How to Scale A Property Management Business: Processes & Plan

By January 13, 2022February 4th, 2022vacation rentals
scale property management business

When it comes to vacation rental property management, more is often, well…more.

If you’ve had success with your short-term rentals so far, it makes sense that you’re wanting to scale your property management business, and take that success even further.

Because—as we discuss more below—the VR sector is continuing to thrive despite the effects of the pandemic, and the industry is showing no signs of slowing down. Why wouldn’t you want to get a piece of that pie?

As families plan their 2022 holidays, right now is the perfect time to scale.  In today’s article, we’ll assess whether your business is ready to grow, and provide you with a step-by-step plan of how to actually do it without burnout or breakdown.

Scaling your business may sound daunting. More vacation rentals mean more work, right? Way more staff? More admin? More complex logistics? More money, more problems?

Think again.

With the right planning and tech stack, scaling is absolutely possible, and will actually increase your size, revenue, and efficiency without overloading your to-do list.

Investing in the right tech stack and centralized processes means you have more headspace to deliver better experiences to your guests and retain the clarity and time you need to accelerate your growth and acquisitions while maintaining profitability, and without losing control.

Here’s how.

Want help scaling?

Operto provides the tech and support you need to scale and keep operations lean.


Vacation rental companies won’t stop scaling

There’s no denying it’s an excellent time to scale your vacation rental management property. 

The vacation rental market is showing no signs of slowing down (despite the continuing pandemic) as bookings begin to be confirmed for 2022 and beyond.

The stats bear this out: A study by AirDNA found that in April 2021, U.S. short-term rental occupancy hit an all-time high of 61.6%, and total revenue for short-term rentals is expected to increase by 42% in the next four years.

The same study found that in most US markets, demand is outpacing growth, and over 2022, the average listings count across OTAs such as Airbnb and VRBO is expected to increase by 20.5% next year to reach 1.3 million.

Much of this growth is being driven by mergers and acquisitions of already-successful vacation rental companies, who are scaling fast to accommodate this growing demand.

Analysis by GlobalData found that M&A deals in the travel and tourism sector in Q3 2021 recorded a 10% increase in deal value to $58billion (despite a 24% drop in deal volume compared to Q2 2021), meaning that even with fewer mergers this year, the figures involved are continuing to skyrocket.

For example, super-successful start-up Sonder has been in talks with special purpose acquisition company (SPAC) Gores Metropoulos II Inc, in a deal reportedly valued at $1.3bn, while the Portland-based vacation rental management giant Vacasa also recently acquired TurnKey Rentals to add more than 6,000 properties to its already substantial portfolio. 

And VTrips, the southeastern US-based property management company, has successfully secured minority equity investment of $250 million to fund its plans to expand via mergers and acquisitions.

Beyond mergers, many big names in the industry are raising serious capital to fund ambitious expansion plans. 

This includes Melbourne-based online portal Riparide, which has raised $4 million to focus on international expansion, and by October this year, long-term vacation rental firm Spotahome had successfully raised $29 million for a similar mission.

And on a slightly smaller-but-still impressive scale, Julie George from Cairns Australia built up a portfolio of over 120 listings over three years through co-hosting, bringing in up to 550k a month. Julie recently sold her management company, Host My Home, to a larger conglomerate, Hometime, for over 7 figures. 

Julie is now working as a consultant for property managers, promoting her book Million Dollar Host—a title that alone speaks to how successful the industry can be.

How to scale a property management company

It makes perfect sense, given the current boom, that you’d have big ambitions for scaling your property management company.

And even if you’re a small business with no current plans to seek secure hundreds of millions of dollars in funding, and even if you don’t have designs on massive mergers, you can still start to scale your business for greater success with the right plan and powerful, automated tech.

Follow our five key points:

  1. Scale according to your business model

  2. Get your numbers right

  3. Keep it lean with process and tech

  4. Build the right integrated tech stack for scale

  5. Understand your profitability

1. Scale according to your business model

How and if to scale depends on your business model. 

There are five major types of business models in vacation rentals, and each will demand a slightly different approach.

  • Master lease - A system where your company rents all available real estate space from the owner for a set price, and then rents to guests (third parties). Scaling will require the acquisition of more space from a larger owner or landlord.
  • Full-service vacation rental management - A system where the company oversees the entire process from vacation rental marketing, listing, pricing, guest communication, vacation rental cleaning, and even staff coordination—without necessarily owning any of the properties they are renting themselves. Vacasa is a great example of this. Scaling here will require you to bring on more owner or commercial properties to your books and keep those owners happy.
  • Online property management - Very similar to full-service vacation rental management, but entirely online (meaning no on-site management), and reliant on super-smart technology to coordinate everything remotely. Scaling this model will require hyper-connected tech, reliable connection and servers, and excellent owner-to-manager-to-guest communication, as well as more owners and properties on your portfolio.
  • Franchise model - Typically a model through which a vacation property manager coordinates their properties by working with and gaining access to an existing trademark and brand, as well as their existing processes and technology.
  • Hybrid models - This typically describes a vacation rental model that is a combination, or hybrid, of long-term and short-term rentals, or of an apartment hotel style suitable for longer-term stays, which can also be used for short-term rental accommodation. Texas-based company Locale says its ‘“hybrid” system offers “the best of both worlds” by offering short-term stays akin to a high-end apartment living experience. Scaling this will mainly mean acquiring more multi-family properties in your STR portfolio.

2. Get your numbers right

Before you can scale, you need to get a clear and accurate picture of where your company is at now, and create a comprehensive business plan. As they say, you can’t change what you don’t measure.

You’ll want to go through a vacation rental property management checklist, asking yourself questions such as: 

  • How many properties are your team currently managing at maximum capacity?
  • Will you need to hire more staff members as you scale, or will you want to replace manual tasks with automation technology?
  • What will the costs of your acquisitions be, what will be the right properties for you, and how much will you need to invest in actually acquiring them—whether you own, lease, renovate, or simply manage them? Are your acquisitions single properties, single-family homes, or entire buildings? 
  • What are your current metrics for key KPIs such as homeowner churn, distribution mix (for example, how many of your bookings come from OTAs, and which ones, versus how many come from direct bookings), and what level of profitability are you aiming for?
  • What will your future KPIs be, and what will your aims be once you take steps to scale?

  • 3. Keep it lean with process and tech

    The key to scaling your vacation rental business without piling on the pressure or requiring you to double your staff members, as well as the number of properties, can be summarized in a single word.

    Technology. 

    Setting up vacation rental automation and a property management solution can take some initial investment and may present more of a learning curve than simply doing what you’ve always done before. 

    Yet, it’s the central key to scaling seamlessly, because it automates so much of the behind-the-scenes manual work that you’d otherwise be doing manually. 

    You cannot continue to scale profitably or sustainably if you keep doing everything yourself, or need to hire more and more staff members just to make it work. 

    When we say lean, we mean:  

    • Lean on staff numbers and operational efficiency - Keep staff numbers low even as you expand on investment properties or units (such as The Annex hotel in Toronto, which requires just 1.5 staff members for every 24 rooms)  
    • Lean on remote working and access - There’s no need to have physical offices and overheads for a growing team, redundant communal spaces, or a front desk when you can keep staff numbers small, enable automated systems such as keyless entry for vacation rentals, and you can coordinate everything remotely via a single, cloud-based dashboard.

    Technology designed to help your new property management business scale means that you can acquire more properties or rentals, and expand to new markets or even countries, without tripling your team or investment in staff or processes, or piling on the stress and burnout to your to-do list.

    Property management software can help you streamline and automate all aspects of your vacation rental business from start to finish.

    This might include everything from finding new property owners to creating new listings that convert, to taking online and automatic payment, tenant screening, to confirming bookings automatically, sending guests automated messages, enabling contactless check-in for your vacation rentals, and even managing staff and cleaning workflows and maintenance processes too.

    Harnessing the predictability and 24/7 reliability of technology—such as, say, connecting a powerful PMS such as Mews to a property automation and guest communication tool such as Operto—means you can run your business on an ever-increasing scale even as you sleep.

    4. Build the right integrated tech stack for scale

    Using technology that continues to work for you in the same, consistent and reliable way no matter how many properties you add to your portfolio is central to scaling with success.

    Whatever your business model, and whatever your scale ambitions, no matter how large you scale, operating with a centralized tech stack allows you to ramp up operations efficiently across the group, even if you keep the brand “small and local”.

    Steve Milo of VTrips recently told Rental ScaleUp: “We think that the vacation rental market in the United States is a localized experience, so we keep the local brand for the most part in every region.

    “[But] yes, we take advantage of a centralized tech stack and the synergies that we get through smart locks, through centralized accounting, centralized marketing, and centralized reservations.”

    No matter how many properties or companies VTrips may acquire, its business runs on its centralized tech platform. 

    All-in-one software such as Operto enables you to do this, partly thanks to its wide array of integrations. These enable you to connect all necessary tools to your central dashboard platform, automating everything from accounting, channel management, booking, payments, guest communication, and more.

    Want help scaling?

    Operto provides the tech and support you need to scale and keep operations lean.

    5. Understand your profitability

    As we mentioned above, to scale successfully, you need to have a solid grasp of your numbers and cash flow, but this also includes knowing where your profitability comes from—going beyond the numbers to understand why you’re profitable. 

    VTrips knows that its profitability comes from being respected in the given local area, using local brands to ensure continued recognition and trust.

    “We put a lot of emphasis on the local experience…and we keep the local brand for the most part in every region,” Steve Milo says. 

    “It’s partly taking advantage of the synergies of a national organization, but also understanding how important that local experience, that local touch is, to make what I consider to be a sustainable business model.”

    He explains that the company will not use the name VTrips, but instead, for example, Jackson Mountain Homes, which is a brand that is “very respected in the community, and the owners, the guests, and the employees know it”. 

    Similarly, knowing where your profitability comes from also means spending wisely, whether that means keeping your marketing small and word-of-mouth, or buying existing technology rather than trying to reinvent the wheel by making your own.

    Software such as Operto enables you to optimize this kind of insight and helps by integrating with PMSs that enable you to gather precious, unique data for your business.

    For example, understanding your guests’ behavior and preferences may start with whether they tend to book via OTAs or direct, whether they prefer Airbnb Plus or Luxe (see this Airbnb plus checklist if that’s the case for your guests!) whether they like upsells or prefer to book discounts and deals, and when they prefer to book.

    Coupled with your own knowledge of your field and client base, this level of insight could be the difference between scaling successfully, and making huge real estate investments that you can’t ultimately sustain.

    Getting ready to scale your property management business: The bottom line

    Ultimately, scaling your vacation rental property management business requires you to get a solid understanding of where your numbers and operations are now, and where you want to be in the next 12 months or beyond, and why.

    This will help you understand the next steps you need to take to grow without becoming overwhelmed, overspending, or losing sight of what makes you profitable and popular in the first place.

    As VTrips has found, using a centralized tech stack ensures seamless scaling and a portfolio that can continue to grow almost endlessly, without abandoning the local touch that guests trust and respect. 

    Central operations are managed automatically, using technology to automate everything from bookings to accounting to maintenance. 

    This leaves your company with lower overheads, a manageable number of employees, and reliable processes that work every time, for more profit and successful scaling, without a ton of more stress.

    Want help scaling?

    Operto provides the tech and support you need to scale and keep operations lean.