Preparing Your Vacation Rental Every so often I go off on a tangent and decide we need something for the cottage that will please our guests and keep them coming back for more. And that is the key….if the new addition will attract more guests and repeat renters, then we evaluate the decision to buy based on the income potential of it. When we first started in the vacation rental business, we were helped out and mentored by a very savvy business man who got us to see what we were doing from a pragmatic viewpoint. If I had a dollar for every time he said ‘Does it sell more chickens?’ in response to one of my inspired ideas, we could have bought a hen coop. His view was that if we were taking this seriously as a business venture and not as a hobby, then we had to evaluate the addition of every feature and facility from a strictly business perspective. If a new purchase did not have a positive impact on the bottom line, then it should be delegated to lower priority. · Will it raise the rental rate? · Will it increase bookings? · How long will it take to pay off the investment? I’m not talking here about the essential purchases although he did argue that spending $130 on a coffee machine with a built-in grinder, instead of $50 on a perfectly good alternative without a grinder might not ‘sell more chickens’. The jury is out on that one. What he did get us to see was that our major decisions must be guided by solid economics and not me just saying, ‘that would be really nice and our guests would love it’. Just to give one example, we decided a hot tub would be a good investment but given the cost – over $10,000 to buy and install a good model – we had to prove it would be a cost effective decision. Since the goal was to increase out of season rentals and we subsequently increased our occupancy over 60% in the low season period, it was an excellent decision. We were happy, not only because of the increased occupancy but because we did the research before taking the plunge, and were confident it was a sound investment. We’ve been applying the ‘Does it sell more chickens?’ question recently to whether we should install satellite internet since wireless hi-speed isn’t an option in our rural location. Part of the process involves getting in touch with all our previous renters and asking if having the facility would have made the cottage experience even better. Then we’ll determine the upfront cost + the monthly subscription and balance that against the added value we’re supplying our guests to see if it’s a wise and economic move .I’ll let you know how that goes. Photo by CC Chapman on Flickr
