How to do a Vacation Rental Business Audit? Complete Guide

by | Oct 26, 2021 | Uncategorised | 0 comments

One of the main requests coming from companies we collaborate with is to understand where they should improve their business and where they’ve already adopted industry best practices.

To understand where efforts need to be focused, and how improvements can be delivered, performing a vacation rental business audit is potentially the best tool available.

This business-wide approach enables us to find where our clients are not delivering according to industry best practices and guide them towards the improvements they wish for their organization.

Our clients, mostly business owners, are usually able to identify that “something needs to change” but are often unable to identify the root of the issue without additional external help.

On top of that, working in a constantly evolving space can lead to the wrong diagnosis and misuse of the limited resources available.

We see companies trying to solve everything with technology, adding complexity to their daily operations while aggravating the margin compression issue far too common in the vacation rental industry.

Alternatively, we also see companies thinking they need to improve an area they are already excelling in while missing the elephant in the room.

You need to conduct an audit of your vacation rental business with experts in their field to understand what needs to be your focus, build the right plan, and execute it.

AJL Atelier has built this extensive know-how over the years and in different areas ranging from management to operations, technology, online distribution, or even growth strategies and we’ve been supporting numerous businesses to improve the way they deliver services to their clients.

What is a vacation rental business audit?

A vacation rental business audit is the 360 assessment of a vacation rental business. It takes into account hard data, such as financials, and analyzes it to help understand how your team feels at work.

The goal of such an audit is to identify areas of improvement and opportunities within your business to make it more efficient and profitable.

Why does your vacation rental business need an audit?

Vacation rental businesses—irrespective of their size, years in the market, or objectives—can all benefit from performing a business audit.

Indeed there are a lot of reasons why an audit can be necessary to fulfill business goals and we’ve listed the main objectives below.

Identifying the goal also enables you to focus the audit on some key topics and areas of your organization to make it more effective.

Identify the areas of improvement

What gets measured gets solved.

If you want to improve your vacation rental business you need to analyze it in detail, look at the data available to you and build an action plan.

A vacation rental business is complex and a change in one process can have somewhat of a butterfly effect on the rest of the organization.

By performing a business audit you will have a clear picture of your company, where it struggles to deliver, and what you’re the best at.

You can then build a plan and priority list to make sure the most urgent matters are addressed first.

Restructure the business after years of growth

The vacation rental industry has experienced tremendous growth within the last decade—and some businesses that were founded as a small family-run operation have now snowballed into multi-million dollar companies with dozens of employees.

As a business owner, it’s very easy to get caught on this hamster wheel and realize, after a few years, that things are not running as well as they did in the past.

Performing an audit and restructuring your business and teams to align them with the reality of today’s business will enable you to optimize your resources and do better.

Prepare for the next level 

You should consider auditing your business with a focus on preparing it for growth and plan to invest time and resources to achieve that goal.

You’ll be far better off working on a solid foundation instead of building a house of cards.

An audit will also provide a clear understanding of the gaps you need to fill before taking on more work. It’ll help you understand which processes you need to create, document, or automate to create efficiencies and ensure you have a clear vision of the resources needed and the milestones you need to hit on your journey.

How to conduct a vacation rental business audit?

Conducting an audit of your business isn’t a small task, but it’s also not something you’ll do every quarter.

For your business to get the most out of it, there are some key strategic steps you need to consider and adapt to, as well as a toolkit you’ll need to use to take the relevant actions and, more importantly, measure their impact.

Take a step-by-step strategic approach

Step 1 – Embrace change

If you’re looking to audit your vacation rental business you need to accept that some aspects of your organization will have to change for its own good.

It might question some decisions you personally made in the past, when your business was facing a different reality, and it can be challenging for any founder.

One thing all the vacation rental businesses in the world share is the fact they were built with no playbook or standards—and that’s perfectly fine. You might be extremely good at something, like getting new owners, but not have any hospitality experience. Embracing this reality and accepting change will only lead to delivering the improvements you’re looking for by performing the audit in the first place.

Step 2 – Get your data in order

Working with property managers, we’ve realized that quite often the business data is not accessible. This will only make an audit harder to perform, if not impossible.

Before auditing your business, you need to prepare and structure as much data as possible in a format that is accessible. This is the first step in making an effective audit possible. You should ask different teams to participate to avoid spending months on data collection and focus on the analysis and decision making.

Step 3 – Get helped by others

Quite often we see founders and CEOs trying to do everything required by an audit themselves and ending up slowing down the process.

In the same way, you should delegate the data gathering process to the relevant teams. You should also enable them to participate as they’ve probably already experienced the issue you are trying to solve and might have some relevant ideas for improvements.

You can build focus groups inside different teams and ask them for suggestions and validation of ideas. This will only help you further down the line when the real change happens and create ownership of those issues.

You can then take an overarching role to ensure alignment between the different teams or work directly with people external to your organization who will enable you to broaden your vision when it comes to areas of improvement and future opportunities.

Being supported by experts such as AJL Atelier who have in-depth expertise in every aspect of a vacation rental business will help you validate ideas, broaden your perspective and make the right strategic decisions.

Looking to get your vacation rental business audited by experts? AJL Atelier has years of experience finding pain points with detailed audits. Get in touch

Step 4 – Measure and solve

Once you’re in a position to start your analysis with structured data and a team ready to help you it’s now time to start the actual audit.

A data-centric approach will help you identify the areas where you are underperforming and the areas where you are best in class.

We’ve seen businesses trying to improve an already optimized area and losing a lot of time and energy doing this while missing on other areas of improvement within their organization.

Looking at your data and benchmarking your performance against similar businesses will help you understand where you need to focus and build the right plan for your company.

Once this plan is crafted you can then track improvements with data and KPIs which will enable you to understand when a problem is actually solved.

Step 5 – Establish the right timelines

If you’re looking to change years of poorly adapted procedures the change will not happen 

overnight.

Some changes, for example expanding your distribution mix to other channels, can be delivered relatively quickly.

Other goals, like negotiating new contract conditions with owners or changing the structure of your teams, will require more time and effort.

This is why we recommend you establish the right timelines and understand the difference between short, mid-, and long-term goals to build the right roadmap.

For example, giving your team one month to renegotiate 100 contracts with owners will only pressure them and make them take the wrong decisions or approach which is unlikely to produce the expected outcome.

Step 6 – Break down ambitious goals into smaller deliverables

This is extremely important as change and disruption are two different things. You need to make sure the objectives, even the most ambitious, are broken down into smaller deliverables.

This will first help you to get more engagement from your team since the task will seem less daunting and will also help you adapt your approach. This is particularly useful if some dependencies exist between areas of improvement or if you are undertaking some structural change across the entire organization.

Small but constant improvements will take you a long way, especially in smaller organizations with limited resources.

In other words, you want your team on a mission, not a mission impossible.

Some of the tools you can use to perform your audit

Now let’s look into some of the tools you can use when performing an audit of your vacation rental business.

The SWOT analysis

The Strength, Weaknesses, Opportunities, and Threats analysis is broadly used by businesses to understand their internal characteristics and external environment.

It enables business owners to define the best strategy moving forward.

While performing this analysis, it’s crucial to be as candid as possible, performing a SWOT analysis is always part of our engagement with vacation rental businesses and it’s always interesting to see how founders perceive their business and contrast this with an external perspective.

Indeed, we always find aspects that were not considered by our clients in every category which is the benefit of an added perspective.

No business owner wants to bury its head in the sand seeing only Strengths and Opportunities and a holistic view is required to truly get the benefits of this analysis.

Establish KPIs

It’s crucial to measure and track improvements with the creation of Key Performance Indicators (KPIs) adapted to the areas of optimization you identified while conducting the audit.

For example, you realize that your vacation rental business has a huge dependency on a particular OTA and list this as a weakness you are looking to solve.

The logical next step is then to quantify this dependency by looking into your distribution mix.

Let’s say 60% of your reservations are coming from Airbnb, 20% from Booking.com, 15% from VRBO, and 5% from your own website.

This is the initial diagnosis you can then map out with concrete actions such as:

– Expand the distribution by onboarding your properties on more OTAs

– Work on optimizing already existing connections, in our example Booking.com and VRBO

– Improve the direct booking performance by retargeting past guests, creating a referral scheme for them to recommend your properties to friends and families, or even investing into your own website to drive better results

Once these key actions are taken, you can track how performances are evolving and see the results of these actions.

Those two examples are not an exhaustive list of the tools you can use while performing an audit, although they are some of the main ones.

Indeed you can derive KPIs from every department in the organization from customer support to sales and marketing and even operations to understand if and how your action plan is delivering results.

Use external resources whose perspective will compound with yours

Performing an audit of your vacation rental business is a great way to identify areas of optimization within the organization. Lots of business owners have built organizations generating several million euros of revenue every year with no sectorial experience and sometimes no management experience either.

On top of that, increased competition and margins compression have made the reality of running a vacation rental business more challenging and less profitable.

As we’re yet to determine industry-wide standards, hiring expert consultants like AJL Atelier is an investment that will produce immediate returns, as you look at every aspect of your business, validate the areas where you’re best-in-class, identify where you should focus your efforts, and how the identified improvements can be delivered.

Additionally, AJL Atelier understands the different phases of the lifecycle of a vacation rental business from launch to exit and we can tailor our analysis and recommendation to this and deliver the best results for our clients.

Looking to get your vacation rental business audited by experts? AJL Atelier has years of experience finding pain points with detailed audits. Get in touch

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