While developing goals during your venture is good, I can't stress how important it is to create a strategic map before you purchase your new home. If you can't afford risk, you can't afford having unrealistic performance expectations and you certainly can't afford to make things up as you go along.
So what is a strategic plan? It's a set of goals and framework that guides your decisions with an end vision in mind. You will constantly make decisions; like dealing with short-term guest complaints to long-term property additions. The plan prevents you from drifting, or worse, copying everything your competitors are doing.
Where Is Your Vacation Rental Business?
Vacation rental success starts with knowing exactly where you are with a detailed understanding of your home, the market, and industry. Start by researching a series of questions:
Your Vacation Home
- How does it compare to other similar vacation rentals?
- Do I have an intimate understanding of all aspects of the home, BEFORE closing?
- Does it need to be renovated? If so, how much will this cost?
- What are my setup costs (furnishing, linens, listing site fees and so on)?
- Who are my customers? Can I divide them into key segments?
Your Vacation Rental Market
- Do I have a lot of competitors, or only a few?
- Is overall demand increasing or decreasing?
- What are the barriers to entry?
- What drives the market? Price, quality or both?
The Vacation Rental Industry
- Key trends: Are vacation rentals being squeezed out?
- How are guest needs and habits changing?
- What is the general economic outlook?
These few questions aren't comprehensive but are often overwhelming to newbies as research isn't everyone's favorite thing (hence my job as a consultant). But please do put in a valiant effort to understand your current situation as the effectiveness of future decisions depend on the accuracy of these answers.
Once your information is gathered, it's time to interpret it with a good old fashioned SWOT analysis (taking you back to college, Strengths, Weaknesses, Opportunities and Threats). Understanding your strengths and weaknesses essentially helps you answer “where am I?" based primarily on facts, rather than opinions, which is ineffective.
Where Do You Want To Go?
The purpose of a strategic plan is to make you more goal-oriented, so you will need to define your goals next. Many owners stop at the desire to achieve “excellence" or 100% occupancy.
Be more specific when answering “Where do I want to go?", so you can begin to work backwards with a clear path. Put it in words. Literally, just start writing down your thoughts as they come and organize it later. Hotels, or any business for that matter, often have their goals framed up in vision and mission statements.
They can be a powerful driving force; the vision describes where you want to be and the mission how you will operate while you get there, inclusive of your homes unique and authentic culture/experience. You don't even have to create formal statements, just create memorable phrases that are realistic, challenging and then actually use them.
How Will You Get There?
Any goal, vision or mission is pointless unless you can make it happen (where most newbies become overwhelmed).
Your strategy will generally define the route you will take. For example, one goal might be to achieve a 40% repeat customer base within your first three year's operating. Your strategy would then involve actionable steps to get there; understanding guest expectations for your experience, how you will exceed said expectations to drive retention, and how you will measure their satisfaction, for example.
Whatever goals and corresponding strategies you come up with, it's important to realize you will probably not get there within three months. This plan, preferably created BEFORE you buy the home so you start with eyes wide open, breaks it down into small manageable pieces that can be tweaked as the market and your business develops.
No amount of knowledge (even if you come from the hotel industry) or hard work can compensate for a lack of direction. Effort and excellence are not the same thing. After you've dialed your plan, make sure you check back in to measure your progress!
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.