20 Actions STR Businesses Can Take Today to Navigate the Coronavirus Crisis
We keep hearing people say, "Don't worry. This storm will eventually pass. We will get through it." There's no doubt that the storm will eventually pass, but at the same time we need to be honest with ourselves. This storm will leave human and economic carnage in its wake. On the economic front, the travel industry is going to get hit hard and 10,000's of STR businesses will leave the market as a result. It's already happening.
The good news is that the STR and VRM businesses who exhibit the most resourcefulness and resilience during this challenging time, will come out stronger than ever. The weak companies will leave the marketplace, and once the economy picks up, there will be less businesses for the survivors to compete with. You can weather this storm.
However, The actions you take in the next week are critical. Remember how different life was 2 weeks ago? If nothing else, this coronavirus crisis has taught us how quick things move. There are limited resources, and you need to act before your competitions to secure them first. Here are 15 ideas for actions you can take in this time of crisis.
#1 Spend an Hour Reanalyzing The Reality of Your New Rental Market
As painful as it may, getting out of denial facing reality is important in any crisis. Get on your Airbnb & VRBO analytics. Look at competing properties' pricing and vacancy. Chances are, if you're reading this, you probably are going to have to slash prices to unimaginable prices in order to rent your place down. My property that once went for $449/weekend night in March/April, now will only rent out for $89/night. $89/night is better than $0.
#2 Get Rid of Higher Weekend Pricing Until May
In most markets, weekend pricing is irrelevant now for at least the next month. No one is going anywhere for a weekend get-a-way anymore. When renters are booking properties, it's easier for them to quickly understand how your property matches up with a uniform weekly pricing.
#3 Heavily Incentivize Guests to Book Through Your Booking Platform and/or VRBO instead of Airbnb
During this time, you are likely to encounter many flakey guests who need to cancel because of some reason related to the virus. Airbnb is a complete wildcard, but by all indications, it looks like they will continue to allow guests to receive full refunds for as long as the coronavirus is around, regardless of the cancellation policy they agree to.
Now that guests are fully aware of the risk of the virus, it's not unreasonable to expect each new guest to live up to their side of the agreement. The only way to truly control enforcing an agreed upon cancellation policy is through your own booking system. (VRBO is a close second, since they have earned manager's trust by allowing property owners and managers to decide their own cancellation policy.) Keep lower prices on your own site and/or VRBO to reward guests who want to commit to contractual cancellation policies.
#4 Switch Your Airbnb Listing to Their New Flexible Cancellation Policy
Airbnb announced that in response to the coronavirus fears, they will be rewarding hosts who have the most flexible cancellation policies. The following is from their new policy, detailing how hosts with flexible policies will be rewarded.
Since Airbnb historically rules on the side of guests in grey-area matters, having a strict cancellation policy is unlikely to mean much in 2020. Most guests will be able to find a way to get out of a strict or moderate cancellation if they say they need to cancel due to the coronavirus. Why not try to get more bookings and be rewarded on the Airbnb search algorithm with a flexible policy?
#5 Don't Panic and Offer Fire Sale Rates for Beyond May...Yet
God willing, this will all be over sometime in May. However, even Trump has come out and said this could go until August. Scientists have hinted that life truly will not go back to normal until there is a vaccine, which could take 12-18 months. With that said, securing summer or fall rentals at a lower price than normal is a bad move right now. Guests can effectively cancel anytime they want if the virus continues. If the virus doesn't continue then there will likely be pent up demand for the summer, and you will have locked in lower prices.
#6 Encourage Property Owners to Post Their Property's Listing to Facebook and/or Instagram
There's no shame in promoting your property to network during this difficult time. I posted mine today on Facebook for the first time since I've owned the property in 2 years. You never know who might see it. There are plenty of cases where a family might be looking for a property for self-isolation that they didn't know had negotiable rates. During a time like this, your friends and family want to help in any way they can.
#7 Tap in To Connections At Local Hospitals
People still need temporary housing, the use cases have just changed. Take a radiation patient in town for treatments, for example. That cancer patient will probably need a clean place to stay away from their family in order to prevent catching the coronavirus. Traveling nurses always need places to stay. If you can offer these people deep cleaned, safe, affordable accommodations, it's a great way to contribute to the fight against coronavirus, while getting a little cash flow.
#8 Treat Cleanliness Standards Like Life or Death
Cleanliness standards are the #1 priority in management right now. It's so top of my mind, that some guests are ruling out properties that don't have 4.9 cleaning ratings or higher. There's too much competition not to rule out properties with poor cleanliness ratings. The last thing you need is a recent review that calls out the cleanliness. That will be a scarlet letter for the property for 6-18 months.
Consider words like "spotless," "hospital-grade-disinfectant" "meticulously cleaned," "professionally cleaned," "attention to detail", etc. Of course, following through on these promises with your cleaning staff is essential to maintaining good reviews (and being able to sleep at night)
#9 File Your Taxes ASAP. It Will Help Speed Up the Approval Process for Loans
If you are interested in an SBA Loan or any loan for that matter, it would be wise to file your 2019 tax returns as soon as possible, as this could make a difference in being approved. Ninety-plus percent of business loans, including lines of credit, equipment loans, government lending, senior debt instruments, commercial mortgages, and even asset-based lending (at reasonable rates) will require tax documentation. Yes, the treasury has extended the tax filing data, but there is no telling how this affects loan approvals. Don't take any chances.
#11 Determine If You Have A Shortage In Your Trust Account (Extremely Important)
During my accounting & automation consulting, I've found a lot property mangers don't properly use trust accounts. Property managers are responsible for collecting money from renters and dispersing it to owners and sales tax agencies. Unlike, Airbnb, other booking platforms like VRBO will disburse advanced deposits at the time of booking. That means at any given time, a property manager with just 20 properties could be holding more than $100k on behalf of other stockholders. Sometimes there isn't as much funds as there should be in the PM's bank accounts. The property managers have dipped into funds, not expecting a batch of mass cancellations.
A trust account includes advanced deposits, taxes payable, amounts due to owners, and security deposits. Understanding if you are holding enough money on hand is extremely important, because imagine what would happen if all your reservations are cancelled through the summer because of Coronavirus. For more information on this, I've created an extensive online course with 100+ pages of information.
At this time, knowing if you are short is extremely important. If you are short, you should get a loan IMMEDIATELY in the case of mass cancellations through the summer (or longer).
#12 Stay as Liquid as Possible
Don't renew long-term contracts or overhead items that are up for renewal unless it's mission critical. During times like this, it's best to have as much cash as possible to survive.
#13 Try to Beat the Masses and Apply for an SBA Loan
The emergency SBA Loan program has been officially announced. Here is the link to apply There will likely be a big demand for this program, so act quickly, even if you're not 100% sure you'll need it yet.
The SBA has drawn criticism in the past for slow processing times. While the agency approved more than 20,000 small-business disaster loans following Katrina, borrowers waited five months on average before they received a check. The fact their website looks like ancient history, is a little bit disturbing. If there is a chance you will need a loan, apply AS SOON AS POSSIBLE to beat the masses.
#14 Start Becoming Lean As Possible
Cut anything that isn't mission critical. Once you've gone through the other actions, this is a good time to prune non-mission-critical expenses of your business. What can you live without if push comes to shove?
#15 Discuss Temporarily Allowing Pets
During the coronavirus, families who can't physically go to work may be looking for a vacation rental to hunker down. This means they will likely be traveling with their pets too. In fact, a recent survey of more than 1,100 travelers conducted by TripAdvisor found that 53% of respondents travel with their pets.
If you are looking at attracting "staycation" guests, you might need to temporarily allow pets in order to have your place booked. You can always charge a pet fee or security deposit to mitigate damages. Plus, a deep clean after a pet stay will give your cleaner something to do when rentals slow down.
#16 Advertise Easy Parking More Prominently
The silver lining in all of this is that there are now a lot of people who are working remotely or on paid leave until the virus blows over in the next couple months, God Willing 🙏. Traveling via car will not be impacted, so expect an uptick of travelers from states close by who are going stir crazy. In places where parking isn't free and easy, it's not a bad idea to highlight your property's parking on the list title.
#17 Incentivize Medium to Long Term Rentals
In most rental markets, right now is a good time to have some longer term guests stay at your property. One way to attract these guests is to add weekly and monthly stay discounts.
No one is sure when this travel challenge will end so it’s a great idea to attract people who need a place to stay for a month to month basis.
#18 Include Pics of Cleaner and/or Past Cleaning Reviews
A picture says a thousand words. By using pictures, guests can immediately see that you care about cleanliness. And they don’t have to read your description. You could also put a photo of someone cleaning. Or even better, a screenshot of a review of a past guest praising how clean your place was.
#19 Highlight Family Friendly & Safety Benefits
Right now school is cancelled in most places and remote work is trending. Families who are becoming stir crazy will start looking a change of scenery. Highlighting family-friendly benefits like board games, multiple T.Vs, streaming services or games, might push you over the edge.
#20 Follow the Local County and State Government Emergency Laws Regarding Your Business
This one should go without saying. If required by law, keep your community safe by shutting down for a period of time. Follow all the CDC and WHO requirements to keep yourself and employees safe and healthy during these times of crisis.
(Bonus) Download My Slide Deck for Other Ideas to Tighten Up Finances
I've created a free slide deck 5 Ways VRMs Unknowingly Lose Money designed for VRM businesses who are looking to tighten their belt.
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