How to get your UNFAIR SHARE of the short-term rental market

When a small minority of properties are generating the lionshare of revenue in a market, how do you compete to get your UNFAIR SHARE?

This is the first post in our series, make sure to check out the other posts in the series at the links below -

Understanding Price Drivers in Your Market

Conduct a Listing Audit - Week 3

Revenue Management Strategies - Week 4

Fair as a concept feels nice, but the reality is that in business the goal is absolutely to get your UNFAIR SHARE. In the short-term rental industry, with significant increases in the number of rentals entering many, many, many markets - with demand not necessarily correlated to those increases, many short-term rental owners are feeling this in terms of lower occupancy and/or less revenue. But overall, within markets steady demand means folks are still renting and enjoying short-term rentals - but with more options, its harder to stand out and get booked. But not EVERY property is experiencing lower occupancy due to increased supply.

Are a small number of properties netting the lions share of the revenue?

The short of it is YES! Keep reading if you want to see the data -

In a webinar I did last week, I talked about Stoermers Law - which isn’t real. I made it up; its my opinion. Which is that 20% of properties make 80% of income in a market, borrowing from the 80/20 rule. My peers and I have even talked about this and agree this is probably pretty true, but I wanted to know.

I don’t work at one of these data clearinghouses for STR data - so access to the full set of data was limited. I opted to see where we landed in terms of what percentage of the total number of short-term rentals in a market contributed 10% of all revenue. A data scientist would be helpful here. But that aside, just this novice review is illuminating.

I reviewed (5) markets, figured out the total revenue from March 2022-February 2023 and used the “Top Properties'' numbers (all from AirDNA ya’all - who opted NOT to grant me affiliate status despite how much I talk about them! Something about not having enough followers on social media - so help a gal out and LIKE my Facebook page!)

Anyhow, I then figured out HOW MANY properties it took to get to 10% of the total revenue. I picked markets that were big, well known (Orlando, Gatlinberg), podunk nowhere and in-between. Consistently, it was between 1.7% and 2.7% of the total listings generated 10% of all the revenue. Unsurprisingly, perhaps, the larger markets were on the lower side.

So I am going to redact my 80/20 statement and replace it with Price’s Law - which my friend, the King of Midterms and first Landlord Scientist (Love that title!) @Al Williamson likes to talk about. Price’s Law says that 50% of all published literature comes from the square root of the number of authors; which applied here is that 50% of the revenue comes from the square root of the number of properties in the market.

So taking one of my markets, there are 621 rentals and in the last 12 months generated total revenue of $4,327,034. Applying Prices Law means 25 (the square root of 621) rentals generated $2,163,517 (half of the total revenue) - leaving 596 generating $2,163,517. My analysis showed it was actually 19 properties, not 25 in this particular market.

Now, even if we assume the bottom 20% of income producers only list a couple weeks a year or were brand new and generated almost no income and knock off 124 of the 621 as essentially non-performers in the market, that leaves 497 properties - of which its clear 19 accounted for half of all revenue generated. So you’ve got 478 rentals vying for the majority of that just over $2M - that equates to $4,442 per listing. For a year.

I am neither an economist or a statistician nor do I have access to the full data set. But this is sufficient discussion to prove the point.

YES - A small number of properties are generating a significant portion of revenue

Do YOU Want to get your UNFAIR SHARE of the market?

Of course we all want our UNFAIR SHARE of the market. With alot more properties newly in many markets, this will take more effort than the last couple of years. But take heart, because not everyone is vested or interested in taking action! The fact that you are reading this tells me you already have an advantage - you are willing to learn and act!

Join THE CEO HOST for the next month!

We are going to put on our "Big Boss" hat - step into our role as the Chief Executive Officer of our short-term rental business and strategically, thoughtfully PLAN AND EXECUTE strategies to get an UNFAIR SHARE of our market! Over the next month, I'm focusing specifically on helping you take action to elevate your listing and grab more than your share of bookings!

Do All These Strategies Work?

Lots of smart folks in short-term rentals share many, many strategies to help increase overall revenue - it can be bit overwhelming. There are many people willing give advice and share tutorials - all very helpful, telling you to “game the algorithms to get higher in search findings, change pictures everyday, bury your cleaning fee, apply SEO strategies to your listing, drop your prices, do paid adverting, get new photos, use instabook, collect everyone's email addresses, send out newsletters to prior guests” etc, etc, etc. Honestly, you could do this stuff ALL DAY EVERYDAY and still not get your UNFAIR SHARE of the market! Why? Because the solution has to tie to the problem and its STARTS with diagnosing the underlying issues - why lookers arn't becoming bookers. And it has to start with understanding the ROOT CAUSE - and then applying the CORRECT action(s) to address the real issue!

SPEND A MONTH LEANING INTO PLANNING AND EXECUTING YOUR STRATEGY

As with everything we do here at The CEO Host, we are thoughtful and strategic and encourage you to be as well - and that is the framework we will use to plan and execute a workable strategy! Sign up to join us over the coming weeks to lean into getting your Unfair Share - and a few surprises as I share over the next few weeks tips, strategies and resources to;

How to REALLY understand what drives bookings in your micro-market?
How to do a Listing Audit to ensure your listing is compelling to YOUR audience?
Tips and tricks to ensure your revenue management strategy is optimized
Consider Automations, Routines to support your Being the Boss of Your STR Business

Through the next weeks, we'll be staying on the theme of Getting Your Unfair Market Share with hints and tips to get ahead in YOUR market!

So make sure to SIGN UP with The CEO Host - and take a deep dive (or just a shallow swim if you prefer to skim the highlights!) into Strategies to get your UNFAIR SHARE of the short-term rental market! I’ve got some SURPRISES lining up to help us lean into some of these concepts, so don't miss out! Join me and take action TODAY to get your UNFAIR MARKET SHARE, sign up HERE!

****

Hey Boss! I'm Kate, owner/founder of The CEO Host. If you are interested in taking a leap into short-term rentals - or struggling with your existing business, my goal - passion, and new career, is to help YOU succeed. I've coached hundreds of folks getting started or looking to optimize, analyzed more deals (and duds) than I could count, completed thousands of hours of education and training, attended conferences... So don't be shy. A good CEO knows to bring in expert help - and that's what I'm here for! Lets HOP ON A CALL and chat!

Categories: : kpi, metrics, propertymanagement, self management, short-term rental investing