Dispelling The 3 Biggest MYTHS About Professional Hosts for Your Vacation Rental

Hello hosts! Are you wondering if it might be the right time to switch your unit over to a professional host? Wondering about management fees? Payouts? Well, today I am going to dispel the three biggest myths about professional hosts, and hopefully help you make your decision on whether you should be looking at getting a host instead of doing it yourself a little bit easier. I want to preface this by saying that I used to be a professional vacation rental host, and I understand why some people choose to self-host, but there are lots of benefits to not having to do it all yourself. So let’s break it down.

Myth #1: Low management fees are better.

I know lots of professional hosts who have a management fee around 20%. While that’s fine, it really is limiting to the host. When I was a professional host, my management fee was 40%. You might be thinking ‘woah, that’s way too high,’ and for some people, they couldn’t get over the initial shock of 40%, but it comes with lots of benefits. 

First off, those who charge higher fees typically have more experience than those who are charging lower fees. My background was spending 14 years in hotels prior to moving into vacation rentals. During this period, I learned so many of the core features of great hospitality and that gave me a huge competitive edge against those who charged a lower fee. I had a marketing cycle and was able to put money into advertising. I had a dedicated revenue manager who was regularly monitoring the competition. I was listed on all of the major OTAs like Expedia and Booking.com, which, in turn, maximized occupancy in the owners’ units. I also covered commission and credit card fees, charges which many of the smaller fee companies simply can’t handle and pass on to owners. 

Consider this, if the unit is going to make $10,000 in a month of gross revenue by a host charging 30%, you’ll net $7,000 as the owner. 

If that same unit is going to make only $8,000 gross by a host charging 20%, you, as the owner, will only net $6,400. That’s $600, and while that might not seem like a huge difference, over the course of a year that adds up to thousands of dollars (in this example, $600×12 months= $7200 in a year) that you could be leaving on the table simply by looking for low commission.

	Gross Revenue	Management Fee	Amount to Owner	Amount to Host
Example 1	$10,000	30%	$7,000	$3,000
Example 2	$8,000	20%	$6,400	$1,600
		Difference	$600

I just want to clarify that someone offering a low commission does not automatically make them a bad host. I know lots of outstanding hosts in the 20-25% range, and they are great at what they do. In fact, I have recommended hosts to some of my clients in the past. However, as an owner, there are some potential drawbacks to simply just going with the cheapest option. Doing the right research, or having someone do that research for you is a great way to get the most out of your asset.

Myth #2: Bigger companies are better.

You may be tempted to go with a larger company, for example Vacasa, which manages thousands of units on behalf of owners. This may make sense for some, but there are real downfalls to this tactic. If you are hands-on and want regular contact with your professional host, it’s likely considerably more difficult to get a hold of a larger company’s host than it is to deal with a small-time host.

In a large company, your unit may be just one in an entire city or region where they might have more than a hundred, and, during the high season, you can bet that they’ll be extremely busy managing the day-to-day operations that they won’t have as much time to deal with you directly.

Compare this to your typical small or growing unit of only a few dozen hosts.

You’ll definitely notice a difference in their owner relations strategy. Your unit is more important to the overall success of their operation, you’ll also make up a much greater proportion of their revenue. Therefore, a smaller host has almost no choice but to give your unit the attention it deserves. If you’re looking for great customer service, and, overall a better experience for your guests in my opinion, smaller may be the way you want to go.

Myth #3: Professional Hosts Don’t Care About My Asset

Wear and tear is a normal part of managing any hospitality asset. Whether it’s a hotel, a restaurant, or a vacation rental, wear and tear is going to happen. The truth of the matter is that your guests don’t care about your furniture as much as you do. It’s important that you set clear expectations with a host so that you don’t end up disappointed when you want to use it for your personal use. 

It’s in the host’s best interest to ensure your unit is in tip-top shape for every guest. This includes maintaining the furniture and appliances to a high standard, and keeping everything in good, running, functional order. Otherwise, that host risks their status and paying out compensation for issues. 

If something goes wrong, let’s say a dishwasher needs to be replaced or there’s a flood in the room, a good, professional host would be contacting you as soon as possible.

Conclusion

So those are three of the most common misconceptions that I hear about professional hosts when an owner is trying to decide whether it’s in their best interest to hire one. I hope that this helped you determine whether using a professional host is for you, and, if so, which sort of host you might want to search out. 

Are you on the hunt for a new property manager or considering it for the first time? Looking for help in making the best decision for your investment? Contact me today to see how I can help.