A vacation rental can be managed similarly to any other business. There are advantages, disadvantages, opportunities for development, and threats. Whether you’re just starting or have been hosting for a while, it’s a good idea to periodically assess your company to see what is functioning well and what could improve.
Although these are challenging times, we strongly advise taking advantage of the coronavirus pandemic’s impact on the housing and vacation rental markets to conduct an audit of your company and prepare your property for when the market rebounds.
We advise you to focus on two things while analyzing your vacation rental homes and yourself as a business owner. There are several things to consider, including your budget, target market, price, etc. You might only be making the most of your best qualities if you know what they are. Similarly to this, if you are unaware of your weaknesses, you might not be aware of what you need to work on.
So how is the overall state of your company? To help you evaluate your company, we’ve produced a SWOT analysis form and ten questions for you to consider.
A SWOT analysis is what?
By analyzing your company’s strengths, weaknesses, opportunities, and threats, a SWOT analysis examines both the positive and negative aspects of your vacation rental business, both internally and externally.
It’s not a scary marketing procedure, despite what it may sound like. Making a SWOT analysis for your company is quite beneficial, especially now. You are compelled to evaluate your company and consider its future. SWOT refers to:
- Strengths (S)
- Weaknesses (W)
- Opportunities (O)
- Threats (T)
You are aware of your company’s performance today and yesterday, but do you know where it will be tomorrow? Thanks to this study, you can sort things out and make plans.
SWOT internal factors
When doing a vacation rental analysis of your company, you should start by assessing the internal aspects, including your strengths and limitations. Consider the past and present circumstances of your company.
Start by identifying the strengths and shortcomings of your company. You influence them, and with time, you might be able to alter them.
Strengths are the advantages that your vacation rental has to offer, both concrete and abstract. Consider all the things your business does well and how it differs from the competition, for instance:
- The location of your vacation home
- Internal resources such as outstanding, informed, and skilled employees
- tangible assets like technologies and intellectual property.
The elements that prevent your short-term rental business from expanding or operating at its best are referred to as weaknesses. You must conduct some critical self-evaluation to comprehend your internal vulnerabilities. Consider everything your business lacks and everything your rivals do better than you, for instance:
- Budgetary restrictions
- insufficient smart home technologies
- negative reviews online
- without amenities
- Unreliable website
- The distinctive selling proposition is unclear (USP)
SWOT external factors
Threats and opportunities are typically beyond your control. It’s not entirely up to you, but you can try to prepare for them or promote a positive change.
Opportunities are actions you can take to increase reservations, enhance online evaluations, or raise revenue. Examine your visitor comments and the market as a whole to see if you can identify new markets or sales prospects. Several instances include:
- untapped markets for certain types of tourists
- There are few rivals in your area.
- new requirements for your kind of properties or services
- Press and media mentions of your business
Threats are anything that puts your company in danger. The pandemic of coronavirus is regarded as dangerous. Other illustrations include:
- Developing rivals
- negative feedback from clients
- Adapting regulatory landscape
- unfavorable media coverage
Who ought to conduct a SWOT analysis?
In conclusion, everyone should perform a SWOT analysis, regardless of how long they have been in business or whether they are just starting.
Suppose your company has been around for a while. In that case, you should conduct a SWOT analysis once a year to ensure that everything is working as it should, predict issues, make the required adjustments or enhancements, and make more informed decisions all year long. In essence, a SWOT analysis every year should keep you in touch with your business, clients, and sector.
A SWOT analysis will give you a tactical advantage whether your business is just getting started or you plan to establish one soon. By doing this, you should be able to determine your break-even point and get a more realistic idea of what to anticipate. Both should be mentioned in your vacation rental business plan if you need to apply for funding.
How to carry out a SWOT evaluation
A SWOT analysis is not an objective way to assess your business. There is no precise method to gauge how well you perform it. It depends on your capacity to recognize and keep in mind both internal and external factors that can have an impact on your company. Knowing what to plan for is more important than generating accurate estimations.
Step 1: is to involve the appropriate individuals in the process.
There is no such thing as “too many cooks in the kitchen” with a SWOT analysis, although founders and top management should typically make important business choices. Even from those who don’t fully get your business, more input will only strengthen it.
Additionally, you’ll see that including your staff in the process will result in a stronger buy-in to the policy decisions that emerge from the research. Even better, use this chance to conduct a consumer survey, which might yield insightful results!
Step 2: Organize an idea-generating meeting.
Set up a brainstorming session with your staff after informing them that you need their input. You can either ask them to make lists of the advantages, disadvantages, opportunities, and threats facing your company, or you can make a combined list. Try to record everything to avoid missing anything. regardless of how it sounds.
Step 3: Close any holes.
Consider the concepts that require more explanation once you’ve written down everyone’s opinions in four lengthy lists. You and your team have the chance to ask questions now to ascertain the significance of each item on the list.
To decide what to focus on, you can also ask your group to select their top three ideas for each area. You’ll likely see a pattern if you do this.
When conducting a vacation rental market analysis, there are questions to consider.
1. Are you getting the number of reservations you expected to?
What are the major aims and objectives of your business? Did you set a target for the number of reservations you would receive? Examine the relationship between your objectives and your performance. Discover the cause of any quieter than expected period if you were expecting bookings and what you can change to increase bookings. The pandemic is most likely to blame, but be sure there aren’t any other factors at play.
Consider the advantages and disadvantages of each before deciding whether to permit fast bookings or inquiries and which would be most helpful to your company. If you don’t accept direct bookings, you should test this out to see how it performs.
How well has your rental been marketed? Are you utilizing all of the resources at your disposal, such as social media? Or do you only use listing websites? Have you changed your tactics and begun concentrating on different categories of travelers? There are countless ways to promote your rental, so go above and above.
2. Is the cost reasonable?
When picking accommodations for their holiday, many visitors believe that cost should be a deciding factor. In a perfect world, you would like to equal their price, but obviously, that only happens sometimes. Most of the time, a lot depends on the guests’ financial situation.
Excessively low pricing could result in a lower turnover profit and the attraction of unruly customers. On the other hand, if the cost is excessively high, visitors can decide not to make a reservation.
Another possibility is that visitors are dissatisfied with their accommodations after their trip because the price was higher than they anticipated.
Make sure the price correlates with the market and property structure as part of your investigation. Look at listing websites for properties in your neighborhood to see what your rivals are providing. Conduct a fast Google search to uncover further vacation properties in the area. You might compare the price per night of staying at a neighboring hotel by visiting internet travel agents.
Keep in mind that costs change based on whether it is the high or low season. And in situations like these, you should do as much research as possible to get the ideal pricing.
3. Do you provide the appropriate services and goods?
What supplies are necessary for your visitors? Are all of those goods included in your rental? Consider the needs of a visitor by placing yourself in their position. Dish soap and toilet paper are two small items that may go a long way in improving the guest experience. When assessing your company, consider the extras you can provide, such as the essential features for vacation rental properties. Depending on what you find on the list, you might be surprised!
Of course, some things in today’s world are a must, without a doubt, like a WIFI connection. What transpires, though, if a TV is not provided? No issue! Simply change things for the better in this situation. You might describe your house as a haven for peace and tranquility where you can retreat in your listing. Cross-promote with nearby companies, such as a coffee shop, and provide your guests with a discounted rate for delivery if breakfast is not included.
Consider providing a gift basket or a welcome book to make your guests feel more at home.
4. Are you keeping to your spending plan?
You might have created a business plan when you first began out in this industry, in which you estimated all the costs associated with running a rental and set aside a budget. This could refer to services offered, such as bed linens and towels, coffee capsules, bills you must pay, etc.
Have you saved money in case something goes wrong? It’s still possible if you didn’t create a budget plan at first! Start one right away, and make sure to record your weekly and monthly spending amounts. Include all the information, please.
5. Have you made any errors so far?
Have you ever made a mistake that negatively affected your company? Here are a few instances of minor errors that might be made:
- Have you missed anything when cleaning?
- Did you believe you had the appropriate insurance when, in fact, you did not?
- Did your visitor steal because you failed to screen them before they arrived?
- Have you been filing your taxes correctly?
- When you should have engaged an expert, did you decide to handle everything yourself? like in the pictures on the listing website
- Were your visitors missing anything?
You shouldn’t be concerned; after all, we’re all human. The most crucial thing is to take note of them, learn from them, and avoid them in the future.
6. Have you gained knowledge in any areas you didn’t previously know?
How did things go if you didn’t use a property management company or seek professional advice? For instance, if you took photos of your rental instead of hiring a pro, were they successful in attracting bookings?
What would happen if you decided to DIY, renovate your home, or perform some interior design work yourself?
Read blogs that provide insight into a variety of topics if you want to become familiar with the vacation rental market. Additionally, there is a tonne of e-books, tools, and courses that you can use online to help you grow your vacation rental business.
7. Whom are you trying to reach?
Who exactly do you want to reach? Are the different sorts of visitors similar in any way? For instance, do you often see more groups, couples, or lone travelers? Are you marketing to a certain target audience, or do you have a wide range of visitors?
When picking a place to stay, there are some factors that guests frequently focus on. One of the deciding elements is location. Have you studied the holiday rental market? Is your property located in an area with a lot of visitors who are tourists and travelers from other countries? The type of neighborhood the property is located in should also be taken into account. Is it better suited for millennials, seniors, or families?
Work through how the location of your rental and the property type affect the kinds of travelers you receive. Consider how near the city center your property is, or how far guests will have to walk to use public transportation. Are there any nearby points of interest?
While a permanent property’s location cannot be improved, the property can be advertised to draw visitors. Promote your mountain rental as a peaceful retreat or an escape.
8. How well-known are you as a host?
Visitors prefer to stay at a place where the proprietor has gotten excellent feedback from other visitors. Reviews promote reservations, foster confidence, and support the expansion of your company.
Feedback from your visitors is generally a terrific method to learn about the advantages and disadvantages of your vacation rental, and you can always benefit from it by expressing gratitude to them for their assistance.
If you’ve received a bad review, now is the time to investigate and discover the reasons the customer was dissatisfied. Instead of letting this bad review knock you down, utilize it to motivate you. For the following guests, take what you learned from it and don’t do anything that made the guest upset.
Utilize customer evaluations, and if you don’t have any, invite visitors to leave a review after their visit. You can post it to your website and social media accounts.
You can further establish your reputation by demonstrating that you are a local expert in your field.
Give recommendations for eateries where you can sample the local cuisine, locations that only people who have lived there their entire lives know, or tourist hotspots that are only sometimes known to locals.
9. How would you rate the whole experience?
Consider how the whole experience of managing a vacation rental business has been. Being an entrepreneur is a challenging task. It may experience ups and downs; it is similar to a rollercoaster. Consider how the encounter has gone thus far. Asking yourself the following questions will help.
- Has it met your expectations?
- Do you regret anything?
- What else can you alter?
It’s a smart idea to track your development by keeping a monthly journal of it. Put your thoughts and experiences in writing. Wait to perform the analysis and then disregard it. Make it a mission to carry out this assessment roughly every three months.
How to properly use your SWOT analysis
You must constantly set priorities and decide how to divide your resources as vacation rental owners or property managers. Using a SWOT analysis, you may choose where to spend your attention and resources.
Create a plan for each item on the final list to take advantage of the advantages and opportunities and address the weaknesses and threats as soon as you have finished creating your four lists and have a final version of your SWOT analysis. Although you might want to build on these early tactics later, they don’t need to be especially robust or complex. Just create a comprehensive action plan for the time being.
Additionally, you may harness your strengths to take advantage of opportunities better, use your weaknesses to strengthen your strengths, and prioritize certain strengths to fend against dangers in the future.
Finding a balance between all the factors matters most in the end. Regularly conducting a SWOT analysis of the vacation rental market will help you stay in contact with your business, customers, and industry. More importantly, it will support your continued success in a challenging industry.
After giving the most crucial items on your list some serious thought, flesh out your action plan and go to work!