What Is the Right Amount to Pay for Vacation Rental Management?

What is unclear about vacation rental management fees is that they can be as low as 10% or as high as 50% of the booking price, depending on whether you use a traditional property manager or an unbundled management service like 5 Star STR. 

To clarify, we've outlined the fees charged by vacation management companies and what they provide. Why is the difference so significant? What are you paying for?

Booking Fees and Commissions

What's behind the discrepancy in management fees for vacation rentals? Some traditional property managers charge as high as 50% commissions, while unbundled management services like 5 Star STR charge as little as 10% per booking. Are you getting your money's worth? Here's a list of management fees and what they cover to answer that question.

Marketing Services

You should get a customized listing for your property that makes your home look appealing and that guests can easily find when searching for vacation rentals! Make sure your listing comes with professional photos so you can make a great first impression on travelers.

Distribution

Be sure that your listing is accessible on relevant sites. Some of the most common locations are the company's website, local tourism boards, or listing platforms such as Airbnb and Vrbo. If you register with a listing platform, you will have to pay an extra fee. Your management firm may include that cost in their booking services or charge you an extra amount. This post provides all the information you need about listing fee costs.

Booking Services

You may want to employ a management company with staff to respond to requests to secure reservations promptly. You should ideally reply to visitors within 15 minutes, so they do not lose interest and book elsewhere.

Nightly Rates

Your management company might provide dynamic pricing at any level of sophistication. Using dynamic pricing, rates are adjusted to reflect demand, seasonality, neighborhood comps, and other factors.

Communication with Guests

Before the start of the reservation, your vacation rental manager should send confirmation details and check-in instructions.

Guest Contact

On-site contact is available to welcome guests, hand over keys, and assist them while they are in your vacation rental. In some management firms, this service is included in the commission they charge, giving owners peace of mind. You can hire a guest contact for $50 or less per booking if your chosen service doesn't include all the necessary components of vacation rental services. You might want to reconsider if you haven't chosen the right management company.

Separate Vacation Rental Management Fees

Your management company might offer a la carte services to supplement their standard services and what you pay in commission or booking fees. Here's a list of those extras and how they add up:

Cleaning: It's unlikely that you'll have to pay for cleaning services, as they are typically included in the nightly rate. The cost is based on the location and size of the property, as well as the total, which includes nightly rates, taxes, and cleaning fees. You can expect to pay between $25 for a studio apartment in Nashville to $250 for a five-bedroom home in Park City for cleaning services.

Keeping your cleaning fees competitive for your area is crucial, or you may lose clients to competitors who charge less overall. It would help if you also verified that the preferred service provider maintains a high reputation. You don't want to know that your home hasn't been adequately cared for months later.

Maintenance: Be sure to ask what maintenance services are covered by management companies charging higher commissions, as these firms might charge you extra if a repair is beyond a basic fix. Are there certain repairs or regular maintenance that aren't included in their fees? It's important to know, so you don't get an unpleasant surprise if something breaks or needs regular upkeep. Also, look for additional required services such as snow removal and landscaping, as these services aren't included in their basic fees.

Stocking: The cost of stocking supplies for vacation rentals ranges from $5 to $25, depending on the size of your dwelling and the necessities (soap, toiletries, kitchen essentials, etc.) You'll find out whether your management firm offers the service automatically or if you can choose it by reading the fine print of your agreement. If you can do it yourself, these suggestions will assist you in keeping your property adequately supplied for less money.

Payment Processing: Payment processing companies charge a 3-5% fee when guests pay with a debit or credit card since the transaction is completed and the money is transferred to your account. Because this fee is outside of the booking or commission fees that vacation rental management services receive, it is typically listed as a separate line item. Payments are handled by companies such as Stripe or VacationRentPayment, payment processing companies.

Vacation rentals are lucrative businesses but also require a lot of work. Many owners rely on vacation rental management businesses to handle their rentals. Your choice of management solution will depend on your budget, time limitations, and revenue goals. 

How much does it matter to you? Do you want a low-cost service that limits your choices or a flexible service that allows you to choose where to spend your money to increase revenue?

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