Which Amenities Should Vacation Rental Owners Invest In?

It’s normal for any vacation rental to need time to develop—it’s a living organism, so to speak, that must adjust to the demands of the market. Additionally, managing a rental can be daunting for newbie owners, as they must assess the amenities of their competitors’ properties and then evaluate what they can reasonably afford.

With that being said, I often get asked by vacation rental managers which amenities can help drive maximum profit (by way of increased rates), regardless of the owners’ duration in business.

Our friends at Tripping.com, the world’s largest search engine for vacation rentals, provided us data taken from ten cities in the U.S. to get a better understanding of this question. In general, a hot tub and killer outdoor space, conducive of al fresco dining, add the most value per night (per room).

Tripping Graph 1

Why These Amenities?

“Kitchen” in this data set refers to access to a private kitchen, which logically, is a huge selling point. Travelers often choose to book a vacation rental instead of a hotel to have kitchen access. It’s a mandatory feature and often the focal point in the most successful rentals.

kitchen-island

In addition to a kitchen, which allows guests to prepare and share food without having to eat at a restaurant, guests look for space and amenities that help them relax leisurely- something that outdoor space, pools, and hot tubs all do.

A Closer Look at These 10 Cities

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If we look at the ten cities independently, we see that the amenities contribute to a different value add, depending on the location. For example, we see that a hot tub is a great investment in Miami Beach and New York City but not in Chicago.

Although a pool on average drives the lowest increase, it provides the highest value increase when compared to the other four amenities, in Chicago and Los Angeles.

Which Amenity is the Best?

I think this data is a great gage, but ultimately, owners need to understand what will drive connection (between your guests in your home, to your home, and to the location), comfort, and enhance the overall experience you offer your guests.

If you are outside of these ten cities, research what your competitors offer in your local market then determine if your findings fit into your “brand”. Instead of choosing an amenity because it seems like a cool idea, think of such additions as an investment that should support your overall business strategy to get the highest return.

I’m also a fan of leaning on the hotel industry—they obviously have a bigger research budget so research amenities at those targeting your guest demographic in your city. Borrow the information as you see fit and can afford.

Lastly, don’t underestimate good ‘ol common sense. In addition to considering your guests’ needs, it is important to consider the weather and also the logistcs and costs associated with maintaining these amenities.

Insider’s Guide to Buying Vacation Rentals

This blog was written for Tripping.com by Volo.

The process of purchasing a home is the biggest step to starting your vacation rental business. It is also the most daunting. That being said, I’ve partnered with one of Sotheby’s top agents to help answer frequently asked questions for those potential investors.

Nancy Tallman sells vacation properties in my hometown Park City, UT so I’m very well acquainted with her strategies and work. In fact, she helped me find my first rental in Park City. Being that she is based locally, local examples will be used, but the principles apply anywhere.

First things first, any good agent will want a clear understanding of your goals. So when a client tells Nancy they are interested in purchasing a vacation rental property, she asks a lot of questions to ensure no stone is left unturned and that the client finds the best home for their situation.

Regardless of the your personal goals, all successful vacation rental properties share these same characteristics.

1. Best location.

We’ve previously covered tips for choosing the best location, which focused on local elements; local landscape, the surroundings, and understanding if nearby businesses and homes are complimentary to your intended experience.

Nancy actually helped me navigate some of these topics (i.e. the water main situation at my Park City rental), so I knew she’d have additional input on choosing the best location:

Best, like beauty, is in the eye of the beholder, so again, it’s important for the agent to understand your goals. Do you plan to spend any time in the rental property? Is this a property you hope to live in one day? If the answer is “yes” to either or both of these questions, then your lifestyle and personal taste come into consideration.

If the property is going to be rented 100% of the time, then you are looking at a pure economic decision. Economic decisions are always a dance between the price and income the property is expected to generate.

From experience, the exact location may not be the strongest indicator of return on investment. For example, the rental differential on a ski in/ski out property may not be sufficient to justify the higher purchase price. An older condominium project with a low price and HOA dues could have hidden costs if there is deferred maintenance and planned owner assessments.

Take time to understand your intent (and financial needs) for the vacation home, so your chosen real estate strategist can better work for you.

2. Expected Appreciation

In Park City, just like in any other town, the location will drive the appreciation. Appreciation is based on supply and demand. There is always going to be a limited supply of properties in walking distance to Historic Main Street, the ski slopes, and other amenities. There is also strong demand for new construction, which has seen strong appreciation even when located further from amenities.

The “average” annual appreciation in the USA is about 3%. In hot neighborhoods, we have seen 10-20% annual appreciation in the past couple of years. For some investors, cash on cash return is more important than appreciation. It depends on your individual goals.

3. Positive Economic Signals

As a property investor, you should look at unemployment, job creation, population migration, economic stability, housing prices and rental yields when deciding where to buy. An unfortunate negative example of the above factors moving in the wrong direction is Atlantic City, New Jersey, where casinos are closing and people are losing jobs.

On the other hand, Park City for example, has all of these factors moving in the right direction. Park City is just 30 minutes from Salt Lake City, which has one of the strongest economies in the USA, and is one of Park City’s major feeder markets for resort real estate. Vail Resorts recently took over two of Park City’s three ski resorts and has promised to make a “significant” capital investment in both resorts this year. The Sundance Film Festival also inked a long-term agreement with Park City, which means we can expect the world famous film festival to continue to draw vacationers to Park City for years to come.

Driving maximum profit starts with a detailed understanding of your home’s location as well as the economy, as we described in planning for vacation rental success. Ideally, it is best to purchase an investment property when the economic indicators first turn in the right direction to purchase before prices have been driven upwards.

4.Reasonable Vacation Rental Costs

Costs can vary significantly from home to home or condo. It’s easy to detail fixed costs, such as the mortgage, property taxes, HOA dues and utilities as the previous owner can typically provide records for the past year(s). However, the cost of maintaining and managing the vacation property will vary; if the property is part of an HOA, some or all of the utilities and maintenance may be covered.

The costs unique to owning a vacation rental can be more difficult to figure out. They may include marketing, furnishing, property management, listing site subscriptions and website development costs.

It’s really important to have your real estate strategist help you determine the property specific costs. A good agent has worked with many types of properties and buyers and can easily dig into the details (HOA logistics, for example). After all, you don’t know what you don’t know so it can be hard to ask!

5.Expected Profits

The expected income and expenses of owning a property will determine the profit. For some clients, spending Christmas with their family in their vacation property will be more important than the income they are giving up.

Even a property with a negative cash flow can be profitable when considering tax savings for depreciation and the property’s appreciation. On the other hand, if cash flow is important, vacation rental properties have the potential to generate tremendous income relative to their cost if they are managed like a business with a high level of customer care and an outstanding presentation.

This post was written by Kris Getzie

Kris Getzie Hospitality Consultant

Choosing the Best Vacation Rental Location

This post was written by Volo for Tripping.

There are many reasons why people choose to purchase vacation homes. Sometimes it’s for the love of an area and pure personal enjoyment. Other times it’s purely for cash flow. If you are somewhere in-between or are looking to run your home as a full-time business, the location of your vacation rental is one of the most important decision you will make.

While it can be possible to turn a vacation home in the middle of nowhere into a successful business venture, I do not advise the risk if you cannot afford uncertainty. Choose a location you love, but be cognizant of its ability to attract tourist.

Tripping.com’s Top City Destinations

San Francisco, CA

New York, NY

Seattle, WA

New Orleans, LA

Chicago, IL

Tripping.com’s Top Beach Destinations

San Diego, CA

Destin, FL

Key West, FL

Gulf Shores, AL

Honolulu, HI

Top Tips For Choosing a Vacation Rental Location

For most, location seems basic and research often ends after selecting a particular city or a general neighborhood. Don’t stop there. Just because your condo boarders Central Park, doesn’t mean it’s on the right end. So what’s an out of towner to do?

1. Go for a walk and take in the surroundings

Don’t hire a cab or rent a car, walk. Walk in all directions around your property for blocks. What do you see? Look at the quality (and type) of shops, businesses, homes. Will they complement your business? Do you feel safe on your walk? Take another walk at a different time of day, including the night. A beautiful beach can look completely different when the tide is out. It can also be quiet and pristine on a Wednesday but packed with locals on Saturday (which may or may not be great for your intended experience).

I once stayed in a vacation rental right next to train tracks where trains passed by every thirty minutes. While some noise levels, particularly in urban locations, are inevitable it’s important to understand what is around you. This may sound ridiculous but not too long ago I stayed in a property that was located about 500 yards from a sewage treatment facility. I was sick to my stomach a few hours everyday when the wind blew wrong.

2. Study the local landscape

If you are buying a home or land in an area you aren’t intimately familiar with, take extra time to study the details of the land and area. You don’t want to show up on a pristine day, only to find out later that during your peak season strong winds blow large tides onto your beach and make swimming a hazard.

The same holds true for erosion. Understand what happens to your property when the extreme elements (rain, cold, heat, whatever) are in full effect. Will your property flood? Do you have exposed water mains that could freeze and burst?

My Personal Experience

When I bought my vacation rental in Park City, Utah, I noticed the neighbor had recently excavated and laid a new driveway, which had already cracked. Park City happens to be the high desert, so this was a big red flag. Sure enough, the water main was exposed and had a history of bursting. In my purchase negotiations, I had them move the water main from the side of the home to the front where it now connects with city water (all underground). The project was estimated to cost $15k, but really cost over $20k due to the depth of the city water connection. A fee I’m glad I didn’t have to pay!

luxury pool

3. Be aware of the elements

If you are planning on having a pool, you will need to create a space with consistent sunshine. If a building permanently blocks this opportunity, your rates might be substantially lower than you would have thought. Too much sun, or high temperatures, can also be problematic and reduce travel to your hopeful location for long periods of time. Lastly, understand how the elements will impact the design of your property and maximize what is naturally bestowed upon you if you are building.

4. Never be pressured into buying

Don’t let anyone rush you! I don’t care if an all cash offer is supposedly looming, if you are not allowed time to research your investment, walk away. This is when the biggest mistakes are made. Likewise, if something doesn’t feel right, even if everything else by examination seems perfect, trust your gut and move on.

This post was written by Kris Getzie

Kris Getzie Hospitality Consultant

Awesome Kitchen

Kitchen experiences take part in significant memories; talks over wine in the kitchen with girlfriends and cooking hearty breakfasts with family before hitting the slopes.

The truth is that travelers thoroughly consider where to dine and what to cook!  It can save a few bucks for the guest on a budget and having a private kitchen is often the reason, one way or another, for choosing a vacation home over a hotel.

My biggest recommendation is to ensure your home provides opportunities for these memorable moments to happen by offering a great kitchen.  By ‘gourmet’, the intent isn’t high expense (unless you are offering a true luxury home).  Just…thoughtful, my favorite tip.  The feelings associated with those experiences will never be forgotten, nor will your home.

This post focuses on mountain town kitchens, but is really applicable to any. Guests themselves created this list of kitchen “must-have’s” but I thought it equally important to gain the perspective of chef, author and mountain vacation home owner, Jennie Iverson:

 
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As the author of Ski Town Soups, I wanted to showcase the perfectly balanced recipe for life: a ski town, a comfortable restaurant and a yummy bowl of soup.  With a little heart and attention to detail, I believe you can capture that ambiance in your Vacation Rental’s kitchen.

In my active life as a wife and mother of 2, soon to be 3, rambunctious boys, my mission is to enjoy days on the mountain (skiing, snowshoeing, hiking, etc.), then return and relax in a cozy home environment – quite possibly relishing a bowl full of soup in front of the crackling fire.

Upon finishing the coffee-table caliber cookbook, Ski Town Soups, it reaffirmed that although soup is typically meant to simmer, life is meant to boil.  This is the experience that your travelers are trying to savor.

I suggest making it easy for your traveling guests by personalizing your kitchen for ease and comfort.

In a mountain community, there is nothing more inviting than a large kitchen with a spacious island for gathering around – sampling artichoke dip appetizers, hot toddy drinks, and a pot of Bavarian Goulash just removed from the stovetop.

Cool-Kitchen-Design-Modern-Mountain-Lodge-Interior-Design-Ideas-by-Moody-Cabin

I have a very good friend with the most inviting, expansive, and congregating kitchen – she has hosted sushi-making parties, a Ladies Pastry Party and a festive holiday gathering with separate drink stations throughout her kitchen.  In her culinary haven, there is a breakfast nook and a large stovetop on the island that allows her to mingle while stirring her homemade caramel sauce or beer cheese soup.

However, not all properties have the luxury of being “large” and “spacious”.  Our kitchen in our European Mountain Chalet in Vail is a little more modest and traditionally laid-out: the kitchen is separate from the more formal dining room.   But, I can still make “magic” in this accessible and well-appointed kitchen.

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When your guests enter the less familiar kitchen, it’s wonderful to have options on display to give them ideas of what they can create.  I would suggest having the soup pot on display with the ladle close-at-hand with Ski Town Soups standing adjacent.

Soups are easy to make in advance for large group sizes and are incredibly forgiving. You could also have a Kitchen Aid standing mixer on the counter with a muffin pan or quick bread pan beside.  Or, in your designated bar area, you might set out the wine opener, martini shaker, and chilling bucket.

Accessibly grouping appliances and accompaniments together will make your kitchen and their experience in it stress-free. Also, giving guests ideas when they arrive adds a home touch and uniqueness to your property.

I believe, if a person is vacationing in a mountain community, one of the last things they are inclined to do is slave-away in the kitchen, all day.  And, even if they are excited about this prospect, you can surely make it more approachable and enjoyable with ease: have sample recipes available and provide sample grocery lists.

Another especially personal idea would be to make a guest book for culinary comments, such as “Page 178 – This was the best soup I’ve ever made; it is hearty and perfect with herbed bread!”

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Finally, in the food world, I continually talk with restaurant owners and chefs about being ahead of the curve and creating “the experience”.  As a Vacation Rental Owner, that is what you are trying to maximize!

Often times, my friends and I entertain in each others homes; the flow and informality is more conducive to conversation, especially in peak season when the restaurants are at full capacity.  I’m guessing that not every night do your traveling guests want to splurge on restaurant meals, but not every night do they want take-out pizza.  So, make it easy for them to optimize the culinary options that your kitchen offers, thus making more memorable meals and experiences.

 

 Great kitchen Must Have’s

Large Appliances: Mountain travelers I spoke with regarding this project have never insinuated the need to buy a La Cornue’s Grand Palais range, or even Viking for that matter. But they do desire a cooktop in a functional location (and preferably gas)!  Guests want to whip up something delicious and take part in family conversations.  I recommended paying attention to the layout of the large appliances and kitchen prior to purchase or remodeling; it can turn a good rental experience into a great one.

Ensure your large appliances work properly, are clean and esthetically pleasing. Unless you are offering a rustic experience (an old cabin, yurt or canvas tents), a dishwasher is also mandatory. A built-in ice maker will really please guests as well.

Cookware: Upon settling into any vacation home, I always prep a meal for my family. It’s a routine I enjoy.  When a mountain town client asked me to assess one of his difficulty vacation homes, I gladly obliged and followed my typical nesting behaviors.  I unpacked my overnight bag, slipped into pajama’s and attempted to cook over a glass of wine.

Every pan was warped or had Teflon flaking off.  Nothing is worse than cooking on a sticky, wobbly pan.

Sturdy cast iron pans, pottery dishes, sturdy hot cocoa mugs and perfect wine glasses are on the must-buy list for any mountain home.  Guests love a fabulous copper mug for a fabulous Moscow Mule, too!

No one wants a painful cooking process.  Meals on vacation are often a poignant part of the memories created.  Make assessing your cookware apart of your regular property audit and provide good quality products.

Coffee Maker: You don’t have to buy the most expensive model, nor the cheapest.  My guests have always appreciated those with a few bells and whistles- hot water on demand for tea and soup, height to fill traveler mugs and charcoal filters to keep minerals out (if you have really hard water).  Buy a backup, too.  Nothing is worse than a morning coffee snafu!

Kettle: Electric or old school.  I provide an old school, steel kettle at my Park City cottage as it adds nicely to the decor.  Guest often use it to add moisture in the air as Park City is very dry (I also provide multiple humidifiers!).  Most often, I’ve been told deluxe coffee pot offering hot water on demand is a nice (and quick) touch for tea time.  But that an old school kettle adds to the charm and experience.

Beverage Selection:  Guests really appreciate a kitchen stocked with a selection of gourmet coffee, hot cocoa and tea.  I buy small serving size packages, so the home offers a great mixture of flavors that remain fresh.  It’s a nice touch to get my guests started!

4-Slice Toaster: Make sure a bagel can fit!

Slow Cooker: A great extra for cold-weather climates.  Jennie has already said it much better than me, but nothing beats coming “home” to a warm bowl of stew after a day in the snow!

Stand Mixer: Guests prepare anything from breakfast waffles to an entire Christmas feast while on vacation.  Stand mixers make everything easier (read: multitasking)!

Blender or Magic Bullet: I stock my properties with a blender and “Magic Bullet”.  I started with a nice blender for smoothies and the like.  But after receiving a couple requests (nearly at the same time for two different vacation rentals) for a Magic Bullet, I provided all my properties with one, too!  They are great to help with any task in the kitchen and are small in size.  Your guests will appreciate having both.

Herbs and Spices:  Herbs and spices are expensive, which can be frustrating for a guest when they only need a dash or two during a weekend trip.  I stalk a variety of fresh spices (check these in your property audit be sure they haven’t gone stale) and even have fresh potted herbs available at some vacation homes.

Offer to Grocery Shop:  Guests would rather not spend their vacation time at the grocery store. It snows a lot in the mountains and trudging through drifts (after your long day skiing) isn’t very appealing.  You’d rather be next to a cracking fire, right!?  I always offer to pick up groceries for them or work with local grocery delivery services.

Cookbooks:  Offering unique cookbooks at your vacation rental is an easy way to differentiate your kitchen.  Find those that offer local recipe’s or have a cultural flair specific to your region.  My favorite at my Park City rentals is Jennie’s soup cookbook “Ski Town Soup”!  Not only is every single recipe amazing, some are local!  It’s been a big hit.  Whether or not you own a mountain vacation home, I suggest checking out this book!

A great kitchen should provide enough amenities for family to make a full holiday meal or fabulous cocktails, should they so desire.  The layout should flow to encourage interaction, but doesn’t necessarily have to be large in size.

Travelers love dishes, cook wear and amenities that add to the experience of the local environment.  They don’t have to be expensive; just unique and charming!  Local craft fairs and markets are usually a good place to find pieces for your vacation rental (and it supports your community).  A little extra attention to the kitchen details can go a long way as cooking, eating, and savoring delicious beverages is the most common way to entertain inside the vacation rental home.

Written by Kris Getzie, Volo Founder and Principal Consultant and Jennie Iverson, Author of Ski Town Soups and Chef.