April 27, 2020
Times are tough right now, there’s no doubt about it. And as the COVID-19 pandemic prolongs, it only seems to be getting worse for property managers. Cities are limiting the uses of short-term rentals and some buildings are banning them altogether. But rather than despair, this is a time for us to unite as an industry and provide one another with the necessary resources to succeed. To help you weather the pandemic, we reached out to the short-term rental industry’s leading experts, asking about their advice for struggling operators.
Switch to longer-term stays
To stay profitable, property managers need to “move their minds away from short-term rentals and into medium- and long-term rentals for the next six to eight months,” says Eric Moeller, co-founder of Short-Term Rental Legends, an event that brings together the industry’s most ambitious operators. Guests booking for a weekend is no longer the reality. To be sustainable, you need long-term guests looking to use your property as a safe place to weather the pandemic. To attract these kinds of bookings, think beyond your typical guests. Reach out to those in need: healthcare workers, stranded expats and families looking to quarantine.
Plan for the future
With bookings dropping off due to the pandemic, Dave Krauss, founder of Rent Responsibly, an advocacy platform for short-term rentals, suggests property managers use this time to think about where they want their operations to be in two years. Property managers often don’t have the luxury of time to reflect on their business, expenses and operations, so this should be seen as found time to plan for the future. “If you’re not putting yourself on a path to getting where you want to be in two years, and working on it actively now, I think that that’s a missed opportunity,” he says. Operators need to accept that the current situation is out of their hands. Instead of dwelling on it, they should be planning future initiatives.
There is no need for operators to struggle alone, says Simon Lehmann, the CEO of AJL Consulting, a leading consultancy firm in the online vacation and travel industry. “I think now it’s time to join forces.” Operators using revshare models who are now struggling in terms of efficiency and operating costs need to consider the idea of a merger. “We see property managers who are forming an alliance together to absorb operation costs, distribution costs and net costs,” Lehmann says. Right now, he’s helping to broker the merger of five property management companies in Italy. Lehmann also suggests looking at franchise options, where property managers with strong tech platforms offer their backends as franchise models. This allows smaller property managers to become part of a bigger, more efficient company. “I believe we will see more franchises than ever before,” Lehmann says.
Protect your properties
As the number of coronavirus cases slows and travel opens up again, property managers will be desperate to recoup the revenue they’ve lost by accepting all guests. But companies need to be aware of their vulnerabilities. This is the time when fraudsters and partiers will target your properties.
During these uncertain times, it's more important than ever to get to know your guest, says Autohost's Anton Zilberberg. To ensure you generate revenue while protecting your properties, you need to implement a guest screening system—one that thoroughly examines a guest’s ID, credit card and booking information. Dealing with the costs of property damage and chargebacks from bad guests will only set you back further.
Make sure your business is covered
With most property managers experiencing a wave of cancellations, many properties are being left vacant for longer than usual. To make sure your business is protected, Darren Pettyjohn, co-owner of Proper Insurance, suggests property managers look into their insurance's 'vacancy clause,' commonly found in short-term rental policies. Operators needs to ask the big questions: How is vacancy defined? Is there still coverage for vandalism, water damage and theft? Is our business on the line financially in the case of any incidents?
Cover all of your bases by researching the vacancy clause. Weather this storm by ensuring your properties are protected—occupied or vacant.
As Dave Krauss said, we need to take this time to create a united front for short-term rentals. The industry has had its fair share of bad press over the last year. With the current break in operations, we need to step back and regroup as an industry. This is an opportunity to retell the short-term rental narrative and craft a new image. An image that shows the world our commitment to the safety of our guests, neighbours, communities and cities. It's time to present ourselves as responsible operators.