When it comes to vacation rentals, things can get a bit tricky sometimes. Don’t get tripped up by complex terms and definitions that can put a dent in the otherwise exciting task of planning a dream getaway.
There may be more than an array of pesky lingo out there used by renters, rentees, and real estate agents alike, but luckily for you, we’ve got the ABCs and the 123s of all major words and abbreviations in the vacation rental dictionary to help better guide you towards stellar summertime fun. We present the ABCs of vacation rental terms.
Glossary of Common Vacation Rental Terms
Advance Payment: Advance payments are applied to the total rental cost and are paid by the renter to the owner. The amount usually equals a portion of the total rental amount.
Advertised Price: The price per night that a rental manager or channel is showing to the customer.
Alternative Agreement: Another type of agreement where vacation rental managers provide homeowners with a guaranteed rental. Under these arrangements, rental managers can buy all of the weeks the homeowner wishes to rent in a single transaction so that they are guaranteed income.
Amenity Fee: A certain amount paid to an owner or property complex that is above and beyond the specified rental rate in order to allow the renter access to certain amenities such as golf, tennis, beach chairs, etc.
American Society of Home Inspectors (ASHI): The oldest, largest, and most respected professional organization for the education and certification of home inspectors.
Availability, Rates & Inventory (ARI): The minimum amount of information that a vacation rental manager needs to give to a channel to list the property.
Available Nights: The total number of nights that a rental manager can rent out a property - oftentimes the owner will want to keep a few days per year in the property for themselves!
Average Daily Rate (ADR): The average rate of a property per night over a certain time period. This is calculated by dividing the total rental revenue by the total number of nights that are sold for the property.
Average Length of Stay (ALOS): The average number of nights that a customer stays in the rental over a certain time period (a month, a season, or a year for example.)
Average Rate Index (ARI): A measurement of success (Key Performance Indicator, or KPI) that shows the rental property's average daily rate over a certain time period compared to a set of competitive numbers.
Bartered Services: The act of exchanging a stay at your vacation property for repairs, maintenance, or other work that may need to be completed.
Best Available Rate: The lowest-possible rate that can be found for the property.
Best Rate Guarantee: The promise that whatever rate the customer books at is the lowest-possible rate that can be found anywhere.
Billboard Effect: The theory that the more channels a vacation rental is listed on (like on Tripping.com), the more exposure the property will gain and the more bookings will be made.
Booking Curve: A tool that shows the number of bookings over a certain amount of time, which helps property owners and managers to adjust rates and availability.
Booking Engine: An online application or website that helps customers to book a rental property - like Tripping.com and our partner websites!
Booking Pace: The rate at which a rental property is being booked over a certain amount of time.
Broom Clean: Used in the real estate industry as a way to describe the cleanliness of a home. To “broom clean” a home also means to take out the trash, to remove personal items, and to sweep the floors, though broom cleaning generally does not involve sanitization.
Buyer's Agreement: A signed and sealed document between you and a selling agent that notes that the agent cannot show anyone else a specific property until you confirm that you are no longer interested in the property.
Channel Fee: A commission that a third-party distributor charges for a vacation rental to be listed on the website.
Channel Manager: A company that serves as a connector between a third-party distributor and the vacation rental manager in order to keep the property's prices and details in sync across all channels.
Cleaning Fee: A certain amount of money that is above and beyond the rental rate that renters are charged in order to cover the cost of cleaning the property after their departure.
Closed To Arrival: A tool that makes certain days unavailable for arrivals.
Competitive Set: Similar rental properties (they attract the same demographic, or are similar in style and price) that can be compared against one another to analyze performance.
Complex: A building or group of buildings with multiple units for rent, usually managed by a Home Owners Association or Vacation Rental Manager.
Condo-Hotel: A building with condos but with services like a hotel (concierge, room service, etc.) - sounds like the best of both worlds!
Conforming Mortgage: The most typical way of purchasing a loan that is governed by industry standards. Usually, it requires the purchaser/renter to possess a financial situation that fits government standards such as Fannie Mae and Freddie Mac guidelines.
Conversion Rate: The number of people viewing a property online or making an inquiry who decide to actually book it.
Cosmetic Upgrades: Improvements made to a home-- such as installing a new fireplace or better carpeting-- that are relatively inexpensive but can make a huge difference to the look and feel of the home.
Custom Fees: Any add-on fee that is unique to the property. For example, a cleaning fee is pretty normal, but you won't see a hot tub cleaning fee everywhere.
Damage Waiver Fee: A fee that some owners collect in lieu of a damage deposit. Usually, damage waivers are significantly less than damage deposits—usually just $25-$100 depending on the property. Also, unlike a damage deposit, the damage waiver is nonrefundable.
Deeded Access: A written and filed right to have complete access to a certain property.
Depth of Inventory: The number of similar units that are available to rent in a specific area. These can be broken into Key Level channels (where the unit is described in more detail.)
Direct Booking: When a customer books directly with the rental manager, rather than a third-party distribution channel.
Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount that is still owed on its mortgage.
Eviction: The lawful expulsion of an occupant from any property.
Exit Strategies: A predetermined plan that takes into account everybody’s interest in a joint ownership arrangement.
Fair Housing Act: Federal statute prohibiting discrimination against renters based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents of legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability).
Fair Market Value (FMV): An estimate of the market value of the property that is based on what a knowledgeable, willing, and unpressured buyer would likely pay to a seller in the market. Basically, it is the highest price that a buyer would agree to pay and the lowest price that a seller would agree to accept in any transaction.
Fixed-Rate/Fixed-Term Mortgage: Interest and payments that do not change over the length of the loan.
FSBO (For Sale By Owner): When a homeowner chooses to sell a home by himself or herself rather than go through a listing agent or company.
Gîtes: Term that is used in the rural locations of France that specifies a type of holiday accommodation—i.e. a holiday home that is available for rent. Gîtes are usually fully furnished and equipped for self-catering. Plus, to be officially deemed a Gîte, the owner must live close by in order to provide help, assistance, and a warm welcome to guests who choose to stay. Renters handling their own rentals can choose to find these by searching online on the multitude of listing sites, or by checking with any local tourist information office.
Global Distribution System (GDS): A system that makes transactions between third-party services (like Tripping.com) and the rental manager possible.
Gross Booking Revenue: The total amount of money that the vacation rental manager collects, including Guest Fees (see below!)
Guest Fees: What a vacation rental manager charges a guest beyond the initial price, like cleaning fees, pet fees, and extra person fees.
Guest Screening: The steps that are taken to get to know potential renters before allowing them to rent any property.
HOA (Home Owners Association): The association that is responsible for the maintenance, upkeep, and financial management of common areas in certain complexes and neighborhoods.
Homeowner's Insurance: An important type of property insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and the contents inside.
Holiday Lets: The term for holiday homes in the United Kingdom. When across the Pond, be sure to rent out a cute little holiday let!
Installments: Breaking up payments that are made into equal installments is what many homeowners/renters choose to do when signing a rental agreement--it often makes things easier for both parties. Remember though, for last-minute reservations, full payments at the time of booking may be best.
Internet Service Provider (ISP): A commercial service that sells access to the Internet to individuals.
Key Performance Indicators (KPI): Anyone who has a background in business will know what this means! KPIs for vacation rentals are numbers that are the most important to measure for determining how successful the rental is. Some of the numbers to keep in mind are Occupancy Rate, Average Daily Rate, and Conversion Rate.
Key-Level Listing: If a rental property is a building with several units, a key-level listing describes one of these units in more detail (i.e. "Malibu Ocean View Unit 216 is right by the elevator on the second floor and has a balcony and a panoramic view of the ocean.")
LIBOR (London Interbank Offered Rate): A base index used for setting the rates of various adjustable-rate financial instruments.
Lock Boxes: Many rental properties today make popular use of electronic keyless locks, which are digital or push button mechanical lock boxes that do not require a key or access card to operate. These often allow for easier and more efficient entrance into the rental if ever needed by an agent and/or potential renters.
Managed Distribution: Any service that helps vacation rental managers improve the distribution of their property online. Examples of this are help with increasing revenue, adjusting the rates per night, payment and accounting help, and listing the property on more channels.
Merchant Channel: A distribution channel that charges the traveler’s credit card and sends the supplier a net rate—think Expedia, Orbitz, or Priceline.
Merchant Of Record: The company or party that charges the renter's credit card for the booking.
Minimum Stays: A minimum stay period required by the property owner in order to rent out the home. During the busy months, at least one-week minimum stays may be typical, though options can often vary, especially in less crazy seasons. As such, minimum stay regulations usually reflect seasonality and what the competition is doing at the moment.
Net Rate: The total amount that a property owner receives from a distribution channel (like VRBO or HomeAway, for example) after commission has been deducted.
Nigerian scam: A widespread scam in which renters (i.e. Scammers) demand for an immediate refund after the owners have deposited the check. In worse cases, Scammers may write a check for an amount greater than the balance owed and ask that owners immediately mail back the difference. Unfortunately, by the time the banks discover the counterfeit certified checks, it is too late to take any action because the owners have already sent out the refund amounts.
Occupancy Rate: The percentage of the time that a vacation rental is occupied out of the total nights available.
Online Payment Service: Such as PayPal—these are fast and convenient web-based payment services that allow money to be transferred automatically over the Internet, or directly from their credit card and/or personal checking account.
OTA Ranking: Where your rental shows up on a search results page. The closer to the top, the better!
Owner's Closet: A locked closet that is set aside in the vacation rental property to store the owner’s personal things.
Owner Revenue: How much money the property owner receives after the vacation rental management system (VRM) takes the commission out of the total revenue.
Pet Fee and Deposit: A certain amount of money above and beyond the rental rate that covers the stay of any pet, as well as any special accommodations that may be made to cater towards the pet. Pet fees are nonrefundable. However, pet deposits can be refunded after the guests' stay if no damage has incurred. Flat rate fees can also be used in lieu of a pet deposit.
Piggyback Loans: A product offered by mortgage brokers allowing individuals to purchase one mortgage for the first 80% loan-to-value along with a simultaneous second mortgage for an additional 10 to 15% of loan-to-value to avoid PMI (Private Mortgage Insurance).
Pricing Structures: A system of different rental rates for different rental seasons.
Private Mortgage Insurance (PMI): Insurance that is often required on loans exceeding the 80% loan-to-value range.
Promotions: A bonus on a vacation rental (for example, "3rd night free when you book for a weekend in May!") or a special discount.
Property: A vacation rental home.
Property Group: A group of vacation rental properties that are very similar. Rental managers will often price these properties together.
Qualification: Otherwise known as pre-qualification. It is a verbal approximation with no guarantees from a loan officer that you will or will not qualify for a loan.
Rack Rate: The full price of the rental property per night, before discounts are applied.
Rate Parity: Maintaining the same rate per night for a vacation rental across all of the distribution channels.
Representative Style Listing: A listing that represents a certain lodging type in a multi-unit building or complex. This listing might have “Depth of Inventory” and different unit types. Examples would include: “2BR/2BA Ocean View” properties, as well as “Hotel-style” listings by Type, Location, Arrival Time, etc.
Reservation Deposit: A certain amount of money collected upon booking that validates the rental contract. The reservation deposit can automatically convert into a damage deposit.
Resort Recreation Specialist (RRS): A real estate agent who has completed a special sort of training in vacation and/or second home sales.
Return on Investment (ROI): A very important measurement of success! This is calculated by dividing the cost of the investment by the total revenue, or in the case of the vacation rental, the cost of the property by the amount made from the property. The bigger the better!
Revenue Management: The use of analytics to track a vacation property (or group of properties) and how they are performing over time. This helps the owner or distribution channel to increase profit and growth.
Revenue Per Available Night: This amount is calculated by dividing the total amount of revenue from a vacation rental property by the number of available nights.
Revenue Per Available Room: This number, also known as RevPAR, is used in the hotel industry to determine performance. It is measured by dividing the total room revenue in a hotel by the room count and number of days in the measurement period.
Reverse Mortgages: A home loan that provides cash advances to the homeowner, requires no repayment until a future time, and is capped by the value of the home when the loan is repaid.
Sales Tax: Many states in the U.S. and provinces in Canada require the collection and remittance of sales tax. Sales taxes are typically paid by guests in addition to the rental rates to the property owners, who then gather up the monies to hand over to the government at an interval (typically quarterly). Specific area requirements can be found by contacting various county sales tax offices.
Security Deposit: A certain amount of money that the owner holds until after the renters have left the property. Typical security/damage deposits are $200 or 10% of the rental rate.
Self-Catering Accommodations: Accommodations that usually include private or shared kitchen facilities where guests are able to make their own meals. These types of rentals can offer greater flexibility to many renters and are often a great option for those on a tighter budget, for large families with fussy eaters, or for travelers with special dietary needs.
SNAD: Some travelers avoid vacation rentals for fear of what industry insiders call SNAD—i.e. "Significantly Not As Described". These “scams” refer to properties that look like paradise in online photos but are in reality, dingy spaces boasting leaky roofs, blocked views, or worse upon the traveler's arrival. To reduce risks like these, many vacation rental companies offer user reviews to provide further assurance.
Third-Party Distribution: Websites and companies that show information for a vacation rental. Examples of this include Tripping.com and Tripping.com's partner sites, such as VRBO and HomeAway.
Time-Sharing: Homes that are divided in ownership or use on the basis of time periods, most often one or two weeks each year. Basically it is a hybrid form of ownership, or the right to occupy a unit of real estate during a specified number of separate time periods. Time sharing often allows multiple purchasers to buy interests in the same piece of real estate.
Traveler Fee: Also known as a service fee, the rental service adds this amount is added onto the total that someone renting a vacation property must pay.
Value-Added Items: Amenities such as porta-cribs, high chairs, hot tubs, pool tables, and sofa beds that when added to any property could increase its occupancy level.
Villa Holiday: In Europe, the term villa rental or villa holiday is preferred for rentals of detached houses in warm climates. Villa holidays are super popular nowadays, especially in the summertime, with favorite destinations including the United States Virgin Islands, Italy, Spain, France, Germany, Greece, and Turkey.
VRM Commission: A fee that is charged by a vacation rental management company to the owner of the rental. This is usually a percentage of the rental's revenue rather than a specific dollar amount.
Wire Transfers: Bank to bank transfers of monies. Simple as that.
Yield Management: As the demand for vacation rentals - and the competition - increases or decreases, the yield management is the adjustment that the property owner makes on the price of the property.
This guide was written by Pamela Chan.