How to Write a Short-Term Home Rental Business Plan or Template
The short-term home rental industry has enjoyed significant growth over the last several years, which has driven demand for short-term home rental business plans and short-term home rental business plan templates. A driving reason for the substantial growth in the short-term rental industry is thanks to digital marketplaces such as Airbnb, Vrbo, and Hometogo.
These platforms provide an avenue for short-term rental proprietors to showcase their properties or rooms to potential renters, who can peruse them and ascertain whether they meet their requirements. As the usage of these rental platforms proliferates, the demand for robust short-term rental business plans—for both financing and operational purposes—escalates. Acknowledging this increasing need, our business plan writer offers several strategies and recommendations to effectively craft a compelling short-term home rental business plan (7/23).
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Executive Summary for a Short-Term Home Rental Business Plan.
The executive summary for an Airbnb business plan must succinctly present key aspects of your short-term home rental business. Primarily, detail the rental availability of your property—be it daily, weekly, or monthly. In addition, an overview of available amenities, both within the property and its vicinity, significantly enhances the summary. For instance, if the property is proximal to a beach, emphasize its accessibility. Highlight communal features, such as pool access, if available. This essential information constructs an appealing snapshot of your rental business, inviting further interest (7/23).
Company Information and Location.
The company information segment of your short-term home rental business plan lays a crucial foundation, offering stakeholders insight into your operations. Begin by detailing the property, including its location, accessibility, and distinctive features, to showcase its appeal to potential renters and align it with the local property market context. Next, clearly define the rental terms you provide—daily, weekly, or monthly. This clarity facilitates stakeholders' understanding of your business mechanics and guides marketing and pricing strategies.
Your plan should highlight the amenities you offer. Whether basic, like Wi-Fi and kitchen appliances, or unique, like a pool or home theatre, these aspects enhance your property's value and attractiveness. Your business model also needs a thorough explanation. If you engage third-party services for tasks like cleaning and booking, stating this justifies higher variable costs in your financial projections, thereby legitimating your cost structure to investors or lenders.
Defining the business plan's scope is crucial. If you manage multiple properties, clarify the focus property of this plan to avoid confusion. A brief overview of your other properties, their attributes, and your experience managing them can also boost your credibility. In conclusion, by solidly defining this section, you demonstrate your business acumen and provide a clear view of the business plan's scope and structure, enabling a thorough evaluation of your business's potential and strategic direction and stimulating more engagement and interest (7/23).
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Service Description and Competitive Advantages
In detailing the service description and competitive advantages for a short-term home rental business plan, property owners typically adopt a dual internal/external approach. This involves presenting both the property's intrinsic features and its surrounding attractions. The internal component often highlights the property's unique amenities such as the number of bedrooms and bathrooms, the availability of a full kitchen, a pool, or a pet-friendly gated yard. These elements serve as distinctive selling points, setting your property apart in the competitive landscape of short-term rentals.
Simultaneously, the external aspect underscores the property's locational advantages. This could include its proximity to beaches, theme parks, shopping districts, or other local points of interest. By employing this comprehensive internal/external strategy, business owners effectively encapsulate their short-term rental's competitive edge, offering a holistic perspective of its unique value proposition against the backdrop of the broader market (7/23).
Target Market for a Short-Term Home Rental Business Plan
A key component of the company section in a short-term rental business plan is the identification of your target market. Understanding who your prospective renters are enables you to tailor your competitive advantage, advertising strategy, and financial projection to their preferences and needs.
Generally, the target market for short-term rentals can be broadly categorized into tourists or corporate clients. For a tourist-centric target market, it's crucial to align your competitive advantage with elements that cater to their interests. Emphasize aspects such as the proximity of shopping venues, accessibility to popular attractions, and ease of transportation.
Conversely, if your focus is corporate clients, your competitive advantage should underscore factors like the property's closeness to significant business hubs or major employers. By tailoring your business plan to your target market, you can create a more compelling and effective strategy that caters specifically to the needs and preferences of your potential renters. This careful targeting can ultimately lead to higher occupancy rates and increased profitability for your short-term rental business (7/23).
Industry research for a Short Term Home Rental Business Plan or Template
For the industry research section of the short-term home rental business, business owners may choose to explore their research on the bed-and-breakfast industry or the hotel/motel industry. This industry is a blend of the two, so both or either industry segment would suffice. For example, if I were to write a business plan for a short-term home rental business, I would focus more on the bed-and-breakfast industry. In this industry, revenues for the last year exceeded $1.7 billion. In the next five years, industry experts anticipate a 5% annual growth rate for revenues. This is well above most mature industries. As for profits, organizations such as these have exceeded profits of $94 million. Over 7,900 businesses are competing in this industry. These are just some of the industry statistics that may be included as the basis of your industry research.
Owner and Management Section
The owner and management segment of a short-term rental business plan should commence by revealing the property or organization's ownership. Follow this by outlining the professional accomplishments or past employment that have equipped the owner with vital management and marketing skills. Prior roles could span management, advertising, or construction-related fields.
Having established this experience base, incorporating academic credentials can further strengthen your profile. Highlight any degrees in business, marketing, or tourism. Voluntary work in related sectors such as tourism or management also adds value. This section aims to showcase the owner's competence and preparedness to successfully manage the short-term rental business, thereby inspiring confidence in potential investors or stakeholders (7/23).
Funding Request for a Short-Term Home Rental Business Plan
The funding request section for a short-term home rental business plan should start with stating precisely how much funding is needed to start the company. Next, make sure to describe how the funding will be spent. Popular needs for a short-term home rental would include purchasing the property, making renovations, an advertising budget, and substantial working capital. Finally, the segment rounded off by describing how the loan or investor funding will be compensated. For the most part, business owners will pay back loans through excess cash flow. However, future funding may also be an excellent exit strategy.
Financials and Financial Projections for a Short-Term Home Rental Business Plan
The final section of the business plan should discuss the financial projections of the short-term rental property business. In starting the section, I always like to introduce highlights related to the company. Financial highlights may include expected first-year revenues, anticipated first-year costs, profit margin expectations, and subsequent-year profits. Once this is outlined, I then describe the assumptions used in the financial projections. Assumptions may include the number of properties at the start of the company, the advertising budget monthly, the average property rental rate per night, and the number of employees. Next, I then filled in the financial model that will be usable for the business plan as well as in operations.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author
Owner of: Quality Business Plan and Quality Business Consultant.
Date: 7/5/2023