A short-term rental (STR) business provides accommodation to families and business travelers on a nightly, weekly, or monthly basis. Owners of these businesses rent their property to customers for a variety of reasons, and this business model can be quite profitable with the right marketing and other tactics in place.
Property owners in a good location may see a good return on their investment. In fact, revenue in the vacation rentals segment is projected to reach approximately $19.39 billion in 2023. User penetration will be 18.5 percent in 2023 and is projected to hit 18.3 percent by 2027. This guide has helpful information to show you how to start a profitable short-term rental business for business travelers.
Adapting your property for business travelers
Most business travelers are professionals who need to travel for their jobs. Many have high budgets, so they’re looking for quality accommodation that feels more like home than a traditional hotel. These travelers need a convenient, comfortable place with all the required amenities to get their work done. Some of the most crucial amenities include an office area with a desk, a comfortable chair, and ample electrical outlets. Short-term residences work well for the digital nomad or remote worker hoping to spend time in a new destination.
Check in with your mortgage provider
Before renting your home, you must ensure you do everything legally. Start by determining if your home is properly zoned for a short-term rental. Since these rentals are gaining popularity, many jurisdictions are passing laws that may impact your ability to offer short-term rentals. In most cases, the law applies to rentals of 30 days or less when the owner is absent. You’ll also need to consult with your mortgage company since some lenders require you to pay a fee, refinance, or update the mortgage terms if you don’t already have an owner-occupant mortgage.
Enhancing your rental: Furniture & amenities
To be competitive, you must provide the right amenities for business travelers and an inspiring design. Furniture like a roomy desk and office chair, a comfortable bed, and proper lighting are all crucial. In an Airbnb survey, the data found that an impressive 97% of American travelers said amenities significantly impacted their travel experience. The type of rental had the most impact, but amenities still came ahead of things like location, culture, and attractions such as shopping and dining.
According to the same Airbnb survey, other important amenities that travelers want include a full kitchen, free parking, and working heating and air conditioning. Other amenities like laundry facilities (access to a washer and dryer), a coffee maker, Wi-Fi, and a pet-friendly environment were also at the top of their list. Remember these things as you prepare to convert your home into a short-term rental. Look for ways to make changes to your home that will be more accommodating for casual and business travelers. You could always ask for advice from professional designers or take a design course.
If you’re building a short-term rental business for business travelers, providing guests with a proper workspace is essential. This shows your guests that your property is well-equipped for them to get tasks done during their “work-cation.” Here are some of the most important elements to include:
- High-speed Wi-Fi: Business travelers need access to fast Wi-Fi as it is one of the most important since practically every business person today requires access to the internet to get their work done and maintain contact with their boss, coworkers, and clients.
- Office space: If your property currently has a basement or an extra bedroom, consider converting this into a professional office space. Business travelers will appreciate the ability to do work away from the bedroom; it helps them get privacy and some separation between work and sleep.
- Ergonomic desk: Provide your guests with a large desk with lots of room to work and a view of the outside. Include a comfortable, ergonomic desk chair with adjustable height, adjustable arms, and wheels so renters can move around the office as they work.
- Other complements: The little things can make a big difference, so be sure to include a quality desk lamp, several pens, notebooks, and paper. You should also include a smart TV, keyless room entry, a full-length mirror, and a complimentary HDMI cable so customers can plug into the network.
Room space and bathroom
Offering a comfortable, functional bedroom and bathroom is also important for your short-term rental guests. Having a warm, inviting space is extremely important for guests. It helps them get a great night’s sleep and have a comfortable and quiet place to rest and work.
- High-quality bedding and comfortable pillows: Choose premium bedding with a high thread count that washes well. Include several comfortable, fluffy pillows so guests will sleep comfortably throughout the night. Keep bedding colors solid and neutral to create a feeling of calm and tranquility.
- Blackout curtains or blinds: Install special blackout curtains or blinds to keep sunlight and noise out of the room. These window coverings help keep outside noises and bright light from getting inside when guests need quiet time.
- Air conditioning: No short-term rental is complete without a quality, working air conditioning system. The system should be easy for guests to use whenever they need to adjust the temperature to their liking. Include a piece of paper with instructions or the user’s manual so guests can easily see how the system works.
- Bathroom amenities: Include bathroom amenities like fresh, fluffy towels, shampoo and conditioner, body lotion, a small bottle of mouthwash, and a hairdryer. A full-length mirror and plenty of coat hangers are also always appreciated.
The kitchen is one of the most important features of a high-quality short-term rental. Full kitchens offer an advantage over hotels since it helps guests save money on food and makes it easier for those with special diets to make the food they need. Here are some items to include in your kitchen amenities checklist:
- Coffee maker: A coffee maker is a must-have. Include a working coffee maker, some coffee mugs, creamer, and some complimentary coffee for your guests. Most business travelers need their coffee in the morning before they start their day.
- Stove: Include a working stove so guests can cook their daily meals without leaving the property. Don’t forget to include some pots and pans, plates, drinking glasses, and silverware.
- Fridge: Every good short-term rental property should include a roomy refrigerator with a freezer. If possible, provide a fridge with an ice maker, which is always a welcome addition.
- Small kitchen appliances: Include other small kitchen appliances like a blender for smoothies, a toaster oven or toaster, and a rice cooker. You can also include a crock pot, a juicer for beginners, and an air fryer if you have the available space.
- Kitchen supplies for clean-up: Don’t forget to include some kitchen cleaning supplies, like a mop and bucket, dish soap, dish scrubbing sponges, wash rags, and hand towels. Include basics like an oven cleaner, glass cleaner, and disinfectant cleaning spray with a roll or two of paper towels.
- Food storage containers: Offering food storage containers adds a nice touch, as they provide your guests with a place to store leftovers to reduce waste. If you prefer, you can include some zip-top plastic storage bags, a roll of aluminum foil, or some shrink wrap for disposable storage options.
Smart locks make it easier for guests to enter their rooms while adding a high-tech security layer. Consider installing smart locks for your short-term rental to give your guests fast, secure access to the property whenever needed. Here are some of the benefits of using smart locks.
- Automated check-in system: A smart lock system allows visitors to “check-in” the room whenever they arrive. Flexible check-in and check-out times are one of the top items on the amenities that business travelers prefer when looking for short-term rentals.
- Increased control: Smart locks give you more control over who enters the property, and you can do almost everything remotely. Use online check-in to set times for your guests and to monitor and track when people come and go from afar. This will give you peace of mind.
- Save time: These special smart lock systems help you save time by eliminating the traditional check-in process. You won’t need to be physically present (unless you want to be) to register your guests and check them in online. This allows you to streamline the entire process with one simple piece of technology.
Cleaning and storage amenities
Offering a variety of cleaning supplies and plenty of storage are also excellent amenities for casual and business travelers. When people are away from home, they want to be able to keep their belongings neatly and safely stored. Offering your guests access to essential cleaning supplies helps them keep their temporary homes clean while saving them money.
- Cleaning supplies: Include cleaning supplies like a mop, vacuum cleaner, and an assortment of cleaning products like glass cleaner, floor cleaner, and dusting cleaning products. Create a custom rental cleaning kit and include an assortment of brand-name products along with some simple instructions.
- A washer and dryer: Business travelers appreciate having easy access to a washing machine and dryer to keep their work clothes clean. Don’t forget to include some laundry detergent and dryer sheets. Put a checklist on the wall with simple instructions so guests know how to operate the machines.
Warranty and insurance
Since you’ll have a lot of different guests on your property, having the right home warranty and home insurance are absolutely vital. Companies like Airbnb offer property owners some level of protection, but a quality short-term rental insurance plan is recommended to protect you from liability.
This insurance also protects the property in the event of a disaster since many traditional homeowners insurance plans have a business activity exclusion, which won’t protect the dwelling if the owner isn’t present. Also, invest in a good home warranty to cover the cost of repair or replacement of your rental property’s appliances and major systems like the plumbing and electrical.
The best short-term rental sites to list on
When you’re ready to market your short-term rental, it’s essential that you publish them on the best websites and platforms to ensure you’re reaching your target market because, according to the survey made by The Global Vacation Rental Report, approximately 70% of bookings were made through online travel agencies, and 30% were made via direct bookings.
You could use different platforms, but according to Statista, Booking.com is in first place with a revenue of $10.96 billion. Expedia came in second with a revenue of $8.6 billion, and Airbnb was in third place with a revenue of $5.99 billion.
Booking.com is a popular European brand that saw a peak of over 700 million site visits per month this year. While it’s a bit less popular than Airbnb in the United States, it still reaches a wide market share. One benefit to using Booking.com is that you’ll likely attract international visitors as well as Americans. However, the site also includes hotels, so it can be more difficult to stand out against the competition. Booking.com charges hosts anywhere from 10 to 20% in service fees, which can reduce your total rental income.
Expedia sees approximately 18 million users each month who are looking for short-term renters. On this platform, you’ll see rental listings from hotels and homeowners, similar to Booking.com. The service fee for Expedia can be as low as 10% to as much as 30%. However, many consumers like to use Expedia to book their whole trip, including flights and car rentals, so there’s a good chance you’ll get a decent number of reservations from the platform.
Airbnb is one of the most well-known online rental platforms, meaning you’ll reach a massive number of potential customers. Since its initial launch in 2008, Airbnb has over a whopping total of 7 million rental listings across the globe. In Q2 of 2022, long-term stays of 28 days or more continued to be the fastest-growing category for Airbnb guests compared to long-term stays in 2019. This is a 25% increase from a year ago and almost 90% up from Q2 of 2019.
VRBO is very similar to Airbnb and stands for “vacation rental by owner.” One perk to this platform is that it does not include motels, hotels, or corporate hosts, which helps you get more eyes on your listing. Another bonus is that VRBO splits the service fees between the host and the renter. Hosts pay a flat fee of 8% on the full booking price, and guests pay somewhere between 6% to 12% in commission. Remember that VRBO only lists properties for short-term rentals, so anything long-term may not qualify to be listed on the platform.
How to make your rental listing competitive
Now that you know the most important elements to include in your short-term rental is time to understand the essentials for listing your property online.
List your property
The right listing is one of the best ways to reach a wider audience and get property rental customers. Writing detailed, in-depth descriptions clearly stating what you have to offer is important. Here are some other things to include when you list your rental property on a platform:
- Identify your target audience: When you list your property, use keywords that appeal to your target audience. For example, business travelers are looking for technology keywords like Wi-Fi, while couples may want to know more about the bedroom, and families are typically interested in nearby attractions and activities.
- Use quality photographs: Use clear, high-quality photos of every room, including the outside of your property. Make sure you take photos in natural light and post as many pictures as possible so visitors have a clear picture of your property.
- Describe your property and highlight the amenities: Be very descriptive about your property, like the type of architecture, how many bedrooms it has, and all the amenities you offer. Don’t forget to include specifics, like whether you include a work area with a desk and chair or if laundry facilities are available on site.
- Location: Talk about your location, including basic weather stats, nearby amenities, and proximity to things like shopping and entertainment. Include your proximity to the nearest highway and any other key attractions nearby.
- Update your calendar to reflect availability: Ensure you’re constantly updating your calendar so guests know exactly which dates are available. There’s nothing more frustrating than attempting to book a rental only to find out that it’s already been rented for the dates you want, so regularly keep track of your calendar.
The average price of a short-term rental in the United States is around $216 per night, but this may vary depending on your specific location and the time of year. You’ll want to price your rental competitively but also cover your expenses and gain a profit. When you set your pricing, consider the cost of things like your monthly mortgage or rent, any home warranty and insurance premiums you pay, and if you’re paying for a business license or permit. Also, factor in the cost of renovations or repairs, listing fees, cleaning services, landscaping, HOA fees, and the cost of new appliances.
Set up property management
Good management is a crucial part of the short-term rental business. You’re responsible for handling the promotion of your property, managing reservations, marketing, and guest check-in and checkout. You’ll also need to consider how to handle cleaning and maintenance, general customer service, and issue resolution. There’s also the accounting and revenue management task, along with any associated administrative tasks. Look for short-term rental property management software to help make your job much easier and more streamlined.
Crunch the numbers
Knowing the ins and outs of the rental market is vital, and acquiring the right data is important for good decision-making. The Global Vacation Rental Report 2022 states that 40% of property managers depend on information obtained by market business intelligence or analytics services.
Approximately 58% of property owners plan to use more data or spend more money on data products to help them gain competitive insights about pricing, availability, and other aspects of the business to help them make sound decisions and increase revenue.
Growing your short-term rental business
Once you’ve followed all of the necessary steps to get started, it’s important to maintain and grow your short-term rental business. You can do several things to help you increase your bottom line while you gain more happy customers in the process. Here are some actionable ways to help your rental business increase and improve over time.
Create your website
In addition to listing your short-term rental on the best websites and platforms, you can also explore creating your own rental website. By doing so, you can establish a unique brand identity, customize the user experience, and have full control over your rental business. While popular platforms like Booking.com, Expedia, and Airbnb dominate the market, creating your own rental website allows you to tap into a different segment of the market and potentially reduce dependency on third-party platforms. It provides flexibility in terms of design, pricing, and policies, empowering you to tailor the rental experience to your target audience’s specific needs. If you’re looking for autonomy and want to differentiate yourself in the short-term rental industry, building your own website can be a worthwhile endeavor.
Go above and beyond as a host
Your guests will remember the property they stayed in and how their host treated them. Doing small yet impactful things can help your rental property hospitality stand out. As a result, you should see repeat business as well as some free word-of-mouth advertising
- Keep your records straight: Every profitable business should keep thorough and accurate, constantly updated records, and rental properties are no exception. Make sure your records are always kept straight, so there’s no confusion between yourself and your guests.
- Ensure the property is clean before check-in: Every part of your property should be thoroughly cleaned before guests check-in, including the bathrooms and bedding. Now is also the time to re-stock any extra items like coffee, towels, and cleaning supplies.
- Go beyond the bare minimum: Do some extra-special things for your guests, like leaving them a nice bottle of wine from a local winery, offering a nice gift basket, or giving them helpful instructions for the major appliances and directions to local attractions.
- Local snacks or drinks: Give your rental customers a few local snacks or beverages to try free of charge. This is a wonderful, memorable way to let your guests know they’re welcome and that you’re proud of where you live. It also opens dialogue and piques interest, which results in happy customers.
- Provide personalized gifts: Include a nice welcome book that you designed yourself, or give your guests some personalized gifts with their initials or names on them. This can include customized washcloths or something as simple as a small sign to welcome them.
- Clean the space: Consider hiring a professional cleaner for your short-term rental. They can ensure thorough, meticulous cleaning, enhancing guest satisfaction and your property’s longevity so guests can see everything clean when they arrive.
Provide great customer service
Providing exceptional customer service is one of the most effective ways to help your rental business grow. If you’re renting just one property, maintaining excellent customer service is easier than if you’re managing several at a time. No matter what you do, focusing on having happy customers should always be paramount. Provide extras like the items mentioned above and be easily accessible whenever your guest has questions or when an issue arises. Addressing concerns promptly is one of the best ways to get positive reviews and more business over the long haul.
Give and receive good reviews
Combining everything mentioned here should encourage your customers to write positive reviews. Having good reviews is important because it helps to spread the word about not just your property but also you as a host. Both the quality and quantity of the reviews you receive can make an amazing difference for your rental property business. According to one report, 29% of rental customers say they consider review scores when looking for a property. Some platforms also allow the host to write reviews, so make sure you reciprocate with a positive review about your guests when you can.
With the right property and some excellent amenities, you’ll be able to rent to a variety of business travelers and casual guests who love to travel. Remember to have a quality home warranty and the right insurance and that you always make customer service front and center. With a few simple steps, you can watch your short-term rental business grow and thrive over time.