Years ago I read a great quote, "Your career is long and the business world is small. Always act with integrity. Never take the last dollar off the table." – Joanna Shields (President of Bebo.com at the time) quoting her father.
I fell in love with that quote. Unfortunately, in the business world most of us become too competitive, obsessed with short-term performance, or succumb to the pressure of kicking off a new business to be cognizant of such advice.
When applying this to vacation rentals, minimum stay requirements come to mind.
Long Term vs. Short-Term Stays?
Seen as a strategy itself, minimum requirements reflect seasonality and what the competition is doing. Take a Martha's Vineyard cottage in the summer, for example. Most require a seven-night minimum stay, which is on-par with guest needs. However, if your property is new, has lackluster occupancy, or is just outside the prime location, you might consider dropping your minimum stay requirement (among other branding exercises) down to five nights to capture those who just cannot swing a full week vacation: a secondary market.
During the shoulder or off-seasons (assuming your vacation home is still accessible) you might even consider dropping the requirement further, especially for short holiday weekends like Dr. Martin Luther King Jr. or Presidents holiday which can generate more profit than other days.
Keep the Guest in Mind - But Be Smart
For me, building a financially healthy business is a top priority. But so is the human side of the business. Really, it is the reason I'm here: to help vacation rental owners and guests connect to life again.
My minimum stay requirements are general guidelines to maximize my profits.
If someone is asking for a reduced stay, I find out why… are they not able to afford the full stay, are they short on time or just the wrong guest?
I've had people ask for reduced stays because they couldn't swing the costs for a full week. Skiing with a family of four (plus food, gear, lift tickets and so on) is expensive! In such cases, I consider the overall demand for the requested dates, my gut feeling about the person and their intentions.
Meanwhile, of course, I'm considering my ability to negotiate without creating the perception that my home is a commodity.
In my experience, those guests I have flexibility with become very loyal… which actually decreases the cost of future bookings by way of repeat visits. My point of this post is to have clear strategies in place based on your knowledge of your market. But be prepared to bend when it makes sense.
Nothing is Ever Black and White
The goal for any vacation rental strategy (i.e., minimum stay requirements, pricing or market position) is so that you don't leave any money on the table. In a way, it's taking that last dollar by encouraging guests to pay an optimal rate and stay an optimal duration based on seasonality.
But, like most things in life, nothing is black and white.
The quote continues, "You can always do a slightly better deal, but that incremental dollar or windfall is not worth creating an imbalance that affects the relationship. You have to have the intuition to know when to say, 'I'm going to make sure that we walk away feeling like we've both done well.'"
This guest post was written by Kris Getzie, Founder & Principal Consultant at Volo. She is a vacation rental expert and author of the recently published Vacation Rentals For Newbies.