A vacation rental company is a company that allows travelers to rent private properties for a short time. These rental properties are often located in vacation destinations and feature more benefits and greater flexibility than staying in a hotel.
Please note that some vacation rentals, particularly condominiums or apartments, offer many of the same services hotels offer their guests, e.g., front desk check-in, 24-hour maintenance, in-house housekeeping, and concierge service. The market size of the vacation rental industry in the United States reached 411.9 million U.S. dollars in 2020. The sector saw a 1.7 percent growth over the previous year’s size of 405.2 million U.S dollars.
Steps on How to Write a Vacation Rental Business Plan
Table of Content
Red Roof® Vacation Rental Company, Inc. is a standard vacation rental company that will be located in Miami, Florida but with an active presence and network all across tourist cities in the United States. We have been able to secure all the necessary permits for our facilities.
Red Roof® Vacation Rental Company, Inc. will ensure that all our rental properties meet international standards. We want to build a business with a wide range of clientele base that cuts across people and businesses of different financial statuses.
We have CRM software that will enable us to manage a one-on-one relationship with our customers no matter how large they may grow. Jason Finney is the founder and CEO of Red Roof® Vacation Rental Company, Inc.
a. Our Products and Services
Red Roof® Vacation Rental Company, Inc. will rent out furnished apartments, houses, and professionally managed resort-condominium complexes temporarily to tourists as an alternative to a hotel. We will also offer our guests services such as front desk check-in, 24-hour maintenance, in-house housekeeping, and concierge service.
b. Nature of the Business
Our vacation rental company will operate essentially as a club where patrons can pick up a membership and pay their subscription monthly, quarterly, or annually. We will also open our business to one-off customers, especially tourists and visitors who are new to the industry.
c. The Industry
Red Roof® Vacation Rental Company, Inc. will operate in the travel and tourism industry.
d. Mission Statement
Our mission is to establish a world-class vacation rental company that will make available all kinds of apartments for vacation rental, including budget studio apartments, lavish, expensive private villas, furnished apartments, houses, and professionally managed resort-condominium complexes.
e. Vision Statement
Our vision is to be among the top 3 vacation rental companies in the United States of America.
f. Our Tagline (Slogan)
Red Roof® Vacation Rental Company, Inc. – Your Home Away from Home!
g. Legal Structure of the Business (LLC, C Corp, S Corp, LLP)
Red Roof® Vacation Rental Company, Inc. will be formed as a Limited Liability Company (LLC). The reason why we are forming an LLC is to protect our assets by limiting the liability to the resources of the business itself. The LLC will protect our CEOs’ assets from claims against the business, including lawsuits.
h. Our Organizational Structure
- Chief Executive Officer (Owner)
- Facility Manager
- Marketing and Sales Officer
- Attendants (Staff like House Keepers, Concierge, Cook, and Hostess) (5)
- Security Officers
i. Ownership / Shareholder Structure and Board Members
- Jason Finney (Owner and Chairman / Chief Executive Officer) 56 Percent Shares
- Jolly Francis (Board Member) 14 Percent Shares
- Peter Boniface (Board Member) 10 Percent Shares
- Vincent Oscar (Board Member) 10 Percent Shares
- Roselin Adamson (Board Member and Sectary) 10 Percent Shares.
- Ideal Location for vacation rental company
- Highly Experienced and Qualified Employees and Management
- A wide network of property owners spread across vacation cities
- Availability of all kinds of apartments in safe and secured locations and cities
- Excellent membership package
- Budget limitations to build our apartments all across key vacation cities
- Inability to properly manage off-peak seasons such as bad winter
- A new business that will be competing with well-established vacation rental companies and hotels
- Inability to retain our highly experienced and qualified employees longer than we want
- Excellent location – Miami, Florida is a thriving market for tourism and vacation rental services.
- Increase in tourism and related activities in our location
- Online market, new services, new technology, and of course the starting of new markets.
i. How Big is the Industry?
The vacation rental industry is pretty big. It is expected to reach USD 6.8 billion in 2022 in the United States.
ii. Is the Industry Growing or Declining?
The vacation rental services industry is growing. Available data shows that the sector saw a 1.7 percent growth recently after the gradual recovery from the global coronavirus lockdown that caused a decline in the industry.
iii. What are the Future Trends in the Industry
The vacation rental services industry is changing, and players in the industry are improvising. No doubt, technology (smart apartments), safety, and social media will change the landscape of the vacation rental services industry going forward.
iv. Are There Existing Niches in the Industry?
No, there are no niche ideas in the vacation rental service line of business.
v. Can You Sell a Franchise of your Business in the Future?
Red Roof® Vacation Rental Company, Inc. has plans to sell franchises in the nearest future and we will target the United Kingdom, France, Bahamas, Egypt, United Arab Emirates (Dubai), Canada, and Australia.
- High maintenance cost
- Government regulations
- Liability problems
- Continuously changing consumer demands
i. Who are the Major Competitors?
- Marriott Homes & Villas.
- TurnKey Vacation Rentals.
- Utah’s Best Vacation Rentals
- Roelens Vacation Rentals and Management
- Isle of Palms Vacation Rentals by Exclusive Properties
- Sykes Holiday Cottages
- The Travel Chapter
- Original Cottages
- iTrip Vacations
- My Property Host
- Happy Holiday Homes
- City Relay
- CorpHousing Group
ii. Is There a Franchise for Vacation Rental Company Business?
- iTrip Vacations
- Direct Booker
- SkyRun Vacation Rentals
- Book by Owner
- Happy Holiday Homes
- Property Management Inc.
- Pass the Keys.
iii. Are There Policies, Regulations, or Zoning Laws Affecting Vacation Rental Company Business?
Yes, and zoning laws require vacation rental company operators to follow specific rules and regulations. Please note that in many communities, zoning laws require vacation rental companies to apply for a permit from the city.
This application process allows the city’s zoning department to determine whether the vacation rental company meets the zoning rules of the community. Permits also ensure that all vacation rental companies are properly licensed by county or state agencies.
In many counties, towns, and cities, local authorities attempt to regulate or ban vacation rentals after complaints from residents or competing lodging businesses. In the U.S., New York City, Chicago, and other cities have introduced restrictions on short-term rentals, though regulation is not always strictly enforced.
The City of Portland, for example, does not allow rentals of less than 30 days in residential zones but according to local vacation property managers such as Vacasa, the average guest stays 3-10 nights
a. Who Is Your Target Audience?
i. Age Range
Our target market age range covers people that are 18 years and above.
ii. Level of Educational
We don’t have any basic educational qualifications for those we are targeting; everyone is welcome to rent our apartments.
iii. Income Level
Anyone who can afford our rental fee or membership fee will be welcome to rent our apartments or pick up membership with our company.
There is no restriction when it comes to the ethnicity of the people that will rent our vacation apartments.
There is no restriction when it comes to the language spoken by the people that will rent our vacation apartment.
vi. Geographical Location
Anybody from any geographical location will be welcomed by our vacation rental company.
Red Roof® Vacation Rental Company, Inc. will not restrict any customer based on their lifestyle, culture, or race from renting our vacation apartments.
b. Advertising and Promotion Strategies
- Host Themed Events That Catch Attention.
- Tap Into Text Marketing.
- Use FOMO to Run Photo Promotions.
- Share Your Events in Local Groups and Pages.
- Turn Your Social Media Channels into a Resource
- Develop Your Business Directory Profiles
- Build Relationships with Other Businesses in Your Area
i. Traditional Marketing Strategies
- Marketing through Direct Mail.
- Print Media Marketing – Newspapers & Magazines.
- Broadcast Marketing -Television & Radio Channels.
- OOH, Marketing – Public Transits like Buses and Trains, Billboards, Street Furniture, and Cabs.
- Including direct sales, direct mail (postcards, brochures, letters, fliers), print advertising (magazines, newspapers, coupon books, billboards), referral (also known as word-of-mouth marketing), radio, and television.
ii. Digital Marketing Strategies
- Social Media Marketing Platforms.
- Influencer Marketing.
- Email Marketing.
- Content Marketing.
- Search Engine Optimization (SEO) Marketing.
- Pay-per-click (PPC).
- Affiliate Marketing
- Mobile Marketing.
iii. Social Media Marketing Plan
- Start using chatbots.
- Create a personalized experience for our customers.
- Create an efficient content marketing strategy.
- Create a community for our target demography.
- Gear up our profiles with a diverse content strategy.
- Use brand advocates.
- Create profiles on the relevant social media channels.
- Run cross-channel campaigns.
c. Pricing Strategy
When working out our pricing strategy, Red Roof® Vacation Rental Company, Inc. will make sure it covers premium, skimming, economy or value and penetration. All our pricing strategies will reflect;
- Cost-Based Pricing
- Value-Based Pricing
- Competition-Based Pricing.
Sales and Distribution Plan
a. Sales Channels
Our channel sales strategy will involve using partners and third parties—such as referral partners, affiliate partners, managed service providers, marketplaces, or value-added resellers—to market our vacation rental company (vacation apartments).
Red Roof® Vacation Rental Company, Inc. will also leverage the 4 Ps of marketing which are place, price, product, and promotion. By carefully integrating all these marketing strategies into a marketing mix, so we can have a visible, in-demand service that is competitively priced and promoted to our customers.
b. Inventory Strategy
Red Roof® Vacation Rental Company, Inc. will operate an inventory strategy that is based on a day-to-day methodology for ordering, maintaining, and processing items in our warehouse. We will develop our strategy with the same thoroughness and attention to detail as we would if we were creating an overall strategy for the business.
c. Payment Options for Customers
Here are the payment options that Red Roof® Vacation Rental Company, Inc. will make available to its clients;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
d. Return Policy, Incentives, and Guarantees
Red Roof® Vacation Rental Company, Inc. will operate a no refund policy hence we will not provide compensation for paid services (membership fees inclusive) in our vacation rental company.
e. Customer Support Strategy
Our customer support strategy will involve seeking customer feedback. This will help us to provide excellent customer service to all our guests, it will help us to understand their needs, experiences, and pain points. We will make use of effective CRM software to be able to achieve this.
We plan to expand our revenue by 50 percent in the second year and the plan will include a marketing, sales, and operations component. The operations component of the plan would include organizing regular promos at the local and state levels, providing electric vehicle charging amenities, and attracting international travel and tour agencies. These strategies will enable us to boost our service offerings and support revenue growth.
a. What Happens During a Typical Day at a Vacation Rental Company Business?
- The business is open for the day
- All the apartments are cleaned and ready to welcome guests
- Guests are welcomed and ushered to their apartments
- Administrative work is done concurrently
- The cooks and other staff members carry out their job description
- Stocking of toiletries, cooking ingredients, and other supplies is done
- Maintenance of the properties is carried out when due
- The facility is administratively closed for the day.
b. Production Process
There is no production process when it comes to the vacation rental business.
c. Service Procedure
When a vacation rental company is opened and everything is in place, they will either choose to welcome guests based on membership or open their doors to everybody.
d. The Supply Chain
Red Roof® Vacation Rental Company, Inc. will rely on trusted agents to supply some of the needed supplies in our city and we have been able to establish a business relationship with wholesale supplies.
e. Sources of Income
- Income from renting or vacation apartments.
- Membership fee
- Service charges for our added services.
Our Membership fee will cost $25,000 for the start and then a $15,000 annual fee from the subsequent year (VAT inclusive and subject to change). The average nightly price for vacation rentals is $58.
a. Amount Needed to Start your Vacation rental company Business?
Red Roof® Vacation Rental Company, Inc. would need an estimate of $6.5 million to successfully set up our vacation rental company in the United States of America. Please note that we will start with only five apartments (holiday villa, apartment, cottage, condominium, townhome).
b. What are the Cost Involved?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $7,300.
- Marketing, Branding, and Promotions – $5,000.
- Business Consultant Fee – $7,500.
- Insurance – $5,400.
- Properties (holiday villa, apartment, cottage, condominium, townhome) – $5 million
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
- Operational Cost (salaries of employees, payments of bills et al) – $60,000
- Start-up inventory – $55,000
- Counter area equipment (countertop, sink, ice machine, etc.) – $29,500
- Store Equipment (cash register, security, ventilation, signage) – $14,750
- Website: $1,500
- Opening party: $10,000
- Miscellaneous: $20,000
c. Do You Need to Build a Facility? If YES, How Much Will it Cost?
Red Roof® Vacation Rental Company, Inc. will build new facilities (holiday villa, apartment, cottage, condominium, townhome) for our vacation rental company and it will cost us $5.5 million.
d. What are the Ongoing Expenses for Running a Vacation rental company Business?
- Cost of stocking up supplies such as toiletries and food ingredients
- Cost of regular surveillance
- Utility bills (gas, internet, phone bills, signage and sewage et al)
- Maintenance of facility
- Salaries of employees
e. What is the Average Salary of your Staff?
- Chief Executive Officer (Owner) – $75,000 per year
- Facility Manager – $38,000 per year
- Accountant / Cashier – $35,0000
- Marketing and Sales Officer – $35,000 per year
- Attendants (Staff like House Keepers, Concierge, Cook, and Hostess) (5) – $35,000 per year
- Cleaners – $22,000 per year
- Security Officers – $21,150 per year.
f. How Do You Get Funding to Start a Vacation Rental Company?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
a. How Much Should You Charge for your Service?
Aside from our membership fee, Red Roof® Vacation Rental Company, Inc. will charge patrons based on the industry standards in the United States. There are several factors that affect the amount charged to rent a vacation apartment. However, we will charge between $58 to $259 per night in our vacation apartment.
b. Sales Forecast?
- First Fiscal Year (FY1): $750,000
- Second Fiscal Year (FY2): $1.2 million
- Third Fiscal Year (FY3): $2.2 million
c. Estimated Profit You Will Make a Year?
Red Roof® Vacation Rental Company, Inc. is projecting to make;
- First Fiscal Year (FY1): (50% of revenue generated)
- Second Fiscal Year (FY2): (45% of revenue generated)
- Third Fiscal Year (FY3): (45% of revenue generated)
d. Profit Margin of a Vacation rental company Business Product/Service
The profit margin of a vacation rental company business is not fixed. It could range from 4.5 percent to 15 percent depending on some unique factors.
a. How We Intend to grow and expand? By opening more retail outlets/offices or selling a Franchise?
Red Roof® Vacation Rental Company, Inc. will grow our vacation rental company by first building other vacation apartments in key tourist cities in the United States of America, the United Kingdom, France, Bahamas, Egypt, United Arab Emirates (Dubai), Canada, and Australia within the first fifteen years of establishing the business and then will start selling franchise from the sixteenth year.
b. Where We Intend to expand to and why?
Red Roof® Vacation Rental Company, Inc. plans to expand to:
- Los Angeles, California
- Long Beach, Washington
- Newport, Rhode Island
- Chicago, Illinois
- Clearwater, Florida
- New York City, New York
- Orange Beach, Alabama
- Ocracoke, North Carolina
- Block Island, Rhode Island
- Las Vegas, Florida.
Internationally, we plan to expand to the United Kingdom, France, Bahamas, Egypt, United Arab Emirates (Dubai), Canada, and Australia.
The founder of Red Roof® Vacation Rental Company, Inc. plans to exit the business via merger and acquisition. We intend to merge with an international vacation rental company that has a world spread so that the management of the company can be placed under a trusted hand when the founder retires.
The goal of combining two or more vacation rental companies is to try and achieve synergy – where the whole (the new company) is greater than the sum of its parts (the former two separate entities) and with a well-structured management team and board of trustee.