In the time of COVID-19, financial instability for property management companies (PMCs) has inevitably become an issue. The spring season saw a drop in travel and thus, rental bookings, and though we have seen some improvement relating to how COVID-19 is impacting the short-term rental ecosystem — with June bookings significantly outpacing those from May — many short-term property managers are still managing tricky finances.
With this in mind, we’re going to look at a few ways of addressing financial instability during COVID-19, and mitigating the associated risks.
Before we get to specific financial management, it’s first and foremost a good idea to explore what opportunities you may have to continue doing business. One of the key issues with vacation rental financial stability during COVID-19 is that people simply aren’t traveling as much. However, the data indicates that shorter trips haven’t slowed down as much. In fact, with popular vacation spots and flights looking less safe, interest in road trips has increased. More people are looking into what are effectively local vacations.
You may be able to improve your property management company’s short-term outlook by adjusting your marketing approach. With a focus on attracting more local travelers, you may be able to make the property appeal to people in the area looking for quick, easy, and safe getaways.
Another interesting solution for property management companies during COVID-19, if rental activity has declined, is to look into ways of diversifying your income. This isn’t necessarily an easy endeavor, but you may be able to find some ways to supplement income until rental activity picks up. For instance, you may be able to make some small profits by blogging about your experience during this time. Whether that means adding an editorial component to your property rental website or contributing guest posts to existing travel and accommodation blogs, this is an option worth exploring. There’s always a market for travel-related content, particularly if you can put a unique spin on it!
Explore Loan Options
Beyond finding new income streams to mitigate the risk of financial instability, you also have the option of seeking out a loan. A business loan may or may not be appropriate depending on the size of your short-term rental operation. But personal loans can be customized according to your input, and can be easier to obtain in the first place. These are typically more flexible arrangements with low fees and simple applications — which means in this case, you have a good chance of securing cash for whatever purpose you deem necessary. If that means patching up your finances until the rental market picks back up again, it’s certainly an option to explore.
Cut Costs Wherever Possible
Another way to address vacation rental financial instability is to stop spending on your properties, wherever you can — if, that is, they’re not being rented out. This may not be an issue for you, depending on how you handle the properties. But there’s a chance you could be in the habit of spending money on them that you don’t need to if you’re not actively renting them out. Maybe you’re paying for regular cleaning or internet services; maybe you subscribe to a particular streaming platform or cable service for renters to enjoy; perhaps keeping the air conditioning on is racking up a charge you don’t think about much. Each of these can be an opportunity to cut costs.
Naturally, you need to make sure that the vacation rentals are kept up well enough to be in good shape (and to retain their value). They should be ready to be prepared for renters as quickly as possible. But you may well be able to cut some costs without negatively affecting the properties.
Revamp Your Business Plan
As a means of mitigating the risk of financial instability for the long term, you might also consider taking this opportunity to revamp your business plan regarding the rental properties. As much as COVID-19 has harmed businesses of all kinds, it’s also being viewed by some savvy company owners as an opportunity to adapt. This means different things for different businesses, but the idea is to reassess long-term plans (so that you can plan for a more realistic outlook) and reinvent what you’re offering to suit the new reality in which we live. For short-term rental properties, that might be as simple as taking steps to demonstrate to potential renters that your properties are kept safe, and emphasize cleanliness. Whatever the specifics though, reassessing your outlook and offerings in light of COVID-19 is a vital aspect of financial management.
Hopefully this has given you a few ideas about how to minimize the financial impact of the current crisis and its long-term effects. For more specific details that line up with how Guesty can help property management companies during times of financial instability, have a look at some of our solutions for communications, growth, and organized finances.