to take into account when developing a business plan for your vacation rental: 

  • Consider Your Location

Think about how appealing your area is in terms of tourist attractions, things to do, or even the climate. These factors will determine how popular the area is to visit, which will ultimately determine the potential of your short-term rental business.

  • Determine Your Target Audience

Any business needs to consider who their product would appeal to the most. Once this is done, marketing efforts can be allocated accordingly. 

Vacation rental owners need to figure out what the key attractions are to their specific area, and by doing this, they can figure out who their target audience will be. 

  • Research Demand and Supply 

In terms of demand, this comes down to how appealing your area is, and how many travelers are looking for accommodation within your region. 

One also needs to consider the supply of vacation rentals within the area, as this will play a direct role in determining your occupancy rates. As a new entrant to the market, vacation rentals owners may need to charge lower prices, as this will often be the most attractive option to tourists. 

  • Seasonality

Vacation rental property owners should look to raise their rates during the peak season, and lower their rates during the season where tourism is low. This will play a massive role in ensuring consistent occupancy rates throughout the year.

  • Operational Costs

Running a vacation rental business requires plenty of maintenance and administration, and this needs to be taken into account when developing a business plan.

Some examples of operational costs could be electricity, water, and the costs of repairs within the property.

  • Costs Involved in Starting a Vacation Rental Business

Listing your property on a service such as Airbnb doesn’t cost anything, however, they will take a percentage of your rental fee.

There are several other costs associated with starting your vacation rental business, such as furnishing your property, supplying the necessary amenities, or cleaning costs. You’ll want to make sure that your vacation rental is as attractive as possible, as this will leave a positive reputation for your property which will benefit your occupancy rate majorly. 

Investing in the necessary insurance is also something that needs to be done. This will ensure that you’re covered for anything that could potentially go wrong during the rental process. 

  • Cleaning and Maintenance

Cleaning and maintenance are two fundamentals of vacation rental management, and should never be overlooked. If you decide to list your property on a service such as Airbnb, or Vrbo, you’ll quickly become aware of their review system – and one bad review can do more harm than you think. 

Get Your Property Ready For Guests

As mentioned, you’ll need to make sure that your property is in impeccable condition whenever your new guests are arriving. Along with this, you’ll want to make sure your guests are impressed before they even enter the door. 

Here are some tips on how to make sure your property is ready for your guests:

  • Consider Keyless Entry 

Smart Locks and Keyless door locks are here and this means you won’t have to meet your guests as they arrive. For example, EveryDoor is a service that automates keyless access to any property. 

  • Provide Necessary Amenities

Television and WiFi are considered to be mandatory in today’s age. Along with these, make sure you provide the necessary toiletries, linen, and other basics that you would expect in your own home. 

  • Provide a Welcome Book

A welcome book can help your guests feel comfortable in your space. It can also present you as a more caring and thoughtful host. 

A welcome book should provide information about property rules, emergency contacts, instructions relating to amenities, and some local knowledge about the area. 

Advertise Your Vacation Rental 

There are a few essential actions that can be taken to get your property out there to potential guests. These include: 

  • Multi-Channel Listings

For example, listing your property on both Airbnb and will mean your property is exposed to browsers of both platforms. 

  • Writing Engaging Titles and Descriptions

This plays an essential role in the first impression that your property will receive. Creating a title that appeals to your target audience can lead them to want more information about your property. 

In terms of the description, this needs to be equally compelling. Keep it concise and highlight the key benefits of staying at your property.

  • Investing in High-Quality Photography

This is the first thing that your potential guests will look at, so you’ll want to portray your property the best way you can. 

Rather than doing it yourself, get a professional photographer. 

Manage Your Vacation Rental

The process of managing your vacation rental business can become a complex one as your occupancy rates grow and you potentially branch out by investing in other properties. 

The management process can be made a lot easier by using vacation rental management software. This software automates several repetitive tasks, as well as eliminating the chance of human error. 

Here are just a few of the features of vacation rental management software: 

  • Direct Booking Management

Manage your bookings in an organized manner and remove the threat of double bookings.

  • Payment Processing and Invoice Management

Tracking of payments and invoice management is made effortless. 

  • Smart Guest Communication

The messaging process can be automated, meaning your guest’s queries can be answered quickly. 

  • Cleaning and Team Management

Setting tasks for your staff can be done in an organized manner, and this will help ensure your property is ready for your next guests. 


Running a vacation rental business can be an incredibly rewarding experience, however, the longevity of your business revolves around efficient and organized management. 

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