The Invested Vacationer

How to Analyze VR Listing Performance

Dan — Mon, 20 Jun 2011 15:28:00 GMT

by Ashley F Miller

When managing or paying for a website, it's important to keep track of whether you're getting a good return on your investment (ROI). That doesn't just mean comparing your results to the the amount of money you spend, but also to the amount of time you spending working on the project. If you're spending a lot of time or money on listings that aren't getting results, then you need to reallocate the efforts.

At the end of the day, the quality of a listing site is all about the ROI. This is simple to calculate: how much are you making on bookings that come through a site compared to the price you're paying for the listing? If you are paying more for an underperforming listing, you should consider whether you would benefit from canceling that listing. If you're actually losing money attempting to get rentals, you need to change what you're doing.

ROI isn't just the simple price of signing up for a site - part of the calculation has got to be whether you've paid more for photos, or for prime placement, or any of the dozens of extras that you may be paying fees on. All of those fees add up. Flipkey offers unlimited photos, while VRBO charges 30 dollars extra to to add as many photos as you'd like.

That said, listing on a site like Flipkey or even VRBO is pretty inexpensive, booking for just a weekend probably covers your marketing expenses. As long as you're getting a few bookings a year from a website, it's propbably worth it to continue listing there.

Other factors to consider:

How many listings do you have?
Some sites, like FlipKey, offer discounts if you have a large number of listings, while others do not or charge just a flat percentage rate. It just takes a little bit of time to do the math to see which one is going to save you the most money. Money spent per listing isn't the only ROI variable, but it's an important one to consider when comparing different vacation rental sites. Some sites offer only a one size fits all approach, with yearly subscriptions or flat rates being your only choices, while some offer monthly or yearly subscriptions. You may not need those options, but they are important to understand if you list multiple vacation properties.
What is the rate of high quality leads to low quality leads?
If on one website you're getting fewer inquiries, but every one leads to a booking while on another you're getting only one booking for every 10 inquiries, you may be better off focusing your energies on the first site rather than the second. It could be a problem with your listing rather than the site. Are your prices reasonable? Are your photos attractive? What about dates? If one of your listings does much better than another, you should compare them and see what might be making the difference - is it the setup of the site itself that gives the listing a more attractive layout or something in the copy?
How much time do you spend managing various listing
Again, time is an important factor in ROI that often gets forgotten. Sure, you may have a "free" site (like Craigslist) where you're doing listings, but if you spend hours working on it and get almost no bookings from it, then you're wasting your time if not your money. And are you getting quality responses from those inquiries, or are you just wasting your time pursuing inquiries that never lead to bookings? Pursuing dead-end inquiries is just as time-consuming as managing dead-end listings.
Could you fill your entire calendar with bookings from one site?
If so, you really should focus your efforts in one place. Why spend time on multiple sites when you don't have to? Think of all the time and money saved by just using one. The other benefit of this is that it's much easier to stay organized and on top of things if you're not going from site to site. It's much easier to analyze your ROI as well.
How long do guests book from each site?
Do some sites encourage short visits while others encourage longer vacations? If you're getting a lot of short visits, then that's great, but if people are interested in booking your house for a month at a time, that's certainly a much easier way to fill the calendar. You may be more interested in high or low turnover depending on the market, but either way you should know what the sites are geared towards and make sure it matches your own goals.
Where did most of your return guests come from originally?
Every time a guest returns, that's additional return on your original investment. If one site is giving you many return visitors, the ROI is much higher for that site than it may initially appear. And you may have guests that decide they like you and try to stay in your other properties for other vacations, that's a return guest as well.

There are a lot of factors in determining your ROI, but for the most part they are straightforward and easy to see. If you're not getting the results you want from one site, it may be time to look at another. If you think you're paying too much per listing or per inquiry or booking, there are options out there. How do you determine the effectiveness of your listings? Share your thoughts in the comments!

3 Questions About Vacation Rental Taxes to Ask Yourself

Dan — Wed, 01 Jun 2011 17:51:00 GMT

by Ashley F Miller

If you've got a second home that you've found you aren't using that often or that you'd like to be making some income from, then you're probably thinking about turning it into a vacation rental. There are a lot of financial considerations to take into account when you're doing this, but one of the most important and rather complicated tasks is to understand the tax consequences of this decision.

Some Questions to ask yourself:

1. What is a second home?

A second home is a home that is not your primary residence, meaning you don't live in it at least half of the year. A vacation rental is a second home that you're making rental income off of rather than using as your own personal second home.

2. How many days of the year will you use the home yourself? How many will you rent it out?

If you're solely using your second home as a rental property, then normal rental laws apply, and if you're using it solely as a personal property, then those laws apply; but if you sometimes use the home yourself and sometimes rent it out, then the rules get somewhat complicated.

I plan on using the home more than 14 days a year

If you're using the house often enough, despite renting it out, then it's still considered a second home and you remain entitled to claiming your mortgage interest and property taxes as deductions if you itemize, and add the cost of improvements to your basis.

I plan on renting the home less than 15 days a year

If you rent the house less than 15 days a year, the rent is not considered income and you don't have to pay taxes on it, but you cannot claim rental expenses either.

3. Are you good at itemizing your deductions?

Another somewhat complicated aspect of rental taxes is knowing the difference between deductibles. When you own a house, you can add cost of improvements to the cost basis but not the cost of repairs, but when you're renting you can only claim the cost of repairs.

Depreciation is Key

The key tax break you get in renting is taking depreciation and deducting repairs from your income. Basically, your home loses values over time and you get to subtract that loss from your taxes.

Renting is a Business

Because renting is considered a business, you can also deduct normal business operating expenses, meaning insurance, advertising, cleaning, and utilities. But, you can only claim deductibles up to the amount of income you made - losses beyond that are not write-offs.

Oftentimes, renting out a vacation home just means that the home ends up paying for itself, not that you're going to be making any significant income from the property.

More available from the IRS: http://www.irs.gov/publications/p527/ch02.html

The Pros and Cons of Timeshares

Dan — Mon, 16 May 2011 18:19:00 GMT

by Mary-Elizabeth O'Neill

Timeshares have a bad reputation. They are commonly associated with scams, financial loss, and pushy salesmen. While those associations are not always true, timeshares are often not the best decision for vacationers. Outlined below are some of the pros and cons of timeshare ownership that can help you decide whether buying/renting a timeshare is a good decision for you.

In essence, buying a timeshare means buying the right to use a property during a specific period of time every year. That's what it's all about. After the purchase, you own defined units of time, from a week to a month, generally for a 100-year term (though the length of the term depends on the individual property). Timeshares are usually found in resort locations such as islands and ski areas, and the price of fractional ownership can be quite high depending on the location.

So what are the advantages of timeshare ownership?

The most obvious advantage is the nominally low price to “own” property in a desirable destination. Think a $25,000 investment instead of $500,000. With lower real estate prices throughout the country, now is a good time to buy. However, it's not such a great a time if you are already an owner; many timeshare owners bought in the heyday of the real estate market (2002 or so, before the recent collapse) and now own properties that have decreased in value.

However, in a good market, the value of the timeshare will go up. An increase in property value is critical in the secondary market, which is a collection of realtors who buy and sell timeshare units. Although many owners buy their timeshares directly from developers, owners are not obliged to keep their timeshares for the entire length of ownership (100 years or otherwise), nor do they have to sell their shares back to the developer. In the secondary market you can buy and sell a timeshare as you would a normal property that you own outright. Furthermore, you can generally rent out your weeks, depending on the rules of the timeshare, and you can even mark up the price of your weeks to your renters. So if you play your cards right, you could stand to earn money through investing in fractional ownership.

... And the Disadvantages?

That said, there are still key disadvantages to timeshare ownership. You will only own one block of time, so having a timeshare affords a lot less flexibility than if you owned outright. In addition, you are buying a slice of an existing development. You do own it, but you can’t customize it. Moreover, there is no space to store personal items in a timeshare, and you have no say over who inhabits the space before or after you.

Often, timeshares compel owners to travel to the same place year after year, unless the owner buys into a system like Hyatt Vacation Club or Ritz-Carlton Destination Club which owns multiple properties throughout the States, or trades out the week for a timeshare elsewhere in the world through a program like Interval International. And perhaps the most important disadvantage is the continued expenses. With a timeshare you have to pay yearly maintenance and cleaning fees, even if you have already paid off the cost of your share of the property.

It all comes down to the value of scarcity, in other words, supply and demand. The major value of timeshare ownership is the possible quality of the investment, which is related to the fluctuations of the real estate market. A timeshare can be a great investment if done well, but it's not for everyone.

Mary-Elizabeth O’Neill is a New York based event designer who has lived in Paris and London. She travels frequently, loves writing about her adventures and appreciates your comments! You can find Mary-Elizabeth on Twitter as @m_oneill_nyc.

Property Managers Caught in the Middle? HomeAway-ISI Lawsuit

Dan — Thu, 05 May 2011 13:59:00 GMT

Here is an interesting blog post from Tnooz - Original can be found here.

HomeAway got sued a couple of months after acquiring Instant Software and the dispute has left up to 70 to 80 professional management companies of vacation-rental properties hoping their websites don’t crash and scrambling to rebuild and redeploy them on new servers.

The controversy relates to HomeAway’s Sept. 17, 2010, acquisition of Instant Software, which offers property managers an electronic distribution and online booking tool, ISI Link.

A week before the HomeAway-Instant Software deal closed, Instant Software allegedly entered into a partner agreement with Denver-based TravelStorm, according to an ongoing lawsuit that TravelStorm filed against HomeAway Nov. 24, 2010, in U.S. District Court in Denver.

TravelStorm’s customers are professional managers of vacation rental properties and the company builds, hosts and powers 70 to 80 of these sites with its Rezolution software.

TravelStorm alleges that HomeAway breached its obligation to honor the Instant Software-TravelStorm contract, which required Instant Software to give TravelStorm access to “Princeton” proprietary software and ISI Link so TravelStorm could develop websites and listings for vacation rentals owned or managed by Instant Software customers.

TravelStorm was purchased from Instant Software in June 2010 by Phillip Hopcroft, son of Instant Software co-founder David Hopcroft.

Part of the suit revolves around intellectual property and another facet involves hardware. Neither party challenges the fact that when HomeAway purchased Instant Software’s assets, HomeAway took control of the servers used by TravelStorm.

And, HomeAway now declines to maintain these servers because Phillip Hopcroft allegedly has not authorized them to do so. The TravelStorm suit alleges:

Although not included in the asset purchase, the Defendants [HomeAway and Instant Software] took control of six TravelStorm servers, a ‘rack’ which holds the servers, two switches, two firewalls, two load balancers and intellectual property known as a source code for Rezolution, Rezolution Edge and Rezolution FHS, that was the property of TravelStorm.

In a battle of dueling customer letters, obtained by Tnooz, Carl Shepherd, HomeAway co-founder and chief development officer, wrote to TravelStorm customers April 12: “We understand that TravelStorm customers have been given 30 days to move their websites to other facilities.”

Shepherd said HomeAway intends to keep the servers powered up in the interim. “However, should your website fail, we do not have the right to make any code changes that may be required to start it back up,” Shepherd wrote.

HomeAway has requested that TravelStorm retrieve the six servers which power the vacation rental websites in question, but TravelStorm has refused, Shepherd alleges.

For its part, TravelStorm’s Phillip Hopcroft wrote to customers April 14 that TravelStorm has not issued a 30-day cancellation notice and won’t pick up the servers because HomeAway allegedly won’t give TravelStorm access to passwords for hardware and software. “… These issues will be resolved in a court of law,” Phillip Hopcroft wrote.

Meanwhile, in an interview, Phillip Hopcroft says TravelStorm has run out of money and the six-member staff has been reduced to one employee, himself.

Phillip Hopcroft alleges that HomeAway sought to drive TravelStorm out of business because it has designs on the company’s intellectual property, namely Rezolution and a successor product, Rezolution Edge. In the suit, TravelStorm even alleges that HomeAway hired away “David Machelya, who was responsible for the technical design and implementation of the TravelStorm products…” and that the company can’t roll out new products in a timely manner without Machelya.

TravelStorm’s complaint seeks a judgment in its favor and an undetermined amount of damages.

HomeAway answered the TravelStorm complaint with one of its own on Jan. 21, 2011.

In sum, HomeAway’s complaint either denies the allegations or argues that it doesn’t have enough information about the charges.

In a statement on May 4, HomeAway said:

Due to the ongoing litigation related to this matter, we are not able to fully comment on this subject. We can confirm HomeAway has not purchased TravelStorm or any of its assets. However, months ago we encouraged TravelStorm to retrieve its servers and offered them assistance in doing so, but as of today they still haven’t. We have also kept Travelstorm’s servers powered on even though we have no contractual obligation to do so and have not been compensated.

All of this leaves at least some of TravelStorm’s customers, which include companies ranging from Maui Condos by Owner to Ocean Front Vacation Rentals and Mountain Laurel Chalets, hustling to transition their vacation rental websites to different technologies and hosts.

Michael Magliocchetti, a principal and general manager at TravelStorm customer Key to The Rockies, is very angry about the situation.

“I feel victimized because of their business deal,” Magliocchetti says of the HomeAway-Instant Software transaction.

Magliocchetti says that with the TravelStorm servers currently subject to HomeAway’s hands-off warehousing, Key to the Rockies has experienced operational problems maintaining some of the 100 or so vacation rental properties on its site and adding new ones.

And whether or not a 30-day deadline is in effect for transitioning TravelStorm-powered websites elsewhere, Magliocchetti says he’s going to have to rebuild his company website and find a new host.

Several companies, including BlueTent Marketing, LiveRez and GuestStream, have been pitching their services as TravelStorm successors, Magliochetti says, with one recommending a new guest reservation system and accounting software.

“This would be a material change to the entire website aspect of my business,” he adds.

“It is a big issue for a small company like mine,” Magliocchetti says. “It’s a curveball that is going to cost us money to make the change. It was handled haphazardly and with no respect to customers.”

And, another TravelStorm customer, who declined to be identified, was similarly upset at his company’s current predicament.

He says his website offers several hundred “separate and distinctly different properties” and he won’t be able to build a new website in 30 days.

“If the site crashes, we’ll sue,” the property manager warns.

The Importance of Quality Vacation Rental Photos

Dan — Thu, 28 Apr 2011 16:33:00 GMT

by Ashley Miller

One of the most important elements in renting a vacation property is having good photos available for interested parties. If someone’s looking to rent a place for a vacation, they’re probably not going to be able to come visit it personally before their holiday – meaning that they’re potentially committing to a long stay in your property sight unseen. That can be a bit of a gamble, so renters depend on accurate photos to help them make decisions. You can help them by making sure the photos really give a good idea of what the home is like.

Use a good camera. Your phone or webcam is not a good camera. You don’t need professional-level control over things like focus and iso, but you do want pictures that look professional. In fact, it can even be worth getting a friend or local photography student to come over and take the pictures with you if you’re not so comfortable with photography yourself.

Make sure to take exteriors during your peak season. If you’ve got beautiful azaleas that bloom only for a couple of weeks in the spring and your entire landscaping has been centered around them, take the pictures during the spring! Are you in the mountains and very popular around leaf-peeping time, then get a picture in the fall. If you have multiple high-occupancy seasons, then take an exterior shot during each.

Time of day is also important. The hour after sunrise and the hour before sunset are known as the golden hour because the color and quality of the light is so beautiful. They exploit this in Hollywood, but you can just as easily make it work for you; try to get your exteriors when the light still has that golden quality.

If you can at all avoid it (Seattle and Cleveland disregard), don’t take photos when the sky is overcast. No one wants a gloomy vacation, so don’t take gloomy photos. Blue skies, some friendly clouds, but not doom and gloom.

Make sure it’s clean, but don’t make it sterile. People like vacation homes because they feel like homes, but they also don’t want to feel like they’re going to be staying somewhere dirty. Feel free to include flowers, books, bowls of fruit, apple pies, or whatever else strikes your fancy – just make sure it’s all neat and tidy.

If you have a fireplace, have a fire.

Don’t take photos of the bathrooms unless they’re really gorgeous. They almost always look icky and small, no matter how you angle it, and most people don’t need to see them before making a decision on a house

Photograph all the bedrooms. Make sure there’s plenty of ambient light, make sure the windows are open. Beds should be made, nothing should be on the floor or on the nightstand.

Be willing to get on your knees or on a step ladder to get the best angle for the room.

Photoshop is your friend. You really want to be able to edit the pictures after you take them - it makes a huge difference. Color temperature, contrast, brightness, cropping, and adjusting the horizon are all important things you’ll want to be able to adjust in the computer. You can take mediocre pictures and turn them into good ones, and turn great photos into irresistible ones.

Finally, make sure you post your photos online where potential guests will see them. If you have your own vacation rental website (recommended), then you can post as many photos as you want. Photo sharing websites like flickr and photobucket are also useful places to store your photos online. The various vacation rental listing sites all have different plans: Homeaway allows you post only 24 photos, while FlipKey encourages owners to add unlimited photos. Many guests primarily look at your pictures, so make sure you make them look good!