VROA OWNER NEWSLETTER - December 6th, 2004
SUBJECT: When & How to Hire (or Fire) a Property Manager.
This newsletter spends a lot of time discussing issues helpful to self-managed owners. However, the majority of vacation rental owners seek the aid of professional management firms to manage their homes. So today lets spend time explaining how to pick a good manager and, if necessary, fire a bad one.
WHY A MANAGER
After the thrill of managing all aspects of a vacation rental home wears off, some owners realize that renting may not be as profitable as they anticipated. Other owners, mindful of the value of their time, start with, or stay with, professional managers for the long haul. And it is the correct decision for the great majority of owners.
Managers can often advertise more efficiently and less expensively than individual owners. They have reliable on-site cleaners and maintenance people. In some circumstances an on-site front desk is provided. Venerable and experienced managers can have extensive lists of past guests to solicit to fill homes. Perhaps most importantly, managers agree to take those late night phone calls and shoulder the burden for each and every home they manage. It's a time consuming job, and it's not easy.
WHICH MANAGER
Not all managers are created equal. In fact, becoming a manager is far too easy; most managers don't even own real estate. Starting an agency takes less capital than buying even a single home. Some managers have humble beginnings as cleaners or handymen without training in other disciplines. Even those who are proficient at operations usually have far too little marketing experience. Granted, some can become good at it over time. And importantly, all have to become very good telephone sales clerks and great at customer service if they desire to remain in business.
HOW TO CHOOSE
When searching for a manager, it is of utmost importance to find one who will maintain and protect your home. When handing off-management, owners are trading away daily micromanagement for the elimination of headaches. After all things are considered, the primary goal of each owner is find a manager who they think will produce the HIGHEST NET INCOME for them year after year.
Unfortunately, there is no way for owner or manager to predict the income for a given home, even if it has an established and long rental history. Most managers are (or should be) reluctant to predict the future. Things change over time. The economy rises and falls. Certain areas become more or less profitable. Homes can be upgraded, or they can decline.
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==================================
WHAT TO LOOK FOR
What is the unassuming owner to do? How should they go about picking from various managers? How are they to know which will produce the greatest financial return? How can they find a manager whom they respect and who will work closely with them? These are difficult questions and unfortunately, there is no easy answer. But we have developed a long list of questions owners can ask in an attempt to evaluate which manager will produce success. Every manager should possess these features if they purport to be able to make you money.
OPERATIONS
- Do they employ onsite supervisors to protect your property?
- Do they have their own housekeeping services to control quality?
- Do they have on-site maintenance services for quick repairs & maintenance?
- Do they have 24 hour telephone operator to handle those late night problems?
- Do they use redundant key access for easy but secure access?
- Do they have on-call plumbers, HVAC, etc?
- Do they telephone guests upon check-in for pleasant customer service?
- Do they telephone upon checkout for instant turnaround?
- Do they post rules and notices to remind guests about compliance?
- Do they check inventory to minimize losses?
- Do they handle unit stocking if you don't want to?
MARKETING
- Do they employ relentless and inexorable advertising to search for leads?
- Do they use an on-line booking system for instant guest bookings?
- Do they have area websites for guests seeking specific places?
- Do they create specific, customized, property websites, complete with photos?
- Do they use a unique domain name for every unit to promote individual properties?
- Do they post individual calendars for each unit to maximize occupancy?
- Do they post floor plans for each property to fully inform guests of what they're booking?
- Do they employ unique and creative marketing techniques to find the most leads?
- Do they advertise on specialized websites to find the unusual visitor?
- Do they use feeder website listings to cast a wide net for leads?
- Do they use out-bound telemarketing to reach each and every guest repeatedly?
- Do they create a selling sheet for each property that clarifies its features and benefits?
- Do they utilize customized rates for each property to maximize income?
- Do they scan competitors pricing to remain at or above market rates?
SALES
- Do they specialize in short-term rentals - not sales? (R.E. Brokers who also do rentals get distracted.)
- Do they have a highly experienced sales team to garner more orders?
- Do they have professional sales managers pushing for maximum income?
- Do they manage rates actively? (Raise when possible, lower when necessary?)
- Do they use sales force automation software to speed communication?
- Do they use an automated booking system to reduce errors?
- Do they conduct first-day interviews to forestall complaints?
- Do they ask for after-stay evaluations to get guest feedback?
- Do they conduct constant sales training to keep all staff up to date?
ACCOUNTING
- Do they accepts credit cards to get all possible bookings?
- Do they collect & remit guest taxes to save the owner time and confusion?
- Do they charge cleaning to Guests rather than Owners to improve the bottom line?
- Do they charge significant deposits to avoid cancellations and write offs?
- Do they charge reservations fees to offset credit card fees?
- Will they process and disburse operating expenses if the owner so desires?
COMPUTER SYSTEMS
- Do they have an efficient rental management software system to maximize unit use?
- Do they have a way to quickly retrieve guest information to assist operations?
- Do they have fully networked computers for paramount staff coordination?
- Do they have a network firewall to guarantee your information is secure?
- Do they host their own websites for safety & redundancy?
- Is their system reliably backed up to stabilize their operation?
- Do they have the ability for off-site data retrieval to assist management?
OWNER SERVICES
- Do they coordinate details well with owners?
- Do they give full owner accountability to get answers when needed?
- Do owners get on-line access for easy owner inquiry?
- Do they maximize gross income by increasing occupancy & rates?
- Do they provide owner housekeeping when asked?
- Do they provide thorough & detailed owner income reports for full disclosure?
- Do they issue income reports monthly rather than quarterly?
- Do they pay out owner checks monthly?
- Do they offer status reports on request?
- Do they offer hassle free ownership with no headaches for owners?
- Do they offer competitive or even below market rental fees to increases owner nets?
GUEST POLICIES
- Do they have centralized reservations to make it easy for guests to buy?
- Do they utilize guest qualification to weed out trouble makers?
- Do they have tight group rules to avoid group problems?
- Do they insist on strong guest contracts to charge for damages and penalize errors?
- Do they have a no-cancellation policy to cut losses?
- Do they offer a re-sale policy to assist guests without penalizing owners?
- Do they use multi-marketing initiatives?
- Do they have a 24 hour operator for guest customer service?
- Do they have on-site supervisors to watch homes like a hawk?
STAFFING
- Do they have many years of business experience making them stable & reliable?
- Are they experts in the extreme detail required of vacation rental management?
- Are they experts at marketing and sales to get you the most income?
- Do the firm's owners oversee each property personally?
- Do they belong to and support Vacation Rental associations to keep on top of trends?
- Do they accomplish high occupancy as one of the income tools?
- Are they fully staffed and open extended hours?
- Do they have sufficient staff redundancy to be fully staffed at all times?
- Is the staff well compensated to provide continuity and allegiance?
- Is the company reliable and dependable?
- Do they utilize an explicit and clear management agreement?
- Do they offer a full service program for owners?
- Do they also allow limited services (Reserations or Referrals) if owners want that?
- Do employees share in earnings to keep them motivated?
-----------------
INPUT
As always, I seek your input. Please share your tips, techniques, compliments and complaints on this or any other subject by writing me at Director@VROA.org
HOME OF THE WEEK
We're off to Montefioralle, Italy this issue to see Elena Bencivenni's four-home farm conclave just 25 kilometers from Florence. I think you could relax there. (Especially after a glass of Chianti or San Giovese from their private vineyards.)
If you read Italian take a look at http://www.montefili.it. To see the site in English click the small Union Jack in the bottom left corner.
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
Wow! Thank you so very much for your newsletters!!! You provide a wealth of information. I love to read all of them!
- Stephanie & Robert
Ah shucks. That's so nice. We have some surprises coming in upcoming newsletter. Stay tuned. I think you'll like it.
- Wm. May
Monday, December 06, 2004
Monday, October 11, 2004
VROA OWNER NEWSLETTER - October 11th, 2004
SUBJECT: How to get sued, without really trying.
It is easy to become wildly enthusiastic about the money-making aspects of buying and renting your own vacation rental home, what with the many factors contributing to the rapid growth of private vacation rentals: internet advertising, low interest rates, an emphasis on leisure and the post-911 "Live for today" attitude. Perhaps the biggest factor is simply that renting a large and comfortable, fully stocked home is simply a far better bargain and far more enjoyable for guests than staying in a hotel.
After new owners get past the thrill of setting up their units, running some ads, booking guests and watching the money roll in, I hope each and every one will take the time to do a "gut check" - realize that they are in a business, and like all enterprises, it carries risks and legal exposure.
Luckily, like the thousands of other industries in the world, the financial exposure of vacation rentals can be researched, evaluated, planned for and - with care and caution - usually avoided. But you have to know what you are doing. If you don't you'll find yourself in court answering questions, you may not be prepared to answer. Your response may cause judge and jury to find you were prudent and reasonable and without fault. Or they can just as easily find you failed to exercise due caution, did not conform to written rules and regulations and are one sorry excuse of a landlord, from whom they will extract large sums of money.
GETTING SUED:
So how do you go about making yourself open for legal and financial exposure? Here are some (tongue in cheek) suggestions:
- Advertise and promise the moon. Doctor photos to remove you view of the condo dumpster. And, for goodness sake, never tell them the off-putting aspects of the house, resort or neighborhood, they'll find that out after it's too late to get their money back!
- Do everything verbally. Don't bother with written leases. You are the boss and your guests will do as you say (Just like your children!)
- Let anyone with the money rent your house. And let them bring as many guests as they want. Parties? No problem, as long as they have the rent. It doesn't matter if the neighbors are disturbed, you probably won't even know them anyway.
- Take credit cards, even when you have time to get paid by check. The more the better. Sure the guest can create a Chargeback, but hey, the bank's on my side right?
- Hire the cheapest housekeepers and maintenance people you can find. While paying good wages on time may give you reliability, guests won't know the difference if the place isn't perfectly clean and well maintained.
- Don't worry about safety, fire and other regulations. If the house starts to burn, what good is a fire extinguisher anyway? Who would even notice? And how can anyone expect little old you to know about all those big bad governmental regulations?
- Don't have a 24 hour, 7 day a week emergency phone number. Hey, they rented the house and they should now enough not to lock themselves out. I'm in it for the money, not the work.
- Don't have a local representative to help with problems. Sure you live a scant, 4 hour plane ride away, but what could go so wrong as to require someone to visit the home on short notice?
- Never use a manager. They are all thieves, actually charging you $8 to drive to a house 15 miles away to install a light bulb. Sure some owners don't have the time or experience to properly manage their homes, but who is going to pay a manager when everyone says it's so easy to do-it-yourself?
- Don't join the industry association. What could hundreds of other owners who have been renting for up to 40 years and some of whom own multiple homes - know that I can't figure out myself in just a few minutes? (Sorry for the shameful VROA plug).
AVOIDING LIGITATION:
The silly examples above reflect the kind of thinking detected when speaking with new or inexperienced vacation home owners. I sound like a broken record (do they still make records?) when I say the following, "The only safe way to offer a vacation home for rental is to operate it like a business." No messing around. Learn what you don't know, follow the rules and get better everyday.
Remember: "Free advice is worth what you pay for it" so be careful listening to other owners who are often less skilled and experienced than they let on. Instead, smart investors dig deeply, study thoroughly and then act in responsible and reasonable ways.
There isn't time in this edition to provide instructions as to why the examples above are nothing short of stupidity. Some of these have been covered in prior newsletters and time will be devoted to many of them in future articles. Instead, let me just focus on one very important tactic all smart rental owners should employ.
GET THEE TO A LIMITED LIABILTIY COMPANY:
To leave you with a taste of legal sanity, I want to give you a full and proper answer on legal entities and why you must immediately form a "Limited Liability Company" and have it (and not yourself personally) own your vacation rental home.
This is a frequent topic of discussion among owners who ask "Should I incorporate" to protect myself from the legal exposure of renting my home? When other owners answer they usually find a need to say, "I am not a lawyer, but ..." Maybe they have learned that insufficient disclaimer by listening to lawyers who have been trained, not to give you clear and concise answers, but to be able to argue either side of any issue. That may serve the lawyers well in court, but it's a terrible disservice to clients, especially those with a risky small business like a vacation rental home. Clients who need useable suggestions and efficient answers.
Well I'm not a lawyer either, but I may as well be after 30 years running over a dozen companies. In one firm, I had the distinct pleasure (sometimes pleasurable, but always distinct) of representing the buyers and sellers of companies as a broker or intermediary. In those negotiations every party had a lawyer and usually an accountant, appraiser, corporate board members, company officers and others who influenced their decisions (right on down to their priest, rabbi and brother-in-law). Well, you can imagine the cacophony of opinions that flooded the decision maker's ears. I found that the lawyers were usually the least sure of the decision maker's opinions while those with no training were usually the most sure.
After being a fly on the wall of hundreds of meetings with hundreds of attorneys, here is the only thing I know for sure: one must utilize the 80/20 rule. Eighty percent of the attorneys had no idea what they were talking about, couldn't explain what they did want to say, were not very persuasive and were usually terrible negotiators. Worst of all, eighty percent simply didn't know what they were talking about. They were worse than no-nothings because they insisted they had answers when they clearly did not.
THE QUESTION:
That brings us back to the question of, "Should I incorporate my vacation rental home to protect myself from the liability of owner it?" The answers is - Yes, you should form a legal entity to protect yourself. Let me repeat that - yes, you should. In fact, yes, you must.
A TRAGIC TALE:
The details of forming legal entities may come in other forms in different counties. Formation of legal companies is by statute (by law) in all jurisdictions and is not just some kind of ages old universal process that governments must accept. They all differ in terminology. That means, if you are not in the US, be sure to find similar mechanisms in your country.
Over two decades ago I remember reading the local business paper which had the sadistic practice (like many publications) of publishing the names, addresses and information of people and companies who had gone bankrupt. Like vultures circling a carcasses, I was struck by one particular entry. It was for a company named "Joan's Hair Cutting and Curling" who had filed for chapter 7 (permanent) bankruptcy. The company listed assets of $7,000 and Debts of $12,000 and Joan was having her debts dismissed by filing. Unfortunately Joan's little business had never been incorporated and that meant that for a negative equity of $5,000 Joan was not only going to lose her business, but all her personal assets as well. Maybe even her children's college education savings and (I extrapolate here) their opportunity to go to college and make a better life for themselves.
I also read about large companies that go bankrupt but it's hard to muster sympathy for them. We all make mistakes, some businesses are winners and some are losers. Sometimes it's the fault of the owners who are inexperienced or not careful, and other times because the economy has changed, competitors have prevailed or the managers made mistakes. The last may be true for Joan, but the large company officers generally do not screw up their personal lives and lose their life savings when they lose their companies. All because they have been big enough or smart enough to set up those businesses as distinct legal entities.
So for the lack of (in those days) a $100 filing fee and some forms, Joan was consigned to financial hell: a terrible personal credit report for 10 years.
Luckily, you don't have to make Joan's mistake. Today, you can use online services or buy simple software and form a legal entity to own your home. Or, if you like spending money, you can hire a lawyer to do it. I think Joan would tell you the $100 would have been money well spent. Today, you can spend about $200 to $400 to do the job, plus a small yearly renewal fee and a dozen pieces of copy paper. That's it.
Remember as well that Joan didn't take near the risk that any vacation rental home owner takes. Not only could you lose money and lose the house, you could have an accident (like a fire) that maims or kills someone and you could become personally responsible far beyond the limits of your insurance policy. Even a stove accident, or a slip in the driveway could cost you hundreds of thousands of dollars in legal fees.
LEGAL FORMS:
For many years the legal form of choice was to become incorporated. Doing so was a matter of having Bylaws and Articles of incorporation written and then filed (in the US, anyways) with your state government. Each year after that, you have to take 5 minutes to fill in a renewal form, and send them a fee (usually in the $50 price range.) Oh, and you have to have a meeting of the shareholders and Board of Directors which, will take two more pieces of paper with three more paragraphs on them.
Along the way, the federal government came up with the option of "electing" to become an "S" corporation and have the corporate profits taxed at the personal level, thereby avoiding (in most cases) a double taxation situation - certainly a desirable option. As well as some other decisions - and hoops to jump through - that shareholders could make to remain a corporation in good standing.
If you formed a corporation, invested your capital into the corporation, had it buy your vacation rental home and followed the rules listed above, it's simple to distance your personal assets from any problem that arose in the home. Every lawyer will tell you that the system is not perfect, and that an opposing lawyer would attempt to "Pierce the corporate veil" to get at your personal assets. But realize, lawyers are taught to always find the opposing argument. In actuality, piercing the veil is a very difficult and highly unlikely thing for a judge to grant. So, that leaves us with this - incorporating is the best way (albeit, not the perfect way) to protect your assets.
USING AN L-L-C:
In the last few decades, however, a new legal form has arisen and been approved in virtually all US states called the Limited Liability Company or "LLC." It is a far better vehicle for owning real estate and separating that risk from your personal life. LLCs (like corporations) are, in the eyes of the law, autonomous legal entities. They can do everything a person can do; buy and sell things, borrow and loan money, hire and fire employees, enter into agreements, file taxes, sue and be sued. Just like a person, if they become insolvent or make mistakes, the LLC is liable for them. After all, the word "Limited" means limited to the company and not its owners.
LLCs are usually able to decide how they want to be taxed: as a partnership or sole proprietorship. You can't avoid the taxes, but you can only get taxed once, and you decide where the money comes from: the LLC or your pocket.
In the worst case scenario, death due to fire in your home, there could be financial liability greater than your insurance or the LLC has to pay. If the LLC doesn't have enough assets, it can declare bankruptcy leaving the creditor with all the assets of the LLC. But here is the good part - only the assets of the LLC. Your other personal assets (Cash, stock, savings, other real estate) not owned by the LLC, are outside the reach of the creditor.
What does all this mean to you? First, no one wants to have problems or become personally liable, and you certainly don't want to lose the equity you have invested in your vacation home. However, you must also understand that nothing else can limit the exposure you have when you buy and rent out your home. An LLC won't protect your equity, but it will "Limit" your exposure to the money you've invested.
BANKING:
There is one significant wrinkle - your bank may be unwilling to lend money to what is a very small company (your vacation home). But in many cases they will be willing to lend the money to the LLC if someone (you) co-signs the loan. You don't want to do that for some legal reasons, in particular, co-signing may cause an "unintentional" partnership to be formed, from which a court could construe you are liable for the debts of your partner - the LLC.
Instead, when purchasing your house, ask your bank if you can simply "Guarantee" the loan in the same way you might for a (very good) friend. If he (LLC) doesn't pay, you have to. Of course this means (sadly) that there is really no way to avoid responsibility for the mortgage on the home. But that is not your intention anyway, and this way you'll get the loan, the bank will be secure, and you will still have your risky (vacation home) asset separate from the rest of your financial future.
SUMMARY:
Next time someone asks if they should incorporate their vacation home or any business you will know the answer: ABSOLUTELY. You must form a legal entity to own and operate your business. In most cases, an LLC is the best legal form for small businesses. It will cost a few dollars to setup, and a few more each year to renew, but it will be the cheapest insurance you will ever buy and the most likely to protect you. Don't accept any other answer.
As they say in the game Monopoly - do not pass go, do not collect $200. But do form an LLC immediately. Or lay awake at night worrying about losing everything you own because a guest made a mistake.
-----------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
This week's home is nestled up in the Vail mountains and comes complete with all amenities you'd ever need. 5,000 square feet of luxury for you and your family. Take a peek at http://www.triangleriver.com
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
I've found your newsletters very informative and well written. I can't be sure, but I think since your advice to call, (besides writing emails), has secured me two bookings, and maybe, before, I've lost some.
- Katerina, Greece
Glad to hear it's working. Now I just have to find a way to visit you in Greece?
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
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SUBJECT: How to get sued, without really trying.
It is easy to become wildly enthusiastic about the money-making aspects of buying and renting your own vacation rental home, what with the many factors contributing to the rapid growth of private vacation rentals: internet advertising, low interest rates, an emphasis on leisure and the post-911 "Live for today" attitude. Perhaps the biggest factor is simply that renting a large and comfortable, fully stocked home is simply a far better bargain and far more enjoyable for guests than staying in a hotel.
After new owners get past the thrill of setting up their units, running some ads, booking guests and watching the money roll in, I hope each and every one will take the time to do a "gut check" - realize that they are in a business, and like all enterprises, it carries risks and legal exposure.
Luckily, like the thousands of other industries in the world, the financial exposure of vacation rentals can be researched, evaluated, planned for and - with care and caution - usually avoided. But you have to know what you are doing. If you don't you'll find yourself in court answering questions, you may not be prepared to answer. Your response may cause judge and jury to find you were prudent and reasonable and without fault. Or they can just as easily find you failed to exercise due caution, did not conform to written rules and regulations and are one sorry excuse of a landlord, from whom they will extract large sums of money.
GETTING SUED:
So how do you go about making yourself open for legal and financial exposure? Here are some (tongue in cheek) suggestions:
- Advertise and promise the moon. Doctor photos to remove you view of the condo dumpster. And, for goodness sake, never tell them the off-putting aspects of the house, resort or neighborhood, they'll find that out after it's too late to get their money back!
- Do everything verbally. Don't bother with written leases. You are the boss and your guests will do as you say (Just like your children!)
- Let anyone with the money rent your house. And let them bring as many guests as they want. Parties? No problem, as long as they have the rent. It doesn't matter if the neighbors are disturbed, you probably won't even know them anyway.
- Take credit cards, even when you have time to get paid by check. The more the better. Sure the guest can create a Chargeback, but hey, the bank's on my side right?
- Hire the cheapest housekeepers and maintenance people you can find. While paying good wages on time may give you reliability, guests won't know the difference if the place isn't perfectly clean and well maintained.
- Don't worry about safety, fire and other regulations. If the house starts to burn, what good is a fire extinguisher anyway? Who would even notice? And how can anyone expect little old you to know about all those big bad governmental regulations?
- Don't have a 24 hour, 7 day a week emergency phone number. Hey, they rented the house and they should now enough not to lock themselves out. I'm in it for the money, not the work.
- Don't have a local representative to help with problems. Sure you live a scant, 4 hour plane ride away, but what could go so wrong as to require someone to visit the home on short notice?
- Never use a manager. They are all thieves, actually charging you $8 to drive to a house 15 miles away to install a light bulb. Sure some owners don't have the time or experience to properly manage their homes, but who is going to pay a manager when everyone says it's so easy to do-it-yourself?
- Don't join the industry association. What could hundreds of other owners who have been renting for up to 40 years and some of whom own multiple homes - know that I can't figure out myself in just a few minutes? (Sorry for the shameful VROA plug).
AVOIDING LIGITATION:
The silly examples above reflect the kind of thinking detected when speaking with new or inexperienced vacation home owners. I sound like a broken record (do they still make records?) when I say the following, "The only safe way to offer a vacation home for rental is to operate it like a business." No messing around. Learn what you don't know, follow the rules and get better everyday.
Remember: "Free advice is worth what you pay for it" so be careful listening to other owners who are often less skilled and experienced than they let on. Instead, smart investors dig deeply, study thoroughly and then act in responsible and reasonable ways.
There isn't time in this edition to provide instructions as to why the examples above are nothing short of stupidity. Some of these have been covered in prior newsletters and time will be devoted to many of them in future articles. Instead, let me just focus on one very important tactic all smart rental owners should employ.
GET THEE TO A LIMITED LIABILTIY COMPANY:
To leave you with a taste of legal sanity, I want to give you a full and proper answer on legal entities and why you must immediately form a "Limited Liability Company" and have it (and not yourself personally) own your vacation rental home.
This is a frequent topic of discussion among owners who ask "Should I incorporate" to protect myself from the legal exposure of renting my home? When other owners answer they usually find a need to say, "I am not a lawyer, but ..." Maybe they have learned that insufficient disclaimer by listening to lawyers who have been trained, not to give you clear and concise answers, but to be able to argue either side of any issue. That may serve the lawyers well in court, but it's a terrible disservice to clients, especially those with a risky small business like a vacation rental home. Clients who need useable suggestions and efficient answers.
Well I'm not a lawyer either, but I may as well be after 30 years running over a dozen companies. In one firm, I had the distinct pleasure (sometimes pleasurable, but always distinct) of representing the buyers and sellers of companies as a broker or intermediary. In those negotiations every party had a lawyer and usually an accountant, appraiser, corporate board members, company officers and others who influenced their decisions (right on down to their priest, rabbi and brother-in-law). Well, you can imagine the cacophony of opinions that flooded the decision maker's ears. I found that the lawyers were usually the least sure of the decision maker's opinions while those with no training were usually the most sure.
After being a fly on the wall of hundreds of meetings with hundreds of attorneys, here is the only thing I know for sure: one must utilize the 80/20 rule. Eighty percent of the attorneys had no idea what they were talking about, couldn't explain what they did want to say, were not very persuasive and were usually terrible negotiators. Worst of all, eighty percent simply didn't know what they were talking about. They were worse than no-nothings because they insisted they had answers when they clearly did not.
THE QUESTION:
That brings us back to the question of, "Should I incorporate my vacation rental home to protect myself from the liability of owner it?" The answers is - Yes, you should form a legal entity to protect yourself. Let me repeat that - yes, you should. In fact, yes, you must.
A TRAGIC TALE:
The details of forming legal entities may come in other forms in different counties. Formation of legal companies is by statute (by law) in all jurisdictions and is not just some kind of ages old universal process that governments must accept. They all differ in terminology. That means, if you are not in the US, be sure to find similar mechanisms in your country.
Over two decades ago I remember reading the local business paper which had the sadistic practice (like many publications) of publishing the names, addresses and information of people and companies who had gone bankrupt. Like vultures circling a carcasses, I was struck by one particular entry. It was for a company named "Joan's Hair Cutting and Curling" who had filed for chapter 7 (permanent) bankruptcy. The company listed assets of $7,000 and Debts of $12,000 and Joan was having her debts dismissed by filing. Unfortunately Joan's little business had never been incorporated and that meant that for a negative equity of $5,000 Joan was not only going to lose her business, but all her personal assets as well. Maybe even her children's college education savings and (I extrapolate here) their opportunity to go to college and make a better life for themselves.
I also read about large companies that go bankrupt but it's hard to muster sympathy for them. We all make mistakes, some businesses are winners and some are losers. Sometimes it's the fault of the owners who are inexperienced or not careful, and other times because the economy has changed, competitors have prevailed or the managers made mistakes. The last may be true for Joan, but the large company officers generally do not screw up their personal lives and lose their life savings when they lose their companies. All because they have been big enough or smart enough to set up those businesses as distinct legal entities.
So for the lack of (in those days) a $100 filing fee and some forms, Joan was consigned to financial hell: a terrible personal credit report for 10 years.
Luckily, you don't have to make Joan's mistake. Today, you can use online services or buy simple software and form a legal entity to own your home. Or, if you like spending money, you can hire a lawyer to do it. I think Joan would tell you the $100 would have been money well spent. Today, you can spend about $200 to $400 to do the job, plus a small yearly renewal fee and a dozen pieces of copy paper. That's it.
Remember as well that Joan didn't take near the risk that any vacation rental home owner takes. Not only could you lose money and lose the house, you could have an accident (like a fire) that maims or kills someone and you could become personally responsible far beyond the limits of your insurance policy. Even a stove accident, or a slip in the driveway could cost you hundreds of thousands of dollars in legal fees.
LEGAL FORMS:
For many years the legal form of choice was to become incorporated. Doing so was a matter of having Bylaws and Articles of incorporation written and then filed (in the US, anyways) with your state government. Each year after that, you have to take 5 minutes to fill in a renewal form, and send them a fee (usually in the $50 price range.) Oh, and you have to have a meeting of the shareholders and Board of Directors which, will take two more pieces of paper with three more paragraphs on them.
Along the way, the federal government came up with the option of "electing" to become an "S" corporation and have the corporate profits taxed at the personal level, thereby avoiding (in most cases) a double taxation situation - certainly a desirable option. As well as some other decisions - and hoops to jump through - that shareholders could make to remain a corporation in good standing.
If you formed a corporation, invested your capital into the corporation, had it buy your vacation rental home and followed the rules listed above, it's simple to distance your personal assets from any problem that arose in the home. Every lawyer will tell you that the system is not perfect, and that an opposing lawyer would attempt to "Pierce the corporate veil" to get at your personal assets. But realize, lawyers are taught to always find the opposing argument. In actuality, piercing the veil is a very difficult and highly unlikely thing for a judge to grant. So, that leaves us with this - incorporating is the best way (albeit, not the perfect way) to protect your assets.
USING AN L-L-C:
In the last few decades, however, a new legal form has arisen and been approved in virtually all US states called the Limited Liability Company or "LLC." It is a far better vehicle for owning real estate and separating that risk from your personal life. LLCs (like corporations) are, in the eyes of the law, autonomous legal entities. They can do everything a person can do; buy and sell things, borrow and loan money, hire and fire employees, enter into agreements, file taxes, sue and be sued. Just like a person, if they become insolvent or make mistakes, the LLC is liable for them. After all, the word "Limited" means limited to the company and not its owners.
LLCs are usually able to decide how they want to be taxed: as a partnership or sole proprietorship. You can't avoid the taxes, but you can only get taxed once, and you decide where the money comes from: the LLC or your pocket.
In the worst case scenario, death due to fire in your home, there could be financial liability greater than your insurance or the LLC has to pay. If the LLC doesn't have enough assets, it can declare bankruptcy leaving the creditor with all the assets of the LLC. But here is the good part - only the assets of the LLC. Your other personal assets (Cash, stock, savings, other real estate) not owned by the LLC, are outside the reach of the creditor.
What does all this mean to you? First, no one wants to have problems or become personally liable, and you certainly don't want to lose the equity you have invested in your vacation home. However, you must also understand that nothing else can limit the exposure you have when you buy and rent out your home. An LLC won't protect your equity, but it will "Limit" your exposure to the money you've invested.
BANKING:
There is one significant wrinkle - your bank may be unwilling to lend money to what is a very small company (your vacation home). But in many cases they will be willing to lend the money to the LLC if someone (you) co-signs the loan. You don't want to do that for some legal reasons, in particular, co-signing may cause an "unintentional" partnership to be formed, from which a court could construe you are liable for the debts of your partner - the LLC.
Instead, when purchasing your house, ask your bank if you can simply "Guarantee" the loan in the same way you might for a (very good) friend. If he (LLC) doesn't pay, you have to. Of course this means (sadly) that there is really no way to avoid responsibility for the mortgage on the home. But that is not your intention anyway, and this way you'll get the loan, the bank will be secure, and you will still have your risky (vacation home) asset separate from the rest of your financial future.
SUMMARY:
Next time someone asks if they should incorporate their vacation home or any business you will know the answer: ABSOLUTELY. You must form a legal entity to own and operate your business. In most cases, an LLC is the best legal form for small businesses. It will cost a few dollars to setup, and a few more each year to renew, but it will be the cheapest insurance you will ever buy and the most likely to protect you. Don't accept any other answer.
As they say in the game Monopoly - do not pass go, do not collect $200. But do form an LLC immediately. Or lay awake at night worrying about losing everything you own because a guest made a mistake.
-----------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
This week's home is nestled up in the Vail mountains and comes complete with all amenities you'd ever need. 5,000 square feet of luxury for you and your family. Take a peek at http://www.triangleriver.com
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
I've found your newsletters very informative and well written. I can't be sure, but I think since your advice to call, (besides writing emails), has secured me two bookings, and maybe, before, I've lost some.
- Katerina, Greece
Glad to hear it's working. Now I just have to find a way to visit you in Greece?
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy): http://www.vroa.org/tellafriend/form.asp
Sunday, September 05, 2004
VROA OWNER NEWSLETTER - September 5th, 2004
SUBJECT: If there are Vacation rentals in Afghanistan, it must be here for good.
I kid you not. The LA Times is reporting that Estullah Rooz, after years of fighting Soviets, rival Mujahedee and the Taliban, the man known as the Commander Mullah is going corporate. And how you say? Well, he's building the first Swiss designed and pre-fabricated Vacation Rental homes on Lake Qargha six miles north of the Afghanistan capital of Kabul.
Rooz concocted the idea with a friend of his - Zemary Hakaim - who immigrated to Switzerland in 1972 and became a self confessed Hippie. Together they leased land at the lake and convinced local landlords to allow them to erect the Swiss Style Chalets. And for labor, Rooz and Hakaim recruited or converted experienced freedom fighters into carpenters, landscapers and service personnel at twice the pay of a soldier's salary.
Rooz expects his Vacation Rental homes to be a real money maker once erected. For now, he profits with food sales and guests can also visit the recently opened golf course complete with pro shop made out of an old, dented shipping container.
COMMENTARY:
Don't you love entrepreneurs? They're the ones who find a way to bring a great idea to fruition. In a very convoluted way this is nothing more than what many resort area owners have learned to do with their vacation homes over the past few years: cater to different rentors. Evolve the renting market from one of quaint cabins and rustic retreats into one of fancy homes and luxurious villas. With skyrocketing prices, enterprising individuals find a way to overcome their limitations.
As illustrated by our comrade in arms Mr. Estullah Rooz. I'm going to write him a letter and offer him an Honorary VROA membership. He certainly deserves one and I think we might just have a few tidbits that might help him along the way. I'm sure he also has tips for those of us looking to setup our own rentals in Afghanistan.
I won't be the first to rent his place but goodness knows I really wish him well.
To read more about Mr. Rooz, check out the full story on VROA.org under the News section.
GET LISTED IN GUIDEBOOKS:
I've placed tens of millions of dollars in advertising media purchases for clients over the years, so you might think I'd know the whole story.
Unfortunately, advertising is a trial-and-error business. So it is with great embarrassment that I admit I have unknowingly overlooked a MAJOR advertising/public relations opportunity for Vacation Rentals.
You gotta let the Travel Guidebooks for your city, resort, state or region know your home is available for rent.
By guidebooks I mean those legitimate published books that offer listings, advice and sometimes ratings on lodging, activities and restaurants in the target area.
Unless you have multiple properties your chance of getting listed might be low - but keep this in mind - if they don't know you exist they'll never have a chance to list your home in their guidebooks.
The good news is that submitting your home to the guidebooks is cheap and easy. Here's how:
- Go to Amazon.com & Google.com and search by keywords to find the titles and authors of guidebooks for your area.
- Find the address, phone, email and so forth of the editor and/or author responsible for that book. You may have to call the publisher to make sure you have the correct names as editors can change even for books that come out every year or so.
- Store those names in your computer address book (or even on paper if that is all you have).
- Write a letter template that tells them why you are writing and give a little blurb about your home. Keep it short and give them your website, they'll need to know far more than you could put in the letter.
- Send that letter to every guidebook every six months. I use the same letter over and over again simply indicating that I am "reminding" them to consider me.
It will take time to get results, but if you get listed it's money in the bank.
FREE ADVICE CAN BE EXPENSIVE:
There are a number of web directories, groups and publications where owners can learn about how to do business.
It's good to see the industry resources growing, but VROA's opinions differ on key issues.
First, VROA has no conflict of interest. Web directories sometimes promote their own agenda - fully ethical by the way - but judge the message by the sender.
Online groups are interesting and can give a sense of comradery to the user, but remember all that chat is "unvetted" data. That's a newspaper term. Most consumers don't realize (or take for granted) the fact that major media sources have go out of their way to "check facts" before they publish them. Online group users don't.
At VROA we base our information on years of staff experience and the filtered feedback we get from owners committed enough, and usually experienced enough, to understand how a professional association can serve the industry.
Lately, I've been seeing all kinds of advice in online postings that is simply wrong. For example - here is a frequent chat question - "Can I withhold the guest deposit for ... (you name the sin)."
And the answers are always "yes" or "no" - and both are wrong.
Confiscating a deposit is absolutely necessary in some cases but very dangerous if the owner doesn't understand the law, and hasn't prepared themselves with strong contracts, notices and more.
I love owning rentals. But it's not all fun and it is certainly not a game or a hobby. Owners should use great discretion when listening to advice from any person with the two minutes it takes to join a chat group.
Free advice could turn extremely costly if it leads to simple but expensive errors.
------------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Scarlett & Tim Deshong's luxury Hale Lele Villa located on the golden shore of Maui. Exquisitely appointed, this wonderful villa sports over 6,000 square feet of elegance. www.DeluxeRental.com.
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
The Blue Ribbon Inspection is much preferable to a star rating system. I own one of those quaint little cottages in the mountains that could never compare to some of your luxurious rentals. However, my occupancy rate is very high and I consistently receive rave reviews from my guests. Not all guests are looking for pricey, luxurious rentals. In fact, most families are not. They are looking for a casual environment in which they and their children can feel comfortable.
I enjoy receiving your newsletter and find it to be the only truly informative one in the industry. Not a lot of hype - just good practical advice and info I can use. I also appreciate your asking for the input of owners.
Sharon Z. Ryan, River Rose Cottage
www.distinctivemtnlodging.com
We're working diligently on the revised Blue Ribbon Inspection program. Lots of details but we want to do it right. You raise an apt point, guests come in all shapes and sizes seeking all kinds of accommodations. We want a system that will tell them what they get and whether it is clean, comfortable and honestly represented. More on Inspections soon.
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy): http://www.vroa.org/tellafriend/form.asp
SUBJECT: If there are Vacation rentals in Afghanistan, it must be here for good.
I kid you not. The LA Times is reporting that Estullah Rooz, after years of fighting Soviets, rival Mujahedee and the Taliban, the man known as the Commander Mullah is going corporate. And how you say? Well, he's building the first Swiss designed and pre-fabricated Vacation Rental homes on Lake Qargha six miles north of the Afghanistan capital of Kabul.
Rooz concocted the idea with a friend of his - Zemary Hakaim - who immigrated to Switzerland in 1972 and became a self confessed Hippie. Together they leased land at the lake and convinced local landlords to allow them to erect the Swiss Style Chalets. And for labor, Rooz and Hakaim recruited or converted experienced freedom fighters into carpenters, landscapers and service personnel at twice the pay of a soldier's salary.
Rooz expects his Vacation Rental homes to be a real money maker once erected. For now, he profits with food sales and guests can also visit the recently opened golf course complete with pro shop made out of an old, dented shipping container.
COMMENTARY:
Don't you love entrepreneurs? They're the ones who find a way to bring a great idea to fruition. In a very convoluted way this is nothing more than what many resort area owners have learned to do with their vacation homes over the past few years: cater to different rentors. Evolve the renting market from one of quaint cabins and rustic retreats into one of fancy homes and luxurious villas. With skyrocketing prices, enterprising individuals find a way to overcome their limitations.
As illustrated by our comrade in arms Mr. Estullah Rooz. I'm going to write him a letter and offer him an Honorary VROA membership. He certainly deserves one and I think we might just have a few tidbits that might help him along the way. I'm sure he also has tips for those of us looking to setup our own rentals in Afghanistan.
I won't be the first to rent his place but goodness knows I really wish him well.
To read more about Mr. Rooz, check out the full story on VROA.org under the News section.
GET LISTED IN GUIDEBOOKS:
I've placed tens of millions of dollars in advertising media purchases for clients over the years, so you might think I'd know the whole story.
Unfortunately, advertising is a trial-and-error business. So it is with great embarrassment that I admit I have unknowingly overlooked a MAJOR advertising/public relations opportunity for Vacation Rentals.
You gotta let the Travel Guidebooks for your city, resort, state or region know your home is available for rent.
By guidebooks I mean those legitimate published books that offer listings, advice and sometimes ratings on lodging, activities and restaurants in the target area.
Unless you have multiple properties your chance of getting listed might be low - but keep this in mind - if they don't know you exist they'll never have a chance to list your home in their guidebooks.
The good news is that submitting your home to the guidebooks is cheap and easy. Here's how:
- Go to Amazon.com & Google.com and search by keywords to find the titles and authors of guidebooks for your area.
- Find the address, phone, email and so forth of the editor and/or author responsible for that book. You may have to call the publisher to make sure you have the correct names as editors can change even for books that come out every year or so.
- Store those names in your computer address book (or even on paper if that is all you have).
- Write a letter template that tells them why you are writing and give a little blurb about your home. Keep it short and give them your website, they'll need to know far more than you could put in the letter.
- Send that letter to every guidebook every six months. I use the same letter over and over again simply indicating that I am "reminding" them to consider me.
It will take time to get results, but if you get listed it's money in the bank.
FREE ADVICE CAN BE EXPENSIVE:
There are a number of web directories, groups and publications where owners can learn about how to do business.
It's good to see the industry resources growing, but VROA's opinions differ on key issues.
First, VROA has no conflict of interest. Web directories sometimes promote their own agenda - fully ethical by the way - but judge the message by the sender.
Online groups are interesting and can give a sense of comradery to the user, but remember all that chat is "unvetted" data. That's a newspaper term. Most consumers don't realize (or take for granted) the fact that major media sources have go out of their way to "check facts" before they publish them. Online group users don't.
At VROA we base our information on years of staff experience and the filtered feedback we get from owners committed enough, and usually experienced enough, to understand how a professional association can serve the industry.
Lately, I've been seeing all kinds of advice in online postings that is simply wrong. For example - here is a frequent chat question - "Can I withhold the guest deposit for ... (you name the sin)."
And the answers are always "yes" or "no" - and both are wrong.
Confiscating a deposit is absolutely necessary in some cases but very dangerous if the owner doesn't understand the law, and hasn't prepared themselves with strong contracts, notices and more.
I love owning rentals. But it's not all fun and it is certainly not a game or a hobby. Owners should use great discretion when listening to advice from any person with the two minutes it takes to join a chat group.
Free advice could turn extremely costly if it leads to simple but expensive errors.
------------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Scarlett & Tim Deshong's luxury Hale Lele Villa located on the golden shore of Maui. Exquisitely appointed, this wonderful villa sports over 6,000 square feet of elegance. www.DeluxeRental.com.
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
The Blue Ribbon Inspection is much preferable to a star rating system. I own one of those quaint little cottages in the mountains that could never compare to some of your luxurious rentals. However, my occupancy rate is very high and I consistently receive rave reviews from my guests. Not all guests are looking for pricey, luxurious rentals. In fact, most families are not. They are looking for a casual environment in which they and their children can feel comfortable.
I enjoy receiving your newsletter and find it to be the only truly informative one in the industry. Not a lot of hype - just good practical advice and info I can use. I also appreciate your asking for the input of owners.
Sharon Z. Ryan, River Rose Cottage
www.distinctivemtnlodging.com
We're working diligently on the revised Blue Ribbon Inspection program. Lots of details but we want to do it right. You raise an apt point, guests come in all shapes and sizes seeking all kinds of accommodations. We want a system that will tell them what they get and whether it is clean, comfortable and honestly represented. More on Inspections soon.
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy): http://www.vroa.org/tellafriend/form.asp
Monday, August 02, 2004
VROA OWNER NEWSLETTER - August 2nd, 2004
SUBJECT: Is Yours a Quality Home?
"Love looks not with the eyes but with the mind." To quote good old Bill Shakespeare, that long ago landlord from Stratford on Avon, in Merry old England. It's also a fine lesson for vacation home owners who want to get the best guests, highest rates, most occupancy and fewest headaches.
All of this bonked me on the head as I was sitting in a lovely outdoor theatre in the little town of Ashland, Oregon this weekend. Probabably because the quote is from A Midsummer Night's Dream and this town's Shakespearean Festival is truly world famous for its quality. I'm told its the largest not-for-profit theatre in America running 8 plays simultaneously about 9 months per year in three theatres selling 400,000 tickets annually. ( http://www.osfashland.org) Come visit sometime and you can see 8 plays in four days. Its overload but its enlightening.
You don't have to be a high brow to enjoy Shakespeare in this little community of 10,000 souls as long as you admire anything that is of high quality. I've been traipsing down for almost 30 years and have the dubious honor of having seen the entire collection ("Cannon") of Bill's plays - including the ones he wrote on a bad day. Plus other plays from the Shakespeare era, other classics and contemporary plays that earn the honor of getting produced here. And in all those years I've never seen a production that was anything less that high quality - that is an amazing feat in and of itself.
I also come because learning is a lifelong process - it never surprises me when something written 400 years ago is still applicable today. With the rapid growth of vacation rental availability, I am amazed at how often owners violate Shakespere's simple reminder. Let me paraphrase. Its not what you the owner wants that makes your home desirable (your eyes) - all that counts is what the renter wants; and you have to use your brain - not your heart - to figure that out.
QUALITY IS ELUSIVE:
It is far too easy to get excited about renting out a vacation home as a way to make money or offset costs. Sounds easy right? Just throw up some ads, take a few phones calls and the money comes rolling in. Depending on your location, the existing amenities of the home and our own innate sense of what a renter might want - you might do just great.
But judging from my email, many owners - perhaps most owners - do not reach anywhere near their financial expectations. Some are even struggling, often forced to sell their dream home when it can't carry itself.
Of all the contributing factors to sub-par performance, quality is by far the most important. Instead of studying the industry to figure out what guests want (as we hope smart business people do) owners frequently buy a house that suits them but doesn't suit the guests.
Certainly quality is relative to the geographic area, competition and seasonality, however, it isn't necessary to have a million dollar villa in a rustic mountain community. It is necessary though to make sure that every home, no matter how modest, adheres to some standards that the average guest should expect. You may feel this reminder is an obvious one. But as I inspect home after home I am amazed at how frequently an owner overlooks the most basic tasks to make their home a quality place to stay.
QUALITY CHECKLIST:
I won't bore you with a list of unaffordable improvements or suggest that you remodel your place, the fix is much more simple. Often you can dramatically improve quality by taking a fresh look at your home. Let me give you just a few examples in hopes you will do a thorough review and find your own areas to fix:
TOWELS: Do all towels in your home match? If not, they should. We recommend white so you can add matching replacements as necessary. Are they worn in anyway? They can't be. If you don't have a replacement budget find a place for it in your plans. Retire towels before they are dingy or thinning. And yes you need to have hand towels, washcloths and bath mats as well as bath towels. Its only necessary to leave out a full set for every person of your maximum occupancy - but keep another 50 to 100% in reserve.
PAINT: Do your walls or woodwork have nicks or dings or smudges? If so, take out the paint an and cover them up. Write down your paint formulas so you always have touch up paint ready. Get it done quickly. Ask housekeepers to keep an eye on those little things.
FURNITURE: Did you skimp by converting old furniture from home to your weekend house funishings? If so, your guests will think you are giving them left overs, not quality. Invest in solid, comfortable furniture. Your guests want to relax which is hard to do on flimsy, lumpy, old furniture. Be sure to buy enough of it too. You must have coffee tables, end tables, table lamps, night stands and dressers. You may be willing to rough it. Guests hate it.
** By the way, this is the biggest indicator of a non-quality home. I've outfitted several rentals from scratch - no furniture - and it can be painful. Furniture, fixtures and outfitting aren't cheap. But they're smart. Even the little touches can make your home top notch. When buying furniture, you can die slow (buy a little as you go) or die fast (spring for the good stuff). Kicking the bucket fast is better because your home will be seen from day one as a well designed quality place to stay.
OUTDOOR FURNITURE: Have you used that white plastic furniture on your patio or deck? I know that some brands offer a heavier quality but most of it is simply lightweight, difficult to sit or lay on and shows age quickly. We recommend good quality metal furniture, the kind you can repaint if need be. Surprisingly, if you shop around, you'll find quality metal apointments at only double or triple the price of their plastic relatives and they will last ten times longer. In fact, I have some five year old K-Mart Martha Stewart iron stuff that's still beautiful and will be here after the next ice age. Its classic.
ARTWORK: Does every wall that needs a painting or photo have one? If not, you might not care, but to your guests it looks like you are skimping along or don't have good taste. Art doesn't have to be expensive. Spend a little time shopping. Establish a theme if you like. Yes its a cliche but if you have a mountain home, people will appreciate cabin decor signs, old time photos and maybe even old skis on the wall. Put art everywhere its needed to make the home seem appreciated.
UTENSILS: My goodness, even Denny's restaurant uses heavy duty tableware and dishes. Your dishes should match and you should have twice as many place settings as your maximum occupancy. Guests don't come to wash dishes every time they eat something. Do you have a pizza pan and cutter, a carrot peeler, a wine bottle opener? If not, buy them today.
EXTRAS: Does your home have board games, a VCR or DVD and a lending library? If not, you're losing money and guest respect. Today, such extras are very cheap and easy to provide. They can make a rainy vacation day into an enjoyable stay and that makes your home desirable.
LANDSCAPING: Are the grounds around your home neat and attractive? Or does it look like an abandoned home or, worse yet, a sterile environment? Even a desert home can be landscaped with dry climate items and plants. In most homes, hanging baskets in the spring will draw attention to your home and you can even leave a note for guests to water them - and they will.
CARPET CLEANING: Sometimes spot remover works. Sometimes those home carpet cleaning machines can help. But every home deserves periodic visits from the professional carpet cleaners to keep the rugs looking new. And don't forget to do the upholstered furniture at the same time.
TELEPHONES: A single telephone line is pretty cheap in most locations and you can actually buy decent, nice looking phones for about $20 that will last 20 years. Put one in every bedroom as well as the living room or kitchen. Otherwise you look like an abandoned home instead of decent lodging. Even Motel 6 rooms have phones.
NICK NACKS: The most common reason a big segment of the traveling public avoid Bed and Breakfast operations is because they "Don't want to stay in Aunt Biddy's home." No kidding, a lot of B&B's look like Aunt Biddy never found a nick-nack, thing-a-ma-jig or wedding gift she could part with. Some small pieces can accent the home wonderfully but most don't. Keep them few in number and high in quality.
KNOW IT WHEN YOU SEE IT:
Quality is a difficult thing to judge. But crappy - the opposite of quality - is easy to see. Take some extra time to a fresh look at your home. Sometimes you need to sanitize it, make it less jumbled or personal. Other times you need to add furnishings or amenities. Always you need to freshen and straighten and tidy the place. If you don't need rentals, then treat the place anyway you like. But if you want more money, then give your guests a clean, comfortable quality lodging experience.
SUBJECT: Is Yours a Quality Home?
"Love looks not with the eyes but with the mind." To quote good old Bill Shakespeare, that long ago landlord from Stratford on Avon, in Merry old England. It's also a fine lesson for vacation home owners who want to get the best guests, highest rates, most occupancy and fewest headaches.
All of this bonked me on the head as I was sitting in a lovely outdoor theatre in the little town of Ashland, Oregon this weekend. Probabably because the quote is from A Midsummer Night's Dream and this town's Shakespearean Festival is truly world famous for its quality. I'm told its the largest not-for-profit theatre in America running 8 plays simultaneously about 9 months per year in three theatres selling 400,000 tickets annually. ( http://www.osfashland.org) Come visit sometime and you can see 8 plays in four days. Its overload but its enlightening.
You don't have to be a high brow to enjoy Shakespeare in this little community of 10,000 souls as long as you admire anything that is of high quality. I've been traipsing down for almost 30 years and have the dubious honor of having seen the entire collection ("Cannon") of Bill's plays - including the ones he wrote on a bad day. Plus other plays from the Shakespeare era, other classics and contemporary plays that earn the honor of getting produced here. And in all those years I've never seen a production that was anything less that high quality - that is an amazing feat in and of itself.
I also come because learning is a lifelong process - it never surprises me when something written 400 years ago is still applicable today. With the rapid growth of vacation rental availability, I am amazed at how often owners violate Shakespere's simple reminder. Let me paraphrase. Its not what you the owner wants that makes your home desirable (your eyes) - all that counts is what the renter wants; and you have to use your brain - not your heart - to figure that out.
QUALITY IS ELUSIVE:
It is far too easy to get excited about renting out a vacation home as a way to make money or offset costs. Sounds easy right? Just throw up some ads, take a few phones calls and the money comes rolling in. Depending on your location, the existing amenities of the home and our own innate sense of what a renter might want - you might do just great.
But judging from my email, many owners - perhaps most owners - do not reach anywhere near their financial expectations. Some are even struggling, often forced to sell their dream home when it can't carry itself.
Of all the contributing factors to sub-par performance, quality is by far the most important. Instead of studying the industry to figure out what guests want (as we hope smart business people do) owners frequently buy a house that suits them but doesn't suit the guests.
Certainly quality is relative to the geographic area, competition and seasonality, however, it isn't necessary to have a million dollar villa in a rustic mountain community. It is necessary though to make sure that every home, no matter how modest, adheres to some standards that the average guest should expect. You may feel this reminder is an obvious one. But as I inspect home after home I am amazed at how frequently an owner overlooks the most basic tasks to make their home a quality place to stay.
QUALITY CHECKLIST:
I won't bore you with a list of unaffordable improvements or suggest that you remodel your place, the fix is much more simple. Often you can dramatically improve quality by taking a fresh look at your home. Let me give you just a few examples in hopes you will do a thorough review and find your own areas to fix:
TOWELS: Do all towels in your home match? If not, they should. We recommend white so you can add matching replacements as necessary. Are they worn in anyway? They can't be. If you don't have a replacement budget find a place for it in your plans. Retire towels before they are dingy or thinning. And yes you need to have hand towels, washcloths and bath mats as well as bath towels. Its only necessary to leave out a full set for every person of your maximum occupancy - but keep another 50 to 100% in reserve.
PAINT: Do your walls or woodwork have nicks or dings or smudges? If so, take out the paint an and cover them up. Write down your paint formulas so you always have touch up paint ready. Get it done quickly. Ask housekeepers to keep an eye on those little things.
FURNITURE: Did you skimp by converting old furniture from home to your weekend house funishings? If so, your guests will think you are giving them left overs, not quality. Invest in solid, comfortable furniture. Your guests want to relax which is hard to do on flimsy, lumpy, old furniture. Be sure to buy enough of it too. You must have coffee tables, end tables, table lamps, night stands and dressers. You may be willing to rough it. Guests hate it.
** By the way, this is the biggest indicator of a non-quality home. I've outfitted several rentals from scratch - no furniture - and it can be painful. Furniture, fixtures and outfitting aren't cheap. But they're smart. Even the little touches can make your home top notch. When buying furniture, you can die slow (buy a little as you go) or die fast (spring for the good stuff). Kicking the bucket fast is better because your home will be seen from day one as a well designed quality place to stay.
OUTDOOR FURNITURE: Have you used that white plastic furniture on your patio or deck? I know that some brands offer a heavier quality but most of it is simply lightweight, difficult to sit or lay on and shows age quickly. We recommend good quality metal furniture, the kind you can repaint if need be. Surprisingly, if you shop around, you'll find quality metal apointments at only double or triple the price of their plastic relatives and they will last ten times longer. In fact, I have some five year old K-Mart Martha Stewart iron stuff that's still beautiful and will be here after the next ice age. Its classic.
ARTWORK: Does every wall that needs a painting or photo have one? If not, you might not care, but to your guests it looks like you are skimping along or don't have good taste. Art doesn't have to be expensive. Spend a little time shopping. Establish a theme if you like. Yes its a cliche but if you have a mountain home, people will appreciate cabin decor signs, old time photos and maybe even old skis on the wall. Put art everywhere its needed to make the home seem appreciated.
UTENSILS: My goodness, even Denny's restaurant uses heavy duty tableware and dishes. Your dishes should match and you should have twice as many place settings as your maximum occupancy. Guests don't come to wash dishes every time they eat something. Do you have a pizza pan and cutter, a carrot peeler, a wine bottle opener? If not, buy them today.
EXTRAS: Does your home have board games, a VCR or DVD and a lending library? If not, you're losing money and guest respect. Today, such extras are very cheap and easy to provide. They can make a rainy vacation day into an enjoyable stay and that makes your home desirable.
LANDSCAPING: Are the grounds around your home neat and attractive? Or does it look like an abandoned home or, worse yet, a sterile environment? Even a desert home can be landscaped with dry climate items and plants. In most homes, hanging baskets in the spring will draw attention to your home and you can even leave a note for guests to water them - and they will.
CARPET CLEANING: Sometimes spot remover works. Sometimes those home carpet cleaning machines can help. But every home deserves periodic visits from the professional carpet cleaners to keep the rugs looking new. And don't forget to do the upholstered furniture at the same time.
TELEPHONES: A single telephone line is pretty cheap in most locations and you can actually buy decent, nice looking phones for about $20 that will last 20 years. Put one in every bedroom as well as the living room or kitchen. Otherwise you look like an abandoned home instead of decent lodging. Even Motel 6 rooms have phones.
NICK NACKS: The most common reason a big segment of the traveling public avoid Bed and Breakfast operations is because they "Don't want to stay in Aunt Biddy's home." No kidding, a lot of B&B's look like Aunt Biddy never found a nick-nack, thing-a-ma-jig or wedding gift she could part with. Some small pieces can accent the home wonderfully but most don't. Keep them few in number and high in quality.
KNOW IT WHEN YOU SEE IT:
Quality is a difficult thing to judge. But crappy - the opposite of quality - is easy to see. Take some extra time to a fresh look at your home. Sometimes you need to sanitize it, make it less jumbled or personal. Other times you need to add furnishings or amenities. Always you need to freshen and straighten and tidy the place. If you don't need rentals, then treat the place anyway you like. But if you want more money, then give your guests a clean, comfortable quality lodging experience.
Thursday, July 08, 2004
VROA OWNER NEWSLETTER - June 28, 2004
SUBJECT: Charging for the Extras
There is a fine line between charging customers for the products and services you sell and nickel- and-diming them into submission. In recently e-mails, online groups and phone calls there have been a flurry of questions from owners about what they can and can not charge for. I've also noticed that a big percentage of group replies and advice is flawed and risky.
On occasion, I have been accused of being negative with certain aspects of landlording, but nothing could be further from the truth. I love hosting guests, offering them a good value for their money and - oh yes - making some money as well. But any kind of real estate management is fraught with risk, especially those with insufficient experience or those who fail to educate themselves to the cons as well as the pros of ownership. Offering strangers the use of your expensive asset is not something that should be done casually.
SETTING GOALS:
New owners often presume they should charge for vacation homes as much as is charged for long-term rentals: kind of a one-fee-fits-all theory. More experienced landlords sometimes become greedy and charge at each and every opportunity. New owners try to design their pricing strategy based on their experience as renters, while long-time owners have learned to approach such decisions from an investor's perspective. So I thought it was time to examine how and why rates, fees and other charges should be structured for maximum guest satisfaction as well as owner profitability.
If you've been reading VROA newsletters for a long time, you know I frequently plead with owners to set specific and personal own goals, strategy and tactics. This is because there is simply no one answer for every owner. In short, how you operate your vacation rental depends on what you want out of it.
On the other hand, there is a proven method for approaching the most intricate projects: think large and then act small. To do that, owners must decide what they want to happen, examine the options of achieving that objective, choose the best methods available and then execute them faithfully.
Sounds kind of like a management seminar, doesn't it? Sorry, but the worst thing owners can do is to ask and heed advice from others who may have little rental experience, or any kind of business for that matter. It's the blind leading the blind. Another sin is to concentrate on the joys of renting without preparing for the headaches. If you think like a Boy Scout (Be prepared!), then you'll love renting your home.
EDUCATION:
The best thing an owner can do is to take the time to study and learn their craft. You may be thinking this reminder is because VROA is developing owner certification and property inspections that will test whether owners and homes are ready to rent. On the contrary, we are providing those programs because we want owners and guests alike to find renting a valuable and worthwhile arrangement. There is nothing we offer that an owner can't develop on their own, and we have learned many owners will take the initiative to start out well prepared. And even though our membership is growing, there are still tens of thousands of owners who choose to go it alone, suffering through their problems without good guidance or support.
As an industry we often have ourselves to blame. Unlike older, more formalized industries, we have failed to set standards (even informal ones) and educate the public on what they can and can not expect from vacation rental homes. In time, as VROA grows we hope to put a dent in that large obstacle. The growth of vacation rentals makes it necessary and inescapable.
============================================
This week's sponsor: PAYPAL Online Payment Systems
Even if you take payments by the traditional Visa, Mastercard methods, you also need to take them via PayPal, owned by eBay. The cost is low and you get paid immediately with less chance of recourse. Increase rental income. Click here to learn more: https://www.paypal.com/mrb/pal=TBV4J796GUKQN
============================================
ALL ABOUT PRICING:
OK, with all the babble out of the way, let's examine some factors that will govern how you set pricing for your rental home.
MARKET: The rates you charge must conform to the market you compete in. If you have a rustic cabin in the mountains among other modest dwellings, your rates must be comparable. Guests will choose your competitors if you are significantly more expensive. Visitors will choose other homes even if yours has better furnishings and amenities. And if you charge much less, guests will be attracted but they will also presume something must be wrong with your place. It's a delicate balancing act.
DIFFERENTIATE: You can charge more only if you can differentiate your home from the others. Maybe you have better curb appeal (and hence Web site appeal) or have fabulous photos showing your super comfy furniture and heated pool. If so, feature it and charge for it.
SEASONALITY. Ahhh, this may be the most common mistake on owner rate cards: attempting to make prices simple and easy to comprehend. Customers like to study features, benefits and prices before buying. Grocery stores publish thousands of coupons and sales every day because consumers want to believe it is their own diligence that saves them money. In case you haven't noticed, hotels seldom have rate cards nowadays. They set rack rates and then offer discounts to online bookers, wholesalers and others as necessary to fill their inventory.
Landlords should be wise to do likewise. If your rate card says $200 per night in high season and $100 per night in the low season you are leaving money on the table. Some weeks are more valuable than others, such as school vacations, holidays and so forth. Even small differences in rates between key weeks can result in thousands of extra income per year. You have to think a little more to make a lot more.
EVENTS: Keep an eye on upcoming events in your market. We recently bought some condos in a Bavarian-themed village tucked into the Alp-like Cascade Mountains of Washington State. (www.Leavenworth.de.) The local Chamber of Commerce does a wonderful job of holding major tourist festivals every two to three weeks year-round. My interviews with other lodging establishments quickly revealed that rates sometimes double on festival weeks. We will be smart enough to follow suit. Other factors that could affect your seasonal rates would be major golf tournaments, conventions, school vacation weeks and much more. Think like the consumers to set your rates.
WEEKLY BOOKINGS: Increasing each party's length of stay is generally a good goal. That means less empty days, happier cleaners and less paperwork. But not all markets enjoy the ability to require minimum stays. My first house was in a resort that also had timeshare condos so their owners were accustomed to buying and staying full weeks. That allowed stand-alone home owners, especially during the busy summer season, to require that rental guests book by the week and even to dictate the day on which guests must arrive and depart. Demand weekly bookings when you can but don't reject shorter stays if necessary.
LENGTH OF STAY: In our first Hawaii condo it was clear guests had to come and go every day of the week due to the availability of airline tickets. In this situation, guests were encouraged to stay longer by offering them "length of stay" discounts. A frequent mistake of some managers as well as owners is to offer guests something like 7 nights for the price of 6. A better method is to provide price breaks for staying longer. Such as:
1 to 3 days $200 per night
4 to 7 days $190 per night
8 to 12 days $180 per night
13 to 20 days $170 per night
etc.
Guests love finding this reason to stay longer and we benefit, too. Be careful, however, to double check your math so that guests can not "break the rate system" by buying enough nights to actually pay, as an example, less total for 8 nights than for 7. Think that through carefully.
WONDERFUL WEEKENDS: Like it or not, some vacation rental areas have much higher occupancy on weekends than during weekdays. This phenomenon is a difficult one to fight. In one of our locations I see dozens of owners whose rates are the same every day of the week and they can't figure out why they are booked solid on weekends and empty other times. They would be better off to overload the weekend and make weekdays affordable. As a rule of thumb, if your weekly rate is $700 you need to charge half that amount, $350, or $175 per night Friday and Saturday. Then take the other $350 plus a little more (20%) and divide by 5 for Sunday through Thursday nights.
In such circumstances you should also attempt to achieve the 2-3-4 rule. Two nights minimum, three nights on weekends and four on Holidays. You can't always get it but you must always try.
We recently started booking a home in an uncommon area using these rules. Plus we got the assignment late in the year. Even we were surprised to learn that we filled the high season (and with a good gross). It was a little more work but the income justified the methods.
SPECIAL CHARGES:
This next section is in direct response from the owner who said, "Should I charge for guests who stayed late, smoked in the house and had twice as many people as contracted for?" Do they really need to ask this question? I mean if you keep a rental car a day extra do you pay for it? If you smoke in a non-smoking restaurant will you be asked to leave?
The answers are yes, yes, and yes. I won't bore frequent readers with another lecture on using very clear, hard-nosed leases, but I will list here some of the special charges you must require in your lease and must charge for without hesitation.
- Housekeeping, whether nightly or an out-cleaning charge. (Never include cleaning in the rent.)
- Housekeeping fees for ANY cleaning greater than the "usual and normal usage."
- Early check in fees (4 hours for 1/4 the daily rate. 8 hours for 1/2 the daily rate.)
- Late check out fees (Same as early check in fees.)
- Hot tub cleaning fees (Spas are a hassle, but valuable if guests pay the freight.)
- Firewood charges (I'm amazed at how much people use when it's free!)
- Resort fees (If you pay them, they must pay them.)
- Reservation fees (Especially if you accept credit cards.)
- Smoking fees (We charge $500 if we find any evidence.)
- Pet fees (Either a fee if you allow pets, or a big fine if you don't and they violate. We charge
$500.)
- Extra guest fees for more than the "usual" occupancy (Doubled guests aren't disclosed in
advance.)
- Eviction fees and costs (Most of you will never have one, but you need to recover your time if you
do.)
- Service order charges (Guests pay for problems they cause and emergency requests that prove not to be emergencies.)
- Sales and tourist taxes (Can you believe there are owners risking huge penalties to avoid these unavoidable taxes?)
PAPERWORK:
And of course all these rental rate and service fee ideas only work if you have everything documented in your Web site, guest agreements (leases), in-home notices and guest manuals. And remember, you aren't charging these things to be greedy, you are doing so to make your home well run and a pleasure for those guests who understand and appreciate a nice place to stay.
------------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
I've always wanted to visit the Adirondacks. (Hint, hint.) Denise & Wayne Bujold's Adirondack Harbor Hill cottages on Lake Flower are just 10 minutes to Lake Place and its year-round fun. Take a peek at http://www.adirondackvacations.com/
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
I just like to say thank you. This award is meaningful and I have posted it to my web site. Awards like this help in marketing my property. Also I think you site is great for owners. Again, thank you.
- Bob Wagner, Owner of Barefoot Lagoon (and winner of a Home of the Week Award)
You are entirely welcome Bob. You have a great place.
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy): http://www.vroa.org/tellafriend/form.asp
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
SUBJECT: Charging for the Extras
There is a fine line between charging customers for the products and services you sell and nickel- and-diming them into submission. In recently e-mails, online groups and phone calls there have been a flurry of questions from owners about what they can and can not charge for. I've also noticed that a big percentage of group replies and advice is flawed and risky.
On occasion, I have been accused of being negative with certain aspects of landlording, but nothing could be further from the truth. I love hosting guests, offering them a good value for their money and - oh yes - making some money as well. But any kind of real estate management is fraught with risk, especially those with insufficient experience or those who fail to educate themselves to the cons as well as the pros of ownership. Offering strangers the use of your expensive asset is not something that should be done casually.
SETTING GOALS:
New owners often presume they should charge for vacation homes as much as is charged for long-term rentals: kind of a one-fee-fits-all theory. More experienced landlords sometimes become greedy and charge at each and every opportunity. New owners try to design their pricing strategy based on their experience as renters, while long-time owners have learned to approach such decisions from an investor's perspective. So I thought it was time to examine how and why rates, fees and other charges should be structured for maximum guest satisfaction as well as owner profitability.
If you've been reading VROA newsletters for a long time, you know I frequently plead with owners to set specific and personal own goals, strategy and tactics. This is because there is simply no one answer for every owner. In short, how you operate your vacation rental depends on what you want out of it.
On the other hand, there is a proven method for approaching the most intricate projects: think large and then act small. To do that, owners must decide what they want to happen, examine the options of achieving that objective, choose the best methods available and then execute them faithfully.
Sounds kind of like a management seminar, doesn't it? Sorry, but the worst thing owners can do is to ask and heed advice from others who may have little rental experience, or any kind of business for that matter. It's the blind leading the blind. Another sin is to concentrate on the joys of renting without preparing for the headaches. If you think like a Boy Scout (Be prepared!), then you'll love renting your home.
EDUCATION:
The best thing an owner can do is to take the time to study and learn their craft. You may be thinking this reminder is because VROA is developing owner certification and property inspections that will test whether owners and homes are ready to rent. On the contrary, we are providing those programs because we want owners and guests alike to find renting a valuable and worthwhile arrangement. There is nothing we offer that an owner can't develop on their own, and we have learned many owners will take the initiative to start out well prepared. And even though our membership is growing, there are still tens of thousands of owners who choose to go it alone, suffering through their problems without good guidance or support.
As an industry we often have ourselves to blame. Unlike older, more formalized industries, we have failed to set standards (even informal ones) and educate the public on what they can and can not expect from vacation rental homes. In time, as VROA grows we hope to put a dent in that large obstacle. The growth of vacation rentals makes it necessary and inescapable.
============================================
This week's sponsor: PAYPAL Online Payment Systems
Even if you take payments by the traditional Visa, Mastercard methods, you also need to take them via PayPal, owned by eBay. The cost is low and you get paid immediately with less chance of recourse. Increase rental income. Click here to learn more: https://www.paypal.com/mrb/pal=TBV4J796GUKQN
============================================
ALL ABOUT PRICING:
OK, with all the babble out of the way, let's examine some factors that will govern how you set pricing for your rental home.
MARKET: The rates you charge must conform to the market you compete in. If you have a rustic cabin in the mountains among other modest dwellings, your rates must be comparable. Guests will choose your competitors if you are significantly more expensive. Visitors will choose other homes even if yours has better furnishings and amenities. And if you charge much less, guests will be attracted but they will also presume something must be wrong with your place. It's a delicate balancing act.
DIFFERENTIATE: You can charge more only if you can differentiate your home from the others. Maybe you have better curb appeal (and hence Web site appeal) or have fabulous photos showing your super comfy furniture and heated pool. If so, feature it and charge for it.
SEASONALITY. Ahhh, this may be the most common mistake on owner rate cards: attempting to make prices simple and easy to comprehend. Customers like to study features, benefits and prices before buying. Grocery stores publish thousands of coupons and sales every day because consumers want to believe it is their own diligence that saves them money. In case you haven't noticed, hotels seldom have rate cards nowadays. They set rack rates and then offer discounts to online bookers, wholesalers and others as necessary to fill their inventory.
Landlords should be wise to do likewise. If your rate card says $200 per night in high season and $100 per night in the low season you are leaving money on the table. Some weeks are more valuable than others, such as school vacations, holidays and so forth. Even small differences in rates between key weeks can result in thousands of extra income per year. You have to think a little more to make a lot more.
EVENTS: Keep an eye on upcoming events in your market. We recently bought some condos in a Bavarian-themed village tucked into the Alp-like Cascade Mountains of Washington State. (www.Leavenworth.de.) The local Chamber of Commerce does a wonderful job of holding major tourist festivals every two to three weeks year-round. My interviews with other lodging establishments quickly revealed that rates sometimes double on festival weeks. We will be smart enough to follow suit. Other factors that could affect your seasonal rates would be major golf tournaments, conventions, school vacation weeks and much more. Think like the consumers to set your rates.
WEEKLY BOOKINGS: Increasing each party's length of stay is generally a good goal. That means less empty days, happier cleaners and less paperwork. But not all markets enjoy the ability to require minimum stays. My first house was in a resort that also had timeshare condos so their owners were accustomed to buying and staying full weeks. That allowed stand-alone home owners, especially during the busy summer season, to require that rental guests book by the week and even to dictate the day on which guests must arrive and depart. Demand weekly bookings when you can but don't reject shorter stays if necessary.
LENGTH OF STAY: In our first Hawaii condo it was clear guests had to come and go every day of the week due to the availability of airline tickets. In this situation, guests were encouraged to stay longer by offering them "length of stay" discounts. A frequent mistake of some managers as well as owners is to offer guests something like 7 nights for the price of 6. A better method is to provide price breaks for staying longer. Such as:
1 to 3 days $200 per night
4 to 7 days $190 per night
8 to 12 days $180 per night
13 to 20 days $170 per night
etc.
Guests love finding this reason to stay longer and we benefit, too. Be careful, however, to double check your math so that guests can not "break the rate system" by buying enough nights to actually pay, as an example, less total for 8 nights than for 7. Think that through carefully.
WONDERFUL WEEKENDS: Like it or not, some vacation rental areas have much higher occupancy on weekends than during weekdays. This phenomenon is a difficult one to fight. In one of our locations I see dozens of owners whose rates are the same every day of the week and they can't figure out why they are booked solid on weekends and empty other times. They would be better off to overload the weekend and make weekdays affordable. As a rule of thumb, if your weekly rate is $700 you need to charge half that amount, $350, or $175 per night Friday and Saturday. Then take the other $350 plus a little more (20%) and divide by 5 for Sunday through Thursday nights.
In such circumstances you should also attempt to achieve the 2-3-4 rule. Two nights minimum, three nights on weekends and four on Holidays. You can't always get it but you must always try.
We recently started booking a home in an uncommon area using these rules. Plus we got the assignment late in the year. Even we were surprised to learn that we filled the high season (and with a good gross). It was a little more work but the income justified the methods.
SPECIAL CHARGES:
This next section is in direct response from the owner who said, "Should I charge for guests who stayed late, smoked in the house and had twice as many people as contracted for?" Do they really need to ask this question? I mean if you keep a rental car a day extra do you pay for it? If you smoke in a non-smoking restaurant will you be asked to leave?
The answers are yes, yes, and yes. I won't bore frequent readers with another lecture on using very clear, hard-nosed leases, but I will list here some of the special charges you must require in your lease and must charge for without hesitation.
- Housekeeping, whether nightly or an out-cleaning charge. (Never include cleaning in the rent.)
- Housekeeping fees for ANY cleaning greater than the "usual and normal usage."
- Early check in fees (4 hours for 1/4 the daily rate. 8 hours for 1/2 the daily rate.)
- Late check out fees (Same as early check in fees.)
- Hot tub cleaning fees (Spas are a hassle, but valuable if guests pay the freight.)
- Firewood charges (I'm amazed at how much people use when it's free!)
- Resort fees (If you pay them, they must pay them.)
- Reservation fees (Especially if you accept credit cards.)
- Smoking fees (We charge $500 if we find any evidence.)
- Pet fees (Either a fee if you allow pets, or a big fine if you don't and they violate. We charge
$500.)
- Extra guest fees for more than the "usual" occupancy (Doubled guests aren't disclosed in
advance.)
- Eviction fees and costs (Most of you will never have one, but you need to recover your time if you
do.)
- Service order charges (Guests pay for problems they cause and emergency requests that prove not to be emergencies.)
- Sales and tourist taxes (Can you believe there are owners risking huge penalties to avoid these unavoidable taxes?)
PAPERWORK:
And of course all these rental rate and service fee ideas only work if you have everything documented in your Web site, guest agreements (leases), in-home notices and guest manuals. And remember, you aren't charging these things to be greedy, you are doing so to make your home well run and a pleasure for those guests who understand and appreciate a nice place to stay.
------------------
INPUT:
As always, I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
I've always wanted to visit the Adirondacks. (Hint, hint.) Denise & Wayne Bujold's Adirondack Harbor Hill cottages on Lake Flower are just 10 minutes to Lake Place and its year-round fun. Take a peek at http://www.adirondackvacations.com/
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
I just like to say thank you. This award is meaningful and I have posted it to my web site. Awards like this help in marketing my property. Also I think you site is great for owners. Again, thank you.
- Bob Wagner, Owner of Barefoot Lagoon (and winner of a Home of the Week Award)
You are entirely welcome Bob. You have a great place.
- Wm. May
ONLINE:
Read and download samples of terms and conditions, booking confirmations and so forth on the members-only Web site: www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy): http://www.vroa.org/tellafriend/form.asp
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
Monday, May 31, 2004
VROA OWNER NEWSLETTER - May 31, 2004
SUBJECT: All About Pay-Per-Click Advertising
Increasing rent for rentals is a lot like a chain reaction. But it's necessary to work backward: before the guest pays, he has to sign a contract. Before the contract, he has to inquire (by phone or e-mail). In order to inquire, he has to know you exist. And in order to know about you, he has to receive a message of some sort alerting him of your existence.
Advertisers know there are a great many vehicles for reaching prospective customers. The big and expensive ones - television, radio, major newspapers and magazines - are perfectly reasonable for big companies with geographically disbursed products. Think soda pop, beer and even insurance companies. But advertising has been a necessary evil for small advertisers forever. How do you reach a specific and often small target audience of receptive buyers?
For years that has been an unanswered question. A larger advertiser once said, "I know that only half of the ads work, I just don't know which half."
The answer for most vacation rental owners is that traditional advertising is simply too expensive, produces too few responses and is impossible to track or justify. But luckily for small advertisers of all kinds, the Internet has arrived. And I believe it has come to be the major reason why second home purchase and rental has been growing so fast.
Now, instead of advertisers searching for customers through old fashioned media, they have the option of advertising or listing their goods and services online where customers can come to find them. It's really a revolution.
It can be affordable, quick to post and easy to change. But it also presents a challenge. With over eight billion web pages posted for consumer inspection, how can vacation rental owners advertise their properties and expect anyone to find them? Even students of the Web are amazed at how quickly its dynamics change.
If you've ever tried to get your Website listed high up on Google or Yahoo, you know it can be virtually impossible. Yes, there are ways to manipulate the system to increase your chances of being seen, though they require a significant commitment of time and energy. But the rules that search engines use change frequently. Just when someone thinks they have it figured out, they find themselves demoted dramatically.
PAY-PER-CLICK
Fortunately, Websites (especially Google) have figured out how to allow advertisers - big and little - to attract customers for at affordable price. (And how to generate billions of dollars in revenue for themselves at the same time.) It's called Pay-Per-Click (PPC) advertising and it allows even the smallest advertisers, even vacation rental owners, to advertise at an affordable cost.
There are a good number of Websites and services that can place your ad on important Websites. Some of these are Google.com, Overture.com, Findwhat.com, Enhance.com (formerly Ah-ha.com), Kanoodle.com and others. All work basically the same way: advertisers create ads that go on the Websites with no minimum. But they pay a fee (often as low as five cents every time a viewer clicks on the ad) which takes the viewer to the advertiser's Website.
There is no guarantee that the viewer will buy anything at your site. But, as we all know, getting customer attention is the challenge. It then becomes the advertiser's job to provide information and photos or other enticements to earn the customer's business.
GOOGLE.COM: Google's system is a bit different than the others. Ads there will get you listed on Google.com on the right-hand border. But it also gets your ads distributed on thousands of affiliated sites. You may have noticed that VROA.org and VROA.com carry Google ads. To make sure the ads produce good results for advertisers, Google uses sophisticated technology to match ad content with sites that attract viewers likely to find those offerings enticing.
OTHER PPC: The other PPC sites also distribute their ads, but generally to well established and larger websites such as MSN.com, AOL.com and the like.
============================================
This week's sponsor: PAYPAL Online Payment Systems
Whether you take payments by the traditional Visa, Merchant methods you also need to take them via PayPal, owned by eBay. The cost is low and you get paid immediately with less chance of recourse. Increase rental income. Click here to learn more:
============================================
HOW TO DO IT:
So how do you become involved in Pay-Per-Click advertising? The answer is easier than you think. Here are the details along with a few cautions:
ACCOUNT: Get acquainted with PPC by going to any of the search engines mentioned above and set up an account. Don't worry - you haven't spent any money yet. In order to open your account, you must provide a credit card and plenty of detailed contact information.
WRITE ADS: Next you will be asked to design your ad. Unfortunately, most of the sites limit your ad to a headline, short text (12 to 25 words or so) and, of course, your domain name, such as www.VROA.org. Generally, you can create a number of different ads. This is a good idea when matching the ads to the consumers you want to reach. With a few exceptions, most advertising sites do not allow logos, boxes or banners.
KEYWORDS: Third, you will be asked to select the keywords you think your prospective guests might use in order to find you. Keywords can be single words or short phrases. For our rentals on Poipu Beach, Kauai in Hawaii, we chose the words:
- Poipu
- Kauai
- Hawaii
Using general click-throughs gives us lots of exposure, but it also requires us to think strategically.
- The keyword "Hawaii" will get thousands of clicks a day - far more than we can afford.
- The keyword "Kauai" will get fewer, but still hundreds of clicks, and will include many consumers who are looking for something other than lodging.
- The keyword "Poipu" will get even less clicks, but they'll be from viewers more likely to buy our product.
- The keyword "Poipu Vacation Rental" may only get a dozen clicks per day, but these will be from the consumers most likely to rent.
Most of the sites also have online tools that can suggest other key words you may want to consider. Some will even estimate the number of anticipated daily clicks. For example, if I suggest Poipu for our Kauai rental home, it might suggest "Poipu Beach," "Poipu Rental," "Poipu Lodging" and many more. Most of these keywords will get a smaller number of clicks than the more general words, but there will also be fewer advertisers bidding on the more specific terms. That will prove to be a good way to get clicks at a lower price.
For our various locations, we buy 25 to 200 very specific phrases and almost never buy the general terms. In addition, most of these sites compare "impressions" (every time someone sees your ad) to how many of those viewers click on your ad. Some of the Websites will disable your ad if your "click through" rate is too low.
BID YOUR WAY UP:
In the past, my wife has worked at (and sometimes owned) television stations, radio stations as well as newspapers. As managers, one of our chief tasks was deciding how much to charge for advertising. The question always was, "What will the market bear?" Sure we had to make sure the prices were cost effective for our advertisers. But we also had to generate as much profit as possible. Website operators have solved that old dilemma by setting minimum prices for PPC ads and then allowing advertisers to bid their way up the ad listings by submitting a higher price.
In short, advertisers can choose whether they want to be first or 101st in the list of ads by choosing the price they are willing to pay for each person who clicks on their ad. The top three ads for each keyword are said to receive the greatest majority of click throughs. But remember, you pay a higher price for the higher position. Personally I prefer to take lower positions that produce sufficient leads and pay the lower price. Unless I'm the only advertiser, I almost never buy the top spot.
If you are lucky enough to have your home located in an area with a unique name - such as ours in Chelan, Snoqualmie and Methow - you won't secure hundreds of leads per day with PPC ads, but you will be able to purchase those clicks for a bargain price.
THE SITE DOESN'T MATTER:
You may be tempted to use Google first and maybe only Google. As the largest search engine it can provide you with a many leads very easily. However, it is also popular with your competitors who may very well bid ad costs to the stratosphere. For example, we own ExecutiveSuites.com (for office space) but our competitors are paying up to $8.00 for every click. That is far beyond our means.
Instead, be sure to check out the prices on some of the smaller PPC advertising sites. Usings them may produce a sufficient flow of leads to keep your home full at an affordable cost.
OTHER INTERNET SOLUTIONS
By the way, there are a couple of other Internt advertising solutions you may want to consider. Some of these are "Paid Inclusion" listings on search engines, banner and box ads (now considered less effective) and e-mail marketing. In future newsletters, I will discuss some of those.
------------------
INPUT:
As always I seek your input, please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
This week we're off to Hania Crete to visit Katerina Tsebeli's Villa Catani at Kalamaki. It's so beautiful, I can imagine why the Minoan's set up Europe's earliest civilization on the island. Click here to take a look:
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
Keep the news coming, I need to be educated and I think it is very interestingly written also.
- Emmett, retired university professor
Thank you very much. I don't recall getting any compliments from professors when I was in college, but I think I am studying more nowadays.
- Wm.May
ONLINE:
See the nice article that mentions VROA in the Press Section of the members-only Website. www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy):
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
SUBJECT: All About Pay-Per-Click Advertising
Increasing rent for rentals is a lot like a chain reaction. But it's necessary to work backward: before the guest pays, he has to sign a contract. Before the contract, he has to inquire (by phone or e-mail). In order to inquire, he has to know you exist. And in order to know about you, he has to receive a message of some sort alerting him of your existence.
Advertisers know there are a great many vehicles for reaching prospective customers. The big and expensive ones - television, radio, major newspapers and magazines - are perfectly reasonable for big companies with geographically disbursed products. Think soda pop, beer and even insurance companies. But advertising has been a necessary evil for small advertisers forever. How do you reach a specific and often small target audience of receptive buyers?
For years that has been an unanswered question. A larger advertiser once said, "I know that only half of the ads work, I just don't know which half."
The answer for most vacation rental owners is that traditional advertising is simply too expensive, produces too few responses and is impossible to track or justify. But luckily for small advertisers of all kinds, the Internet has arrived. And I believe it has come to be the major reason why second home purchase and rental has been growing so fast.
Now, instead of advertisers searching for customers through old fashioned media, they have the option of advertising or listing their goods and services online where customers can come to find them. It's really a revolution.
It can be affordable, quick to post and easy to change. But it also presents a challenge. With over eight billion web pages posted for consumer inspection, how can vacation rental owners advertise their properties and expect anyone to find them? Even students of the Web are amazed at how quickly its dynamics change.
If you've ever tried to get your Website listed high up on Google or Yahoo, you know it can be virtually impossible. Yes, there are ways to manipulate the system to increase your chances of being seen, though they require a significant commitment of time and energy. But the rules that search engines use change frequently. Just when someone thinks they have it figured out, they find themselves demoted dramatically.
PAY-PER-CLICK
Fortunately, Websites (especially Google) have figured out how to allow advertisers - big and little - to attract customers for at affordable price. (And how to generate billions of dollars in revenue for themselves at the same time.) It's called Pay-Per-Click (PPC) advertising and it allows even the smallest advertisers, even vacation rental owners, to advertise at an affordable cost.
There are a good number of Websites and services that can place your ad on important Websites. Some of these are Google.com, Overture.com, Findwhat.com, Enhance.com (formerly Ah-ha.com), Kanoodle.com and others. All work basically the same way: advertisers create ads that go on the Websites with no minimum. But they pay a fee (often as low as five cents every time a viewer clicks on the ad) which takes the viewer to the advertiser's Website.
There is no guarantee that the viewer will buy anything at your site. But, as we all know, getting customer attention is the challenge. It then becomes the advertiser's job to provide information and photos or other enticements to earn the customer's business.
GOOGLE.COM: Google's system is a bit different than the others. Ads there will get you listed on Google.com on the right-hand border. But it also gets your ads distributed on thousands of affiliated sites. You may have noticed that VROA.org and VROA.com carry Google ads. To make sure the ads produce good results for advertisers, Google uses sophisticated technology to match ad content with sites that attract viewers likely to find those offerings enticing.
OTHER PPC: The other PPC sites also distribute their ads, but generally to well established and larger websites such as MSN.com, AOL.com and the like.
============================================
This week's sponsor: PAYPAL Online Payment Systems
Whether you take payments by the traditional Visa, Merchant methods you also need to take them via PayPal, owned by eBay. The cost is low and you get paid immediately with less chance of recourse. Increase rental income. Click here to learn more:
============================================
HOW TO DO IT:
So how do you become involved in Pay-Per-Click advertising? The answer is easier than you think. Here are the details along with a few cautions:
ACCOUNT: Get acquainted with PPC by going to any of the search engines mentioned above and set up an account. Don't worry - you haven't spent any money yet. In order to open your account, you must provide a credit card and plenty of detailed contact information.
WRITE ADS: Next you will be asked to design your ad. Unfortunately, most of the sites limit your ad to a headline, short text (12 to 25 words or so) and, of course, your domain name, such as www.VROA.org. Generally, you can create a number of different ads. This is a good idea when matching the ads to the consumers you want to reach. With a few exceptions, most advertising sites do not allow logos, boxes or banners.
KEYWORDS: Third, you will be asked to select the keywords you think your prospective guests might use in order to find you. Keywords can be single words or short phrases. For our rentals on Poipu Beach, Kauai in Hawaii, we chose the words:
- Poipu
- Kauai
- Hawaii
Using general click-throughs gives us lots of exposure, but it also requires us to think strategically.
- The keyword "Hawaii" will get thousands of clicks a day - far more than we can afford.
- The keyword "Kauai" will get fewer, but still hundreds of clicks, and will include many consumers who are looking for something other than lodging.
- The keyword "Poipu" will get even less clicks, but they'll be from viewers more likely to buy our product.
- The keyword "Poipu Vacation Rental" may only get a dozen clicks per day, but these will be from the consumers most likely to rent.
Most of the sites also have online tools that can suggest other key words you may want to consider. Some will even estimate the number of anticipated daily clicks. For example, if I suggest Poipu for our Kauai rental home, it might suggest "Poipu Beach," "Poipu Rental," "Poipu Lodging" and many more. Most of these keywords will get a smaller number of clicks than the more general words, but there will also be fewer advertisers bidding on the more specific terms. That will prove to be a good way to get clicks at a lower price.
For our various locations, we buy 25 to 200 very specific phrases and almost never buy the general terms. In addition, most of these sites compare "impressions" (every time someone sees your ad) to how many of those viewers click on your ad. Some of the Websites will disable your ad if your "click through" rate is too low.
BID YOUR WAY UP:
In the past, my wife has worked at (and sometimes owned) television stations, radio stations as well as newspapers. As managers, one of our chief tasks was deciding how much to charge for advertising. The question always was, "What will the market bear?" Sure we had to make sure the prices were cost effective for our advertisers. But we also had to generate as much profit as possible. Website operators have solved that old dilemma by setting minimum prices for PPC ads and then allowing advertisers to bid their way up the ad listings by submitting a higher price.
In short, advertisers can choose whether they want to be first or 101st in the list of ads by choosing the price they are willing to pay for each person who clicks on their ad. The top three ads for each keyword are said to receive the greatest majority of click throughs. But remember, you pay a higher price for the higher position. Personally I prefer to take lower positions that produce sufficient leads and pay the lower price. Unless I'm the only advertiser, I almost never buy the top spot.
If you are lucky enough to have your home located in an area with a unique name - such as ours in Chelan, Snoqualmie and Methow - you won't secure hundreds of leads per day with PPC ads, but you will be able to purchase those clicks for a bargain price.
THE SITE DOESN'T MATTER:
You may be tempted to use Google first and maybe only Google. As the largest search engine it can provide you with a many leads very easily. However, it is also popular with your competitors who may very well bid ad costs to the stratosphere. For example, we own ExecutiveSuites.com (for office space) but our competitors are paying up to $8.00 for every click. That is far beyond our means.
Instead, be sure to check out the prices on some of the smaller PPC advertising sites. Usings them may produce a sufficient flow of leads to keep your home full at an affordable cost.
OTHER INTERNET SOLUTIONS
By the way, there are a couple of other Internt advertising solutions you may want to consider. Some of these are "Paid Inclusion" listings on search engines, banner and box ads (now considered less effective) and e-mail marketing. In future newsletters, I will discuss some of those.
------------------
INPUT:
As always I seek your input, please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
This week we're off to Hania Crete to visit Katerina Tsebeli's Villa Catani at Kalamaki. It's so beautiful, I can imagine why the Minoan's set up Europe's earliest civilization on the island. Click here to take a look:
(If you want your place considered for Home of the Week, please drop me an e-mail.)
FEEDBACK:
Keep the news coming, I need to be educated and I think it is very interestingly written also.
- Emmett, retired university professor
Thank you very much. I don't recall getting any compliments from professors when I was in college, but I think I am studying more nowadays.
- Wm.May
ONLINE:
See the nice article that mentions VROA in the Press Section of the members-only Website. www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters - if we've helped you even a little - please tell your friends by clicking here (it's automated and easy):
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
Monday, April 19, 2004
New owners of Vacation Rental homes quickly learn how many friends they really have. And I don't just mean cousin Jenny and her 12 screaming kids who would love to spend every week end at your lake house this summer chowing down on your hamburgers and chips. No, I am referring to all the truly great not-for-profit groups who will think it is a nifty idea for you to donate a week at your house to their annual auction, bazaar or awards dinner give-away.
Let me say that I am the first to support every good cause I can afford. Penny and I have volunteered and worked on boards for the zoo, children's safety, theatres, dance companies and the like. If you too are a softie for these organizations, congratulations. You are doing your part to make the world a better place.
Offering your home to charities allows you to provide a unique benefit to those who need your help. But many rental owners are besieged with more requests than they can afford to donate. If you have ever donated you may not recognize the problem. Give a single week's use to, let's say, your daughter's brownie troop auction and your name as a willing benefactor will ripple through the community. Soon, you'll be hearing from well meaning "procurement" person at every not-for-profit around.
Maybe all of this is good news for our fledgling industry. Vacation Rentals are often the highest priced item in many fund raisers. That means consumers value the opportunity to stay at a nice private vacation home.
SHOW ME THE MONEY
At the same time, however, if the income from vacation rental homes is essential to the financial well being of most owners. As much as you may want to be a big donor ad supporter you also have to pay the mortgage. Big companies have learned they are also targets of the well meaning fund raisers. You can imagine the thousands of legitimate requests that large companies receive. It may serve us well to learn from those firms about how to be concerned and involved citizens without giving away the farm.
As an example, Microsoft Corporation's primary philanthropic system (aside from its founder Bill Gates giving away billions of dollars personally) is to setup a matching system for employee donation. Staff member donations are matched by the company up to a certain amount. This serves to help charities but control the outflow.
Other large corporations set strict budgets on donations and require charities submit proposals on an annual basis. They generally don't entertain short notice pleas for help. This means only the organized and persistent causes get helped. Plus it eliminates the interruptions and soul searching that might disrupt the work of their employes.
You will notice that the largest companies often provide small item donations. Your grocery store chain, for example, might donate a bouquet of flowers or video rental. Unfortunately, the rentals we offer are comparatively expensive. They are especially expensive in relationship to the size of our small businesses. A $750 rental donation could be five percent of your annual income whereas a $50 donation by Safeway is peanuts.
WHATS THE IDEA
If large well organized companies see fit to control their charitable giving it is logical that we smaller vacation rental home owners do likewise. So here are some ideas on how to go about formalizing your "Donation Program."
First, stop and decide what your charitable objectives are. If you don't really need the income and you can afford to donate repeatedly then please do so. We'll all think highly of you for that.
But if you have to generate income from your home you might want to be a little strategic. For example, we have decided that donations are a great thing if and only if they provide benefit for us as well as the charity. We limit the number of gifts and we set rules for how the rental should function.
If you have ever had to make procurement calls for your favorite charity you will have heard all kinds of responses from business owners. Some will donate a small item to most everyone who asks. Others donate only to their favorite causes or groups to whom they belong. And others are rather crass about demanding something in return for their donation such as patronage by everyone in your group. And almost all of these people will feel rather sheepish about responding. They get tired of being "hit up" but they know it is bad for business to decline.
ASKING FOR PROMOTIONAL VALUE
For example, we ask for promotional value in order to accommodate requests. I think its the secret to being really good citizens. In short, we only donate to groups who will help us promote our rentals. When you think about it that helps them as well. If donating secures other paid rentals then your income grows and you can afford to donate again.
When someone calls soliciting a donation, its acceptable for you to ask some questions. (Believe me the big companies do). Here is what you want to know. Most requests now a days are for an auction or raffle so I'll preface my questions as if that is the case.
ASK QUESTIONS:
- Who will be attending the event?
- How many people will attend?
- Will your item be offered in the silent or live auction?
- Can you write the live auction description?
- Will the description be included in the auction catalog?
- Can they put photos in the catalog?
(Good for them and for you)
- Can you put up a post and display for the silent auction?
- And for the live auction?
- Can you get a complimentary ticket to the event.
(Its good to meet and great and hand out cards.)
- Will they give you names & addresses of attendees
(So you can mail to them)
- Can you put a flyer at each seat?
- Or put a flyer in each "good bag: given to attendees?
- Will they immediately provide you with the winner's name & address
-Will they disclose what the winning bid was?
WORD OF MOUTH. Auctions and similar events are valuable if they provide word of mouth advertising for your rental. To stimulate such promotion, it is wise to require a display, offer flyers or patriciate in the auction more than just making the donation and getting a 10 second announcement.
BE THOUGHTFUL. Never make a commitment immediately especially on the phone. Ask for all the information and then give it some thought. Think of donations as if you were giving them CASH money. In many ways you are. If you don't make the donation and sell the dates instead you are essentially giving them the cash. Think of it that way.
DON'T GIVE AWAY THE BEST. Most charities are so thankful for a donation that they are not terribly picky about dates. Its wise to give them desirable dates so they will get a significant price. But you don't need to give the your high season. Make sure the auction description clearly explains the dates and exclusions and legal requirements. Require the winner use the dates within one year of the purchase.
STRATEGIZE THE DATES. It seems easy to donate a week to a good cause but you don't have to donate that much. Consider limiting your gift to three or five days. It still shows your support. You will be surprised how many winners will ask to buy additional dates at the regular rates. Be sure to mention this possibility in the description.
WRITE A GREAT DESCRIPTION. The auction description or photos or display are your chance to sell your product. Write exciting, descriptive information. Don't be afraid to sell your product. Remember to sell the resort or area as well. Not everyone will be familiar with your destination. And include the legal stuff in the description.
WRITE DOWN THE DETAILS. If you agree to a donation make sure they provide you with a written contract explaining what you are giving and what you are getting. Most such forms are very short. Don't be afraid to attach a letter confirming the number of attendees, the live description.
GUEST PAPERWORK. Require winners to sign the same paperwork you require for paid guests. Always require a cash deposit to protect yourself from damages and overages. Make sure its clear the booking is non-cancelable and non refundable.
AN ALTERNATE. Another way to get value is to donate "designated sales." In this method you give the charity specific dates to sell such as your mid or low season. Ask them to offer these for sale exclusively to their members by instructing the member to purchase. Then remit all the cash to the charity. You will find that they will appreciate the real money donation more than they do the equivalent value in dates.
SPLITTING INCOME. Or how about giving a charity certain low or mid season dates to sell with the agreement to split the income with them. You get at least some income for harder to sell dates and they'll promote it to far more constituents than those who actually buy. You get lots of exposure and possibly regular bookings in the future.
SAY NO. Do you find some of these suggestions demanding? Maybe, but your home is your investment. The more you get out of it the more you can support your favorite causes. Say no to those who do not provide good value so that you can say yes to more of those who do. Set a limit on how many dates you are willing to donate. Groups who call to late to be considered can be encouraged to apply again next year.
SEEK OUT DONATIONS. Don't reward only those who solicit you. Keep your eye out for great causes with events that might promote your rental well.Give them a all to ask what they are looking for. Even though you may be soliciting them don't hesitate to ask the same questions before donating.
------------------
INPUT:
As always I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Robert Wagner may live in Pittsburgh but he loves his Barefoot Lagoon home in the British West Indies. Grand Cayman Island is famous for scuba diving but also a great place just to sit back and relax. See http://www.eandbcaymans.com/ (If you want your place considered for Home of the Week please drop me an email.)
FEEDBACK:
Sorry you had such a bad experience in our beautiful city. And sorry that you shared this very one sided opinion with all of your readers. Your experience is not at all reflective of the that of the hundreds of folks a year who stay with us in our vacation rental condos. Many of us live and visit here for much less that the exorbitant prices you indicate you paid for most of what you did here. Shame on you for staying in a hotel instead of one of the many vacation rental condos in the city that have all that you wished you had had. Next time. Regards and aloha.
- Bob Cook - Captain Cook Resorts - Honolulu -www.captaincookresorts.com and www.hawaiiproperty.com - 808-735-5588
Mea Culpa. (again) I debated about using the city name when I wrote about hotels. I love Oahu and Waikiki and certainly didn't meant to demean them. But its traditional hotels I was harping about. The article would have had the same themes whether I stayed in a big city mammoth hotel or a small town motel. Vacation Rentals are a better value and Bob Cook's are where I'll stay next time on Oahu.
- Wm. May
ONLINE:
See the nice article that mentions VROA in the Press Section of the member's only website. www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters, if we've helped you even a little, please tell your friends by clicking here (Its automated & easy.) http://www.vroa.org/tellafriend/form.asp
Let me say that I am the first to support every good cause I can afford. Penny and I have volunteered and worked on boards for the zoo, children's safety, theatres, dance companies and the like. If you too are a softie for these organizations, congratulations. You are doing your part to make the world a better place.
Offering your home to charities allows you to provide a unique benefit to those who need your help. But many rental owners are besieged with more requests than they can afford to donate. If you have ever donated you may not recognize the problem. Give a single week's use to, let's say, your daughter's brownie troop auction and your name as a willing benefactor will ripple through the community. Soon, you'll be hearing from well meaning "procurement" person at every not-for-profit around.
Maybe all of this is good news for our fledgling industry. Vacation Rentals are often the highest priced item in many fund raisers. That means consumers value the opportunity to stay at a nice private vacation home.
SHOW ME THE MONEY
At the same time, however, if the income from vacation rental homes is essential to the financial well being of most owners. As much as you may want to be a big donor ad supporter you also have to pay the mortgage. Big companies have learned they are also targets of the well meaning fund raisers. You can imagine the thousands of legitimate requests that large companies receive. It may serve us well to learn from those firms about how to be concerned and involved citizens without giving away the farm.
As an example, Microsoft Corporation's primary philanthropic system (aside from its founder Bill Gates giving away billions of dollars personally) is to setup a matching system for employee donation. Staff member donations are matched by the company up to a certain amount. This serves to help charities but control the outflow.
Other large corporations set strict budgets on donations and require charities submit proposals on an annual basis. They generally don't entertain short notice pleas for help. This means only the organized and persistent causes get helped. Plus it eliminates the interruptions and soul searching that might disrupt the work of their employes.
You will notice that the largest companies often provide small item donations. Your grocery store chain, for example, might donate a bouquet of flowers or video rental. Unfortunately, the rentals we offer are comparatively expensive. They are especially expensive in relationship to the size of our small businesses. A $750 rental donation could be five percent of your annual income whereas a $50 donation by Safeway is peanuts.
WHATS THE IDEA
If large well organized companies see fit to control their charitable giving it is logical that we smaller vacation rental home owners do likewise. So here are some ideas on how to go about formalizing your "Donation Program."
First, stop and decide what your charitable objectives are. If you don't really need the income and you can afford to donate repeatedly then please do so. We'll all think highly of you for that.
But if you have to generate income from your home you might want to be a little strategic. For example, we have decided that donations are a great thing if and only if they provide benefit for us as well as the charity. We limit the number of gifts and we set rules for how the rental should function.
If you have ever had to make procurement calls for your favorite charity you will have heard all kinds of responses from business owners. Some will donate a small item to most everyone who asks. Others donate only to their favorite causes or groups to whom they belong. And others are rather crass about demanding something in return for their donation such as patronage by everyone in your group. And almost all of these people will feel rather sheepish about responding. They get tired of being "hit up" but they know it is bad for business to decline.
ASKING FOR PROMOTIONAL VALUE
For example, we ask for promotional value in order to accommodate requests. I think its the secret to being really good citizens. In short, we only donate to groups who will help us promote our rentals. When you think about it that helps them as well. If donating secures other paid rentals then your income grows and you can afford to donate again.
When someone calls soliciting a donation, its acceptable for you to ask some questions. (Believe me the big companies do). Here is what you want to know. Most requests now a days are for an auction or raffle so I'll preface my questions as if that is the case.
ASK QUESTIONS:
- Who will be attending the event?
- How many people will attend?
- Will your item be offered in the silent or live auction?
- Can you write the live auction description?
- Will the description be included in the auction catalog?
- Can they put photos in the catalog?
(Good for them and for you)
- Can you put up a post and display for the silent auction?
- And for the live auction?
- Can you get a complimentary ticket to the event.
(Its good to meet and great and hand out cards.)
- Will they give you names & addresses of attendees
(So you can mail to them)
- Can you put a flyer at each seat?
- Or put a flyer in each "good bag: given to attendees?
- Will they immediately provide you with the winner's name & address
-Will they disclose what the winning bid was?
WORD OF MOUTH. Auctions and similar events are valuable if they provide word of mouth advertising for your rental. To stimulate such promotion, it is wise to require a display, offer flyers or patriciate in the auction more than just making the donation and getting a 10 second announcement.
BE THOUGHTFUL. Never make a commitment immediately especially on the phone. Ask for all the information and then give it some thought. Think of donations as if you were giving them CASH money. In many ways you are. If you don't make the donation and sell the dates instead you are essentially giving them the cash. Think of it that way.
DON'T GIVE AWAY THE BEST. Most charities are so thankful for a donation that they are not terribly picky about dates. Its wise to give them desirable dates so they will get a significant price. But you don't need to give the your high season. Make sure the auction description clearly explains the dates and exclusions and legal requirements. Require the winner use the dates within one year of the purchase.
STRATEGIZE THE DATES. It seems easy to donate a week to a good cause but you don't have to donate that much. Consider limiting your gift to three or five days. It still shows your support. You will be surprised how many winners will ask to buy additional dates at the regular rates. Be sure to mention this possibility in the description.
WRITE A GREAT DESCRIPTION. The auction description or photos or display are your chance to sell your product. Write exciting, descriptive information. Don't be afraid to sell your product. Remember to sell the resort or area as well. Not everyone will be familiar with your destination. And include the legal stuff in the description.
WRITE DOWN THE DETAILS. If you agree to a donation make sure they provide you with a written contract explaining what you are giving and what you are getting. Most such forms are very short. Don't be afraid to attach a letter confirming the number of attendees, the live description.
GUEST PAPERWORK. Require winners to sign the same paperwork you require for paid guests. Always require a cash deposit to protect yourself from damages and overages. Make sure its clear the booking is non-cancelable and non refundable.
AN ALTERNATE. Another way to get value is to donate "designated sales." In this method you give the charity specific dates to sell such as your mid or low season. Ask them to offer these for sale exclusively to their members by instructing the member to purchase. Then remit all the cash to the charity. You will find that they will appreciate the real money donation more than they do the equivalent value in dates.
SPLITTING INCOME. Or how about giving a charity certain low or mid season dates to sell with the agreement to split the income with them. You get at least some income for harder to sell dates and they'll promote it to far more constituents than those who actually buy. You get lots of exposure and possibly regular bookings in the future.
SAY NO. Do you find some of these suggestions demanding? Maybe, but your home is your investment. The more you get out of it the more you can support your favorite causes. Say no to those who do not provide good value so that you can say yes to more of those who do. Set a limit on how many dates you are willing to donate. Groups who call to late to be considered can be encouraged to apply again next year.
SEEK OUT DONATIONS. Don't reward only those who solicit you. Keep your eye out for great causes with events that might promote your rental well.Give them a all to ask what they are looking for. Even though you may be soliciting them don't hesitate to ask the same questions before donating.
------------------
INPUT:
As always I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Robert Wagner may live in Pittsburgh but he loves his Barefoot Lagoon home in the British West Indies. Grand Cayman Island is famous for scuba diving but also a great place just to sit back and relax. See http://www.eandbcaymans.com/ (If you want your place considered for Home of the Week please drop me an email.)
FEEDBACK:
Sorry you had such a bad experience in our beautiful city. And sorry that you shared this very one sided opinion with all of your readers. Your experience is not at all reflective of the that of the hundreds of folks a year who stay with us in our vacation rental condos. Many of us live and visit here for much less that the exorbitant prices you indicate you paid for most of what you did here. Shame on you for staying in a hotel instead of one of the many vacation rental condos in the city that have all that you wished you had had. Next time. Regards and aloha.
- Bob Cook - Captain Cook Resorts - Honolulu -www.captaincookresorts.com and www.hawaiiproperty.com - 808-735-5588
Mea Culpa. (again) I debated about using the city name when I wrote about hotels. I love Oahu and Waikiki and certainly didn't meant to demean them. But its traditional hotels I was harping about. The article would have had the same themes whether I stayed in a big city mammoth hotel or a small town motel. Vacation Rentals are a better value and Bob Cook's are where I'll stay next time on Oahu.
- Wm. May
ONLINE:
See the nice article that mentions VROA in the Press Section of the member's only website. www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters, if we've helped you even a little, please tell your friends by clicking here (Its automated & easy.) http://www.vroa.org/tellafriend/form.asp
Monday, April 05, 2004
VROA SAMPLE NEWSLETTER - April 6, 2004
SUBJECT: The Trouble with Hotels
----------------------------------------------------------------------------------
*** This is just a partial SAMPLE. To receive the whole newsletter from the VROA every week and to support the Vacation Rental Industry please visit www.VROA.org and consider joining. Its just $59 per year and you'll get 10 times your moneys worth.
----------------------------------------------------------------------------------
Can anyone tell me why a family would stay in a Hotel for their vacation? I was reminded recently of how distressing it can be when we visited the famous Waikiki Beach area of Hawaii. Penny and I hadn't spent much time there for 20 years but my 14 year old son decided there were things he just needed to see like the Bishop Museum, Hanama Bay and the world famous North Shore surfing sites.
So on our working trip to Kauai we stayed over on the island of Oahu and took a hotel room smack dap in the middle of the action. Waikiki, Pearl Harbor, the might Mo battleship and all the sites were worth the effort. But an effort it was.
The name of the hotel shall remain anonymous because I don't want to get sued for libel (but hey, truth is a defense). It was a 30 story high rise building across the street from the people-packed beach and had been recently decorated. It was clean and well staffed and, in general, no worse and certainly no better than other tourist havens.
But let me tell you why it wasn't a vacation and why most hotel stays don't qualify as a holiday. These slightly stressful reasons are exactly why the vacation rental industry is growing fast. If you want a vacation you need a vacation home.
YOU GOTTA BE KIDDING ME:
- In order to check in, we stood in line with 40 other people as the clerks were working feverishly (at least those that spoke english). It sill took 20 minutes to get a key. Room cost was just $199 per night, plus, plus, plus. (More on that later).
- My son was a little slow on jumping out of the rental car which allowed the bell man to snatch the bags and rush them to bell hop prison. She he did the honors. Cost for the tip $8
- We proceeded to the room which had two double beds (no queen beds in this space conscious establishment.), adequate mattresses and the traditional black out curtains. No frills here. There was a small closet and a shower curtain that wouldn't stay up.
- Penny flung open the curtains and stepped out onto the 18" deck with a peek-a-boo view of the beach. No room for a chair out there but that was OK because the roar of the building HVAC system made it impossible to talk. Plus the stench of diesel bus fuel wafted up even to our 24th floor room.
- She quickly crammed the door shut only to discover a loud locomotive sound coming from the air as it blasted under the hallway door and whistled through the deck door that wouldn't close all the way.
============================================
This week's Sponsor: VACATION RENTALS WORLDWIDE
For VROA members - Free Vacation Rental Listing or 6 months - No Strings Attached. Including up to 3 photos on fast and efficient site. www.VRworldwide.com
============================================
- Thee was no place to lay out the suitcases so we used the floor which meant there was then no where to walk. We collapsed on the bed.
- Soon hunger called. After a long flight we dial room service to order from the gourmet menu except the entrees seemed like left over from an Antarctica research camp. (I'm thinking everything comes out of a can). An hour later and $71 and we have dinner for three.
- My soon wanted an extra coke but we didn't think we could wait another hour and pay another $5 so he finds a pop machine in the hall for the bargain price of $3.
- Then he finds the mini bar, "WAAAAAAIT yell before he grabs a snickers bar." I'm thinking $3 per candy bar is highway robbery.
- I need to logon for a few minutes but sorry no high speed internet in this aging beach beauty. I can use dialup in a pinch and find, hidden in the guest "Courtesy" manual that the cost for the data port (ie: phone line) is only one dollar per minute. Sorry I pass.
- And head to the street to find an internet cafe. There I find a place with high speed internet for just $6 per hour. But why do I have to march around the neighborhood to use it?
- At long last we find ourselves tuckered and trampled and snug in bed ready for a good night's sleep. No such luck. We hear Waikiki party goers stroll down our hall to their rooms every 20 minutes soused in liquor and banging the walls. It is spring break and a long night.
-----> This is just a sample fraction of the entire newsletter. To read the whole article including tips on Early/Late Fees, Mystery Shopping, Toll Free phone numbers and renting through auctions, click here www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters, if we've helped you even a little, please tell your friends by clicking here (Its automated & easy.)
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
SUBJECT: The Trouble with Hotels
----------------------------------------------------------------------------------
*** This is just a partial SAMPLE. To receive the whole newsletter from the VROA every week and to support the Vacation Rental Industry please visit www.VROA.org and consider joining. Its just $59 per year and you'll get 10 times your moneys worth.
----------------------------------------------------------------------------------
Can anyone tell me why a family would stay in a Hotel for their vacation? I was reminded recently of how distressing it can be when we visited the famous Waikiki Beach area of Hawaii. Penny and I hadn't spent much time there for 20 years but my 14 year old son decided there were things he just needed to see like the Bishop Museum, Hanama Bay and the world famous North Shore surfing sites.
So on our working trip to Kauai we stayed over on the island of Oahu and took a hotel room smack dap in the middle of the action. Waikiki, Pearl Harbor, the might Mo battleship and all the sites were worth the effort. But an effort it was.
The name of the hotel shall remain anonymous because I don't want to get sued for libel (but hey, truth is a defense). It was a 30 story high rise building across the street from the people-packed beach and had been recently decorated. It was clean and well staffed and, in general, no worse and certainly no better than other tourist havens.
But let me tell you why it wasn't a vacation and why most hotel stays don't qualify as a holiday. These slightly stressful reasons are exactly why the vacation rental industry is growing fast. If you want a vacation you need a vacation home.
YOU GOTTA BE KIDDING ME:
- In order to check in, we stood in line with 40 other people as the clerks were working feverishly (at least those that spoke english). It sill took 20 minutes to get a key. Room cost was just $199 per night, plus, plus, plus. (More on that later).
- My son was a little slow on jumping out of the rental car which allowed the bell man to snatch the bags and rush them to bell hop prison. She he did the honors. Cost for the tip $8
- We proceeded to the room which had two double beds (no queen beds in this space conscious establishment.), adequate mattresses and the traditional black out curtains. No frills here. There was a small closet and a shower curtain that wouldn't stay up.
- Penny flung open the curtains and stepped out onto the 18" deck with a peek-a-boo view of the beach. No room for a chair out there but that was OK because the roar of the building HVAC system made it impossible to talk. Plus the stench of diesel bus fuel wafted up even to our 24th floor room.
- She quickly crammed the door shut only to discover a loud locomotive sound coming from the air as it blasted under the hallway door and whistled through the deck door that wouldn't close all the way.
============================================
This week's Sponsor: VACATION RENTALS WORLDWIDE
For VROA members - Free Vacation Rental Listing or 6 months - No Strings Attached. Including up to 3 photos on fast and efficient site. www.VRworldwide.com
============================================
- Thee was no place to lay out the suitcases so we used the floor which meant there was then no where to walk. We collapsed on the bed.
- Soon hunger called. After a long flight we dial room service to order from the gourmet menu except the entrees seemed like left over from an Antarctica research camp. (I'm thinking everything comes out of a can). An hour later and $71 and we have dinner for three.
- My soon wanted an extra coke but we didn't think we could wait another hour and pay another $5 so he finds a pop machine in the hall for the bargain price of $3.
- Then he finds the mini bar, "WAAAAAAIT yell before he grabs a snickers bar." I'm thinking $3 per candy bar is highway robbery.
- I need to logon for a few minutes but sorry no high speed internet in this aging beach beauty. I can use dialup in a pinch and find, hidden in the guest "Courtesy" manual that the cost for the data port (ie: phone line) is only one dollar per minute. Sorry I pass.
- And head to the street to find an internet cafe. There I find a place with high speed internet for just $6 per hour. But why do I have to march around the neighborhood to use it?
- At long last we find ourselves tuckered and trampled and snug in bed ready for a good night's sleep. No such luck. We hear Waikiki party goers stroll down our hall to their rooms every 20 minutes soused in liquor and banging the walls. It is spring break and a long night.
-----> This is just a sample fraction of the entire newsletter. To read the whole article including tips on Early/Late Fees, Mystery Shopping, Toll Free phone numbers and renting through auctions, click here www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters, if we've helped you even a little, please tell your friends by clicking here (Its automated & easy.)
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
Wednesday, March 17, 2004
VROA COMPLIMENTARY NEWSLETTER - May 17, 2004
SUBJECT: The Trouble with Suppliers
----------------------------------------------------------------------------------
*** To receive this newsletter from VROA every week and to support the Vacation Rental Industry please visit www.VROA.org and consider joining. Annual dues are just $59 per year and you'll get 10 times your moneys worth. Come on now, everyone has to help grow the industry.
----------------------------------------------------------------------------------
Most owners focus 80% of their energy on creating more demand, uping rates and increasing occupancy. I can think of a hundreds Emails and phone calls where the only question is "How to I increase sales?" As all large companies know, lowering costs can be just as important to and much easier to accomplish than selling every available date at the highest possible price.
Long time readers will admit that this newsletter devotes a lot of words to sharing revenue items. Plus we've frequently included cost saving ideas from the major to the minute. But recently I as reminded that who we choose as suppliers and how we work with them can be a significant factor in keeping costs down, minimizing guest complaints and making sure we all sleep well at night.
THE WAKE UP CALL:
At one of the homes we own (a four hour drive from our primary residence) we have employed a personable young gardener (lets call him "Richard") to do the and lawn mowing and gardening for the past few years. He does fairly good work and has been reasonably reliable. But there had been certain behaviors that, as an experienced (you can read that "old") business person I should have paid more attention to.
First it was the stories about his unreliable truck, then his seemingly quick marriages and divorces (yes plural). Often invoices arrived months after work was to have been done and the gardener's ledger seldom matched ours. Last summer we sat down together to compare ledgers and make sure everything had been paid. The summer before last he had assigned someone else to do work at the houses without our approval. Later we received a time sheet for 56 hours for what was to have been a two day weeding project.
ATEMPTINGTO BE REASONABLE:
I've been self employed pretty much my whole life, starting at the age of 15. Until I was in my early 20's I reacted to supplier over-billings perhaps too stringently. So in the case of the gardener I listened to the excuse, paid the bill and gave specific instructions that the other no work was to be subcontracted without our approval and all special assignments must have our prior approval.
Sometime after that we instructed Richard to trim bushes at the house to make sure we were in compliance with the Home Owners Associations Rules. This project had been ordered in previous years and the cost was in the $50 range. A nip and a tuck, so to speak.
My father used to say, fool me once - shame on you, fool me twice - shame on me. So I should not have been surprised when the invoice arrived for $500 for "tree trimming." When I questioned the gardener he said, "Well I subbed it out to someone else, and I guess I forgot to get a bid." Richard acknowledge that the sub-contractor was renowned for taking advantage of customers" and that he failed to get a bid or call for permission. "I didn't ask your permission because the work needed to be done to bring the trees into compliance."
Had I known of this excessive cost I would surely had avoided it by turning the trees into firewood with my handy chain saw and an hour of labor. And I'm always ready to make (or save) $500 per hour.
If this problem had arisen with a large company, the simple solution would have been to return the invoice with a note notifying them that the work had not been ordered and would not be paid. But the gardener is a small one person company. He frequently claims to always be dead broker due to family problems and child support. So I attempted to reason with Richard and eventually sent a payment for $250 even though the problem was totally on her end.
That action has now resulted in numerous "flame" Emails from Richard and errant letters from his bookkeeper. Most recently Ricahrd has taken to going door to door in the community to slander us and plead his case. Luckily, we have gotten calls from those he has spoken with telling us the incidents and acknowledging their belief in how unstable Ricahrd is.
THERE IS NO ANSWER:
Unfortunately there is no acceptable solution to this problem. Many of you may see it as a small issue, and I agree, but if we value our reputations and hope to conduct our affairs ethically then it is a good time to examine who to choose as vendors and how to deal with them.
These are rules I have learned the had way but unfortunately I have not always followed my own guidelines. As far as I can tell, no business school teaches these expensive lessons, there is no book specifically on the subject and even in trade associations like VROA we seldom share experiences or devote time to grasping this little rules and adapting our actions to them.
NO NUTS: Long ago I spoke with a Human Relations hiring expert. When it came to hiring employees he said he could throw out all the IQ tests, Skills tests, past employer interviews and reference checks. His number one criteria was, "Don't hire any weirdos." I think the same is true for vendors. If they have peculiarities, personal problems or can't have a nice social conversation its best to stay clear. There are usually multiple suppliers for every task you might require at a vacation rental home. Avoid the nuts.
PUT IT IN WRITING: Every lawyer every handling a case has had to repeat these words to clients (big and small), "Why the heck didn't you put it in writing?" And now with the advent of email it is easier than ever before. Every little task, every chore and every on going project must be confirmed in writing. If you don't send the supplier an email or letter, then keep notes and put them in the vendor's file.
KEEP RECORDS: If you've been in litigation you quickly learn that what you think you said is almost never what the other party heard. Sometimes they are lying and sometimes they harbor wishful memories. What counts in court is what someone, anyone, wrote down. If you have it in writing, you win. If you don't, you lose. So keep careful records. At a minimum that means a vendor file must be kept with all paid bills, notes and any other correspondence.
BE SPECIFIC: Whether for your rental or your personal affairs, when buying a product its prudent to be very specific when purchasing. Ask the price (and whether you can get it cheaper), the date it will be delivered or received, whether there is a warranty date, and how you would go about getting it repaired if need be. Don't accept platitudes from a sharp taking sales person. Get that warranty in writing. And jot down anything else that they say. Make sure you let them know you are writing it down. Always put the date on the note, where the conversation took place (even if it was on the phone), who you spoke to and what their title was.
THE BIG GUYS: When dealing with a large company be extra careful to identify who helped you. Even with phone companies, utilities and so forth early in the conversation ask person's name and their employee ID number or telephone extension number. If you place an order or a change order always ask for an order number or confirmation number. Virtuallyall large firms enter all customer communications in to a computer data base and those records surely will have a record ID or other unique identifier. If you fail to get the number its as if you never called.
REACT QUICKLY: If you have a problem with a supplier always contact them immediately. Spell out the problem in detail and then, very generally, ask for a resolution. Asking for something specific may not get the intended result. Often they may offer more than you require. And if they don't, move on to say "That doesn't fix it, what else could you do?" Only resort to demanding specific answers when they seem willing but unable to think of a reasonable conclusion.
Also, by demanding very specific answers or being inflexible you may cause the supplier to question your sincerely. You must appear to be, and must truly be, willing to listen to the other parties point of view, determine if they too are genuine and then attempt to find a mutually acceptable solution.
BE CORDiAL: You know what its like when a guest calls and complains unreasonably - you block them out and are far less likely to be accommodating. In reverse don't be turn into that kind of dumbell when you are the customer. Never ever lose your temper whether you be customer or vendor. Sometimes it is necessary to be assertive. You can even let your personality out and laugh at a vendor who lacks the intellect to solve the problem. But no matter how you respond, don't resort to anger, or raised voice or threats. It simply does not work.
BE LITIGIOUS: Most folks find court a fearful exercise. Many people never set foot in a court house in their entire lives. But if the supplier is unreasonable or unreliable the only way to end the conflict may be to submit it to an independent neutral party and let them decide. And those people are called judges. Filing suit should be the last resort. But if the amount is sufficient then, before you even begin to rent you home, you must be willing to petition the court to protect your financial interests
Small amounts can be pursued in the "Small Claims" court offered in most jurisdictions, and you can prepare and plead you case yourself to save attorney fees. If you've never been to small claims there is a way to triple your chances of success. Like most skills you can learn by doing or learn by observing. Surely you don't want to "do" any more than necessary. And the way to learn by observation is simply to go to the courthouse and sit in the audience and observe at least a dozen other small claim proceedings. You might be amazed. Its nothing like Judge Judy. And it can even be boring, but you will pick up a wide-eyed understanding of how to present your grievance.
Large matters, on the other hand, require the help of a competent attorney. Be careful in picking an attorney. Buy his or services with the same rules used to hire any vendor. The attorney will want a blank check for whatever hours he dreams up at an hourly rate that even rock stars don't earn. Don't put up with it. As I said above, ask the price, get dates, set limits on costs and keep a tight control of what is to be done, when its due and what end result you can expect.
IT WAS MY OWN FAULT:
So back to the gardener. Why should you accept recommendations from a guy who didn't follow his own hard won guidelines? Unfortunately dealing with vendors is nothing more then dealing with humans in general. We're flawed and erratic organisms.
------------------
INPUT:
As always I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Maybe I like this Dominican Republic hideaway because the name sounds so Hawaiian (you know I love Hawaii). Ted Riskin's home is pleasant, sunny & bright. A fun place to play. Take a peek at here. (If you want your place considered for Home of the Week please drop me an email.)
ONLINE:
See the nice article that mentions VROA in the Press Section of the member's only website. www.VROA.org.
TELL A FRIEND:
If you like receiving these newsletters, if we've helped you even a little, please tell your friends by clicking here (Its automated & easy.)
===========================================
VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
PO Box 21305
Seattle, WA 98111-3305
Voice: 206-343-7777
Fax: 206-628-0839
Email: Info@VROA.org
Web: www.VROA.org (for Members)
Web: www.VROA.com (for Guests - coming soon)
===========================================
SUBJECT: The Trouble with Suppliers
----------------------------------------------------------------------------------
*** To receive this newsletter from VROA every week and to support the Vacation Rental Industry please visit www.VROA.org and consider joining. Annual dues are just $59 per year and you'll get 10 times your moneys worth. Come on now, everyone has to help grow the industry.
----------------------------------------------------------------------------------
Most owners focus 80% of their energy on creating more demand, uping rates and increasing occupancy. I can think of a hundreds Emails and phone calls where the only question is "How to I increase sales?" As all large companies know, lowering costs can be just as important to and much easier to accomplish than selling every available date at the highest possible price.
Long time readers will admit that this newsletter devotes a lot of words to sharing revenue items. Plus we've frequently included cost saving ideas from the major to the minute. But recently I as reminded that who we choose as suppliers and how we work with them can be a significant factor in keeping costs down, minimizing guest complaints and making sure we all sleep well at night.
THE WAKE UP CALL:
At one of the homes we own (a four hour drive from our primary residence) we have employed a personable young gardener (lets call him "Richard") to do the and lawn mowing and gardening for the past few years. He does fairly good work and has been reasonably reliable. But there had been certain behaviors that, as an experienced (you can read that "old") business person I should have paid more attention to.
First it was the stories about his unreliable truck, then his seemingly quick marriages and divorces (yes plural). Often invoices arrived months after work was to have been done and the gardener's ledger seldom matched ours. Last summer we sat down together to compare ledgers and make sure everything had been paid. The summer before last he had assigned someone else to do work at the houses without our approval. Later we received a time sheet for 56 hours for what was to have been a two day weeding project.
ATEMPTINGTO BE REASONABLE:
I've been self employed pretty much my whole life, starting at the age of 15. Until I was in my early 20's I reacted to supplier over-billings perhaps too stringently. So in the case of the gardener I listened to the excuse, paid the bill and gave specific instructions that the other no work was to be subcontracted without our approval and all special assignments must have our prior approval.
Sometime after that we instructed Richard to trim bushes at the house to make sure we were in compliance with the Home Owners Associations Rules. This project had been ordered in previous years and the cost was in the $50 range. A nip and a tuck, so to speak.
My father used to say, fool me once - shame on you, fool me twice - shame on me. So I should not have been surprised when the invoice arrived for $500 for "tree trimming." When I questioned the gardener he said, "Well I subbed it out to someone else, and I guess I forgot to get a bid." Richard acknowledge that the sub-contractor was renowned for taking advantage of customers" and that he failed to get a bid or call for permission. "I didn't ask your permission because the work needed to be done to bring the trees into compliance."
Had I known of this excessive cost I would surely had avoided it by turning the trees into firewood with my handy chain saw and an hour of labor. And I'm always ready to make (or save) $500 per hour.
If this problem had arisen with a large company, the simple solution would have been to return the invoice with a note notifying them that the work had not been ordered and would not be paid. But the gardener is a small one person company. He frequently claims to always be dead broker due to family problems and child support. So I attempted to reason with Richard and eventually sent a payment for $250 even though the problem was totally on her end.
That action has now resulted in numerous "flame" Emails from Richard and errant letters from his bookkeeper. Most recently Ricahrd has taken to going door to door in the community to slander us and plead his case. Luckily, we have gotten calls from those he has spoken with telling us the incidents and acknowledging their belief in how unstable Ricahrd is.
THERE IS NO ANSWER:
Unfortunately there is no acceptable solution to this problem. Many of you may see it as a small issue, and I agree, but if we value our reputations and hope to conduct our affairs ethically then it is a good time to examine who to choose as vendors and how to deal with them.
These are rules I have learned the had way but unfortunately I have not always followed my own guidelines. As far as I can tell, no business school teaches these expensive lessons, there is no book specifically on the subject and even in trade associations like VROA we seldom share experiences or devote time to grasping this little rules and adapting our actions to them.
NO NUTS: Long ago I spoke with a Human Relations hiring expert. When it came to hiring employees he said he could throw out all the IQ tests, Skills tests, past employer interviews and reference checks. His number one criteria was, "Don't hire any weirdos." I think the same is true for vendors. If they have peculiarities, personal problems or can't have a nice social conversation its best to stay clear. There are usually multiple suppliers for every task you might require at a vacation rental home. Avoid the nuts.
PUT IT IN WRITING: Every lawyer every handling a case has had to repeat these words to clients (big and small), "Why the heck didn't you put it in writing?" And now with the advent of email it is easier than ever before. Every little task, every chore and every on going project must be confirmed in writing. If you don't send the supplier an email or letter, then keep notes and put them in the vendor's file.
KEEP RECORDS: If you've been in litigation you quickly learn that what you think you said is almost never what the other party heard. Sometimes they are lying and sometimes they harbor wishful memories. What counts in court is what someone, anyone, wrote down. If you have it in writing, you win. If you don't, you lose. So keep careful records. At a minimum that means a vendor file must be kept with all paid bills, notes and any other correspondence.
BE SPECIFIC: Whether for your rental or your personal affairs, when buying a product its prudent to be very specific when purchasing. Ask the price (and whether you can get it cheaper), the date it will be delivered or received, whether there is a warranty date, and how you would go about getting it repaired if need be. Don't accept platitudes from a sharp taking sales person. Get that warranty in writing. And jot down anything else that they say. Make sure you let them know you are writing it down. Always put the date on the note, where the conversation took place (even if it was on the phone), who you spoke to and what their title was.
THE BIG GUYS: When dealing with a large company be extra careful to identify who helped you. Even with phone companies, utilities and so forth early in the conversation ask person's name and their employee ID number or telephone extension number. If you place an order or a change order always ask for an order number or confirmation number. Virtuallyall large firms enter all customer communications in to a computer data base and those records surely will have a record ID or other unique identifier. If you fail to get the number its as if you never called.
REACT QUICKLY: If you have a problem with a supplier always contact them immediately. Spell out the problem in detail and then, very generally, ask for a resolution. Asking for something specific may not get the intended result. Often they may offer more than you require. And if they don't, move on to say "That doesn't fix it, what else could you do?" Only resort to demanding specific answers when they seem willing but unable to think of a reasonable conclusion.
Also, by demanding very specific answers or being inflexible you may cause the supplier to question your sincerely. You must appear to be, and must truly be, willing to listen to the other parties point of view, determine if they too are genuine and then attempt to find a mutually acceptable solution.
BE CORDiAL: You know what its like when a guest calls and complains unreasonably - you block them out and are far less likely to be accommodating. In reverse don't be turn into that kind of dumbell when you are the customer. Never ever lose your temper whether you be customer or vendor. Sometimes it is necessary to be assertive. You can even let your personality out and laugh at a vendor who lacks the intellect to solve the problem. But no matter how you respond, don't resort to anger, or raised voice or threats. It simply does not work.
BE LITIGIOUS: Most folks find court a fearful exercise. Many people never set foot in a court house in their entire lives. But if the supplier is unreasonable or unreliable the only way to end the conflict may be to submit it to an independent neutral party and let them decide. And those people are called judges. Filing suit should be the last resort. But if the amount is sufficient then, before you even begin to rent you home, you must be willing to petition the court to protect your financial interests
Small amounts can be pursued in the "Small Claims" court offered in most jurisdictions, and you can prepare and plead you case yourself to save attorney fees. If you've never been to small claims there is a way to triple your chances of success. Like most skills you can learn by doing or learn by observing. Surely you don't want to "do" any more than necessary. And the way to learn by observation is simply to go to the courthouse and sit in the audience and observe at least a dozen other small claim proceedings. You might be amazed. Its nothing like Judge Judy. And it can even be boring, but you will pick up a wide-eyed understanding of how to present your grievance.
Large matters, on the other hand, require the help of a competent attorney. Be careful in picking an attorney. Buy his or services with the same rules used to hire any vendor. The attorney will want a blank check for whatever hours he dreams up at an hourly rate that even rock stars don't earn. Don't put up with it. As I said above, ask the price, get dates, set limits on costs and keep a tight control of what is to be done, when its due and what end result you can expect.
IT WAS MY OWN FAULT:
So back to the gardener. Why should you accept recommendations from a guy who didn't follow his own hard won guidelines? Unfortunately dealing with vendors is nothing more then dealing with humans in general. We're flawed and erratic organisms.
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INPUT:
As always I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.org.
HOME OF THE WEEK:
Maybe I like this Dominican Republic hideaway because the name sounds so Hawaiian (you know I love Hawaii). Ted Riskin's home is pleasant, sunny & bright. A fun place to play. Take a peek at here. (If you want your place considered for Home of the Week please drop me an email.)
ONLINE:
See the nice article that mentions VROA in the Press Section of the member's only website. www.VROA.org.
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VROA OWNER NEWSLETTER
Published weekly for all Members
Copyright - Vacation Rental Owners Association
Read this and all prior newsletters at www.VROA.org
Director & Editor - Wm. May Director@VROA.org
Membership - Penny Taylor Membership@VROA.org
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Seattle, WA 98111-3305
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Fax: 206-628-0839
Email: Info@VROA.org
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