Investment property owners or homeowners debating whether they want to go into short-term rentals vs. traditional rental properties are often concerned about the seasonality of their property. Unlike a traditional rental property where owners can potentially calculate their income within $100 a month, Short-Term Rental Properties have significantly more variance. This uncertainty stems from the high risks versus high reward nature of short-term rentals which are highly affected by the seasonality of travelers' demand but the degree in which it affects your bottom line is heavily dependent on the market.
To understand and help plan your financial year as a property investor you have to first understand ‘What is Seasonality?’
Short-term rental seasonality is the annual cycle that creates varying demand by travelers throughout the year that's unique to each vacation rental market. The clearest examples of seasonality are the rise and fall of demand for beach bungalows in the summer and ski chalets in the winter. But what about those rental markets that aren’t as clearly aligned with traditional tourist seasons? Patriot Family Homes primarily hosts guests in markets in proximity to military bases and underserved short-term rental markets filling a need rather than catering to a vacationing crowd. These markets while not as seemingly seasonal still have a flow and changing levels of demand.
As we assessed annual revenue % by month, our property bookings in January resulted in 5% of the annual earnings, while July’s bookings produced 11% of the year's revenue- over double! This is not to say there aren’t exceptions, but generally speaking, our statistics show a higher volume of bookings in the summer months. This generally makes sense when you think about the culture of travel in the US.
Patriot Family Homes actively markets our properties to mitigate the decline in demand. Our targeted marketing via relationship building with direct booking clients, communication with high-demand companies, and return renters, ensures we keep a rather steady demand in comparison to properties that are left just on Airbnb or VRBO without any active management. This marketing strategy has resulted in higher ROI annually from our properties.
Our team at Patriot Family Homes can advise you on how to plan for your fiscal year to ensure you account for the varying flows of income and actually take advantage of the seasonal nature. We are also more interested in building a long-term relationship that results in profitability for both parties. Your new understanding of seasonality will hopefully help you weather the storm this winter!