May 13, 2020
Hosts learned the value of switching to direct bookings the hard way.
After losing control of their business through OTAs’ aggressive cancelation policies and reactions to the crisis, hosts realized there’s more at stake than the commission they pay.
Having your own website allows guests to book with you directly, instead of through an online travel agency (OTA). Benefits of direct booking are:
- You don’t have to pay commissions
- You have full control over your short-term rental business
- You won’t be at risk if something happens to your listing on the OTA
Operators are afraid that direct booking sites will put them more at risk of hosting bad guests without the protection that some OTAs offer. Airbnb’s Host Guarantee covers up to $1 million USD of property damage. Without the OTA safety net, how can a host mitigate risk?
Hosts around the world have complained about the difficulty of getting OTAs to reimburse property damages. A South Carolina host claimed that Airbnb didn’t fully cover the damages he faced after guests threw a 100-person party. Even if it had reimbursed him the full amount, he still would’ve been responsible for cleaning and fixing his property. It’s risky to leave your property’s security in the hands of a third party.
The best security is proactive and done by the host and not an OTA. Fortunately, for hosts who allow direct bookings, there are ways for you to protect yourself more effectively than any OTA could.
1. Implement a guest-screening process
With the increase in vacation rental scams, you need to have a structured way of screening and verifying guests. At a basic level, this can include:
- Emailing guests and verifying that they reply from the same email address
- Calling guests and asking them questions about their upcoming travel plans
- Checking the area code of guests’ phone numbers
- Asking guests for a copy of their ID
- Running a background check*
*You should be careful with a background check. It’s not directly indicative of whether somebody will commit a crime on your property, and may leave you liable with the FCRA (Fair Credit Reporting Act).
If you’re still on the fence about someone after you’ve screened them, you can choose to meet them in person as a final check.
Manual guest screening can be a lengthy and tedious process, involving many different elements—but it can pay off. To paint a better picture of the guest-screening flow, here's an example:
Let’s say that someone reserves through your direct booking website. A first step could be entering the provided phone number into a validator tool to see if it’s a real phone number. (There are plenty of free tools available online.)
Then, check the area code of the phone number. Local reservations tend to be riskier since there’s almost no reason for someone to book a property when they live 20 minutes away.
While having a local number doesn’t mean a guest is a fraudster, it does raise some red flags.
Finally, you should call the guest. Fraudulent guests almost never answer the phone, preferring to text instead.
When they answer the phone, you can ask the guest a series of screening questions to verify their story.
For instance, if a guest is coming in by plane, consider asking for their flight number. You can phrase the question as you wanting to monitor their flight in case anything changes. The purpose of this is to check for inconsistencies. A guest who’s unable to give you their flight number or gives you a different one is probably fraudulent.
Benefits of Screening Guests
Screening guests may seem like a hassle since you’ll have to verify the identity and story of each guest. However, the benefits of doing so are long-lasting and can skyrocket your vacation rental business. Some benefits include:
- Improving your hosting reputation
- Removing unnecessary booking restrictions
- Cutting property damage and maintenance costs
For instance, hosting on NYE can be extremely lucrative. This upside potential, however, does come with the increased likelihood of parties.
While many hosts may refuse all one-night NYE bookings, doing so means losing out on significant revenue. Having a guest-screening process allows you to remove these restrictions while securing your ideal guests.
If you don't want to screen each reservation manually, you can always automate it. Tools like Autohost streamline the process, removing the grunt work for operators. (They also remove the possibility of human error.)
2. Get Short-Term Rental Insurance
While screening guests is a great way to proactively protect yourself, some bad guests may still sneak through. That’s why it’s advisable to get your own insurance policy to protect yourself in case anything happens.
Depending on your insurance carrier, your homeowners policy may provide limited coverage. Most insurance carriers, however, don’t cover short-term rentals, and those that do, don’t usually provide sufficient coverage. That’s why many hosts and operators end up getting additional insurance for their vacation rental properties.
There are many insurance policies available, and choosing one might be overwhelming. Take the time to research your options and figure out which one is best for your specific situation. If you struggle with legalese, it may be helpful to speak with a real estate lawyer to figure out the best plan for you.
3. Draft and Enforce a Host-Guest Contract
Beyond a screening process and insurance policy, you also want to have a host-guest contract that guests sign upon booking. This document should mention:
- Guests: Outline the registered guests. Any unauthorized people will be considered trespassing, which is a crime.
- Property: Describe your property and the amenities included. For instance, if you have a room that’s off-limits to guests, mention that in the contract.
- Check-In/Checkout: Include check-in/checkout dates and times. Mention any fees related to early check-ins or late checkouts. This will help you prevent squatters, especially if you offer mid-term rentals.
- House Rules: Explain your house rules. Having a clear list of what’s allowed/forbidden will help you to set expectations with guests. You'll also be able to punish guests for any violations.
- Costs: Break down the total costs, including rental costs, cleaning fees, and security deposits. That way, guests won't be able to claim you overcharged or had hidden fees.
- Deposits & Damages: Outline what the security deposit covers. You should explain what constitutes damage vs. reasonable wear and tear. This will allow you to enforce your security deposit policy, even if guests complain.
These are only some of the items you should include in your rental agreement. To make sure that you’ve covered all your bases and that the contract is legally binding, you should work with an attorney.
4. Use Smart Devices for Security
For additional protection, you may want to install smart devices to unobtrusively monitor your guests. Some ideas include:
Smart locks are installed on doors and are opened by punching in a code. Most smart locks can be managed remotely, allowing you to create and delete lock codes from your mobile device or computer. Some can even integrate with your channel manager. You’ll also be able to keep track of who uses what code to enter, so you know exactly who’s entering your property.
Combined with smart locks, doorbell cameras provide a great final layer of security. You can see who’s coming into your property at all times. So, if a guest makes a reservation for two, but five people show up, you can change the door code to prevent entry. Then, you can call your guest and inquire about the extra people.
With noise sensors, you can monitor noise levels within your property. Many noise sensors will notify you if the noise levels exceed a pre-set threshold, so you’ll know right away if a guest throws a party.
Protect yourself while maximizing revenue
With the right security measures in place, direct bookings can be safe and profitable. You’ll be able to host without fear of letting bad guests in.