Ultimate Guide on How to Start a Luxury Vacation Rental Business

Meeting the expectations of the luxury market and its clientele can be daunting.

It can get overwhelming to know what to do to successfully break into this lucrative market and what steps to take to build a sustainable foundation for your business. But once you do, it’s an exciting opportunity filled with business potential.

Luxury guests will pay a premium for the unique, exclusive, exceptional vacation you’ll provide—which means you’ll need to build your business around creating a highly personalized guest experience.

If going above and beyond and impressing guests with personalized services, attention to detail, and excellent communication sound like you, then you’ve come to the right place.

We’ve written the ultimate guide on how to start a luxury vacation rental business to help you as you begin your new endeavor, so you have everything you need to turbocharge the guest experience from the start.

Go above and beyond with a personalized luxury experience guests won’t forget. RueBaRue helps luxury vacation rental business owners personalize the entire guest experience before, during, and after their stay. Book a demo now

Are luxury vacation rentals profitable?

Since luxury vacation rentals provide guests with a variety of first-rate, exclusive accommodation options in several locations, it’s no wonder it’s become an increasingly profitable endeavor.

In fact, the Luxury Travel Market Trend and Analysis report by GlobalData confirms Covid-19 increased both the demand and typical budget for luxury vacation rentals, which is only expected to rise in 2022.

But to stay competitive in your luxury vacation rental business, you’ll need to think beyond traditional short-term rental (STR) business offerings.

One way to do this is to offer a variety of personalized services like: In-room masseuse, personal chef, yoga instructor, or babysitter, to craft an unforgettable experience for your guests. The more services you offer your guests, the more leverage you’ll have when developing a pricing strategy .

Let’s explore some other ways you can curate a luxury experience for your guests.

How to create a luxury experience

We’ve come up with eight key steps to creating a luxury experience for your guests.

Ready? Let’s go.

1. Design a unique stay

For most luxury guests, a phenomenal guest experience includes hyper-personalized communication and attention to detail. They expect an intuitive service and a tailor-made trip, which results from communicating with them to gauge their specific needs and wants.

When designing your luxury experience and offering, make sure you keep your target market (the 1%) top of mind. Remember, their needs will largely dictate what you provide—but you’ll also need to proactively spot and tend to needs they don’t yet know they have.

Other things to consider include:

  • Is the experience exclusive? Luxury guests want an experience they can’t find anywhere else, and that isn’t available to just anyone. You’ll need to market your luxury vacation rental business as the ultimate curator of luxury experiences with remarkable images and eye-catching amenities.
Image of a luxury vacation rental villa with a pool and backyard

Use remarkable images and video footage to capture the exclusive, luxury experience you provide

Source: Florian Schmidinger on Unsplash

  • Is it unique and worth choosing over a luxury hotel or resort? Luxury vacation rentals provide a sense of privacy and flexibility not found within resorts or big hotel conglomerates. But resorts attract luxury guests with their Michelin star restaurants, pools, bars, nightclubs, and a variety of services and activities. So you’ll need to differentiate your luxury vacation rental offering and dig deep into the personalized service and attention you can provide that no one else can.
  • Does it attract a particular niche? Since luxury guests are a niche in themselves, you’ll need to look into what’s unique about your guests and if there are any trends or similarities. By zooming into your guest type, you’ll be better able to differentiate your brand and develop a strategic business angle.
  • Are you paying close attention to the guest selection process? As mentioned above, the exclusivity of your luxury vacation rental is a top priority for luxury guests willing to spend the big bucks. Be sure to remain selective when choosing new guests, and keep your calendar open to loyal, repeat guests.

Remember, luxury guests want to feel they’ve invested in a unique experience they can’t get anywhere else, so make sure you’re constantly looking for new ways to improve and impress.

Pro tip: Be responsive to what guests have to say by asking them directly. Use guest communication software to help streamline guest communication and improve the guest experience. Or follow guests and local competitors on social media to see what they’re doing and get actionable insights that drive impact.

2. Provide amazing guest communication

Part of providing an exceptional experience is having guest communication tools to enable top-grade communication. Investing in specialized software is a necessity for your luxury vacation rental business as it makes sure you can keep up with guest expectations and competitors. Guest communication tools give guests both an ultra-convenient, contemporary experience, and a responsive team that’s always there to provide amazing service and answer any questions.

If you’re using RueBaRue, you can customize and automate guest communication and answer guest texts or questions instantly with SMS Guest Messaging—or create digital guidebooks to give a personal touch to their vacation experience.

RueBaRue Guest Messaging feature

RueBaRue’s guest messaging feature makes it easy to personalize the guest experience and answer all your guests’ questions

Source: RueBaRue

Using a specialized platform lets you oversee all your communication in one place alongside key guest information. Without a centralized platform to manage guest communication, you can quickly become overwhelmed with incoming messages and struggle to track what you have and haven’t responded to.

Set up digital guidebooks

Digital guidebooks are another great way of personalizing the guest experience. Show guests what to do and where to go with local area guides and impress your guests by providing everything they need like arrival times, door codes, and house rules—before they need it.

With RueBaRue, you can create digital guidebooks that look amazing and add real value to your guest’s vacation and experience.

Screenshot of creating Digital Guidebooks with RueBaRue

RueBaRue lets you create custom guidebooks for your guests so you’re always adding value to their experience

Source: RueBaRue

3. Respond to their needs in advance

With your specialized software, you’ll be able to personalize the guest experience even more by responding to guests’ needs before they have them. Communicate directly with guests and ask them about the nature of their stay and preferences, to tailor your services to their needs in advance.

For example, you could impress guests with a welcome basket containing their favorite fruits, nuts, chocolates, coffee, or wine—and services that cater to their needs or vacation. These could include fun tours or activities for families, lessons, couples massages, fine dining options, or festival tickets.

Remember to leverage your ability to communicate with guests and ask them about their requirements or preferences. Then, get creative in the ways you can use that information to wow them throughout their stay.

Go above and beyond with a personalized luxury experience guests won’t forget. RueBaRue helps luxury vacation rental business owners personalize the entire guest experience before, during, and after their stay. Book a demo now

4. Seamless check-in

There’s nothing worse than finally arriving at your destination, only to undergo a complicated, time-consuming check-in process. For a luxury experience, you’ll need to find a solution.

Make sure you’re facilitating a frictionless start to their stay with things like smart locks or contactless check-in providers.

5. In-room smart technology

You’ll need to invest in smart tech to provide the level of luxury your guests expect.

Consider adorning your property with photogenic devices and equipment that speak to your exclusive luxury brand like: The Echo Dot, Nespresso machines, TVs, thermostats, sound systems, and Apple TVs, to level up the experience you provide and truly dazzle your guests.

Image of a smart tech thermostat to amplify your luxury vacation rental business experience

Image of a smart tech thermostat to amplify your luxury vacation rental business experience

Source: Dan LeFebvre on Unsplash

6. Professional photography

Hire a professional photographer to show off and market your vacation rental to make it engaging and shareable on social media. Use stunning photos and video footage (like drone footage of the entire property) to do the selling for you.

If you don’t have exquisite content to display, you’re unlikely to generate the interest you need to sustain your new business.

7. Make it personalized

We can’t stress this enough: A personalized approach to running a luxury vacation rental business will set you up for success and apart from the competition. It’s not only important for the stay itself, but also for your brand’s reputation.

One way to do this is to invest in specialized software that makes personalization easy. For example, if you’re managing a ton of guests across a ton of properties, personalization becomes virtually impossible. You’ll end up with dozens of messages you’ll need to personalize and send manually—so you’ll either need to hire and train a massive team or get great software.

By automating and scheduling guest communication with software like RueBaRue, you can save valuable time fielding repeat questions and reduce the total number of guest calls and messaging by 50%. All of which lets you focus on personalizing the experience you provide and ensure guest needs or questions never slip through the cracks.

RueBaRue's guest communication scheduler automates guest messaging

RueBaRue automates guest messaging so you’re always responding to guests even when you’re on the go

Source: RueBaRue

8. On-site staff for incredible service

As mentioned above, it’s important to supply your guests with additional services that take their vacation and enjoyment to the next level.

Consider offering on-site staff services like personal chefs, mixologists, masseurs, babysitters, or yoga instructors. But make sure to be creative and sensitive to trends, and responsive to guest wants, needs, and expectations.

A personal chef preparing food at a luxury vacation rental

Hiring a personal chef to prepare food at your luxury vacation rental gives guests that luxury feel

Source: Louis Hansel on Unsplash

Starting your luxury vacation rental business

Now that you know how to craft an unforgettable luxury experience, let’s explore some steps you can take to start your own luxury vacation rental business.

Self-qualify: Do you have what it takes?

Starting a luxury vacation rental business comes with its own unique risks (as does starting any business).

It’s your job to be aware of these risks and your ability to manage them. Vacation rental business owners are typically highly-driven individuals who aren’t discouraged by the never-ending nature of the business: including maintenance, communication, and upkeep.

Be honest with yourself about your strengths and weaknesses and whether they’re in alignment with an ambitious, adaptable, and eager mindset. You can start by going through the following checklist:

  • Are you constantly looking for new ways to improve processes?
  • Can you manage multiple tasks?
  • Can you keep up with the competition and provide the level of excellence needed to stay afloat?
  • Can you handle various personality types and ‘nightmare’ guests?
  • Are you flexible enough to handle last-minute changes, cancellations, or requests?

Understand your target market

Understanding your target market is essential to knowing how to meet guests’ needs and building your brand and marketing strategies. You’ll need to get inside the target guest’s headspace to offer exactly what they’re looking for—even if they don’t know what that is. Here are a few tips to better understand your target market:

  1. Figure out your Ideal Customer Profile by categorizing the traits and demographics of your ideal guest(s).
  2. Interact with potential or previous customers on social media and use Instagram Stories to poll interest in potential offerings or services.
  3. Keep up with changing market trends by following professionals in your industry on LinkedIn and subscribing to industry-specific podcasts or magazines.
  4. Gather valuable insights by using specialized guest communication software to chat with guests before, during, and after their stays—and gather valuable feedback through surveys and reviews so you know how to better meet their needs.
RueBaRue’s Guest Surveys feature

Use RueBaRue to survey guests and understand what you could do to improve your luxury experience

Source: RueBaRue

Create a business plan

Your business plan ensures you’re properly prepared to take on this new business venture. It’s not only a way to potentially secure investment but it also acts as a compelling argument (or not) for the business’ potential.

If your business plan fails to prove its profitability or rationale, it’s unlikely the business will survive off paper.

Your business plan should include:

  • Marketing considerations and budget: Detail where you plan on marketing your business, which channels you’ll use, and why. Ask yourself: What social channels does your target market use most? What’s your projected marketing spend? Will you hire a marketing team or market it yourself?
  • Target market specifics: Outline who your target market is, what they’re looking for, and their demographics, to paint a clear picture of who you’re selling to.
  • Financial plan and projections: Create a solid financial plan detailing your projected costs and earnings. Consider these questions: Will you hire a property management team or manage it yourself? Who will take care of the accounting side of your business? Do you have a budget for maintenance costs? Do you have a budget to invest in the proper software and tech required to run your business?
  • Property listings/portfolio and prices: Include the names and planned pricing of your listings for a more comprehensive business plan.

Get the right technology set up

The right tools can help make sure you’re meeting and exceeding guest expectations. As mentioned, smart locks are the perfect tool for ensuring a seamless, contactless check-in experience.

Also, guest communication software like RueBaRue will supercharge your guest interactions by making it easier to respond to guest messages and questions.

When you’re actively responding to your guests with personalized messaging, you’re more likely to increase guest satisfaction and repeat bookings—and grow your business.

Hire a cleaning service

A big part of the luxury experience is ensuring that your guests have a spotless, pristine vacation rental. It’s important to hire a cleaning service you can trust to provide that immaculate feel and keep them in mind for all your future bookings.

Market for direct bookings by being visible and on-brand

Marketing your bookings and brand is how you make a first impression on potential guests. Be intentional about how and where you market your brand and where you could cut expenses.

For example, you could build up a following on social media, and use social media scheduling tools like Hootsuite to automate your social posts, rather than paying high prices for online travel agencies.

You’ll also want to make sure everything you post is hyper-relevant to your brand and brand-strengthening: imagery must always be exceptional and reflect the unique, luxury, personalized experience you provide.

Launch your luxury vacation rental business with RueBaRue

Starting a luxury vacation rental business comes with many responsibilities, but it’s not impossible and doesn’t have to be hard.

Use our guide on how to start a luxury vacation rental business to help you as you launch your new business—focusing on these key takeaways:

  1. Personalize the entire experience
  2. Provide excellent guest communication
  3. Understand your target market
  4. Get the right technology
  5. Make it unique and exclusive

Then, invest in guest communication software like RueBaRue to level up your personalized, luxury vacation rental experience and continuously delight your guests.

Go above and beyond with a personalized luxury experience guests won’t forget. RueBaRue helps luxury vacation rental business owners personalize the entire guest experience before, during, and after their stay. Book a demo now

H2: FAQs about how to start a luxury vacation rental business

What are the costs to start a luxury vacation rental business?

The cost of starting a luxury vacation rental business depends on each business’ needs and what they hope to provide. However, there are basic costs every luxury vacation rental business has to factor in, such as:

  • Maintenance and upkeep costs
  • Cleaning service costs
  • Software and technology costs
  • Security costs

What is the average profit margin on a luxury vacation rental?

The average profit margin for luxury vacation rentals is typically 68-72%.

How do you start a luxury vacation rental business?

To start a luxury vacation rental business, you’ll need to:

  1. Qualify your strengths and weaknesses
  2. Understand your target market
  3. Create a business plan
  4. Get the right tech set up
  5. Hire a cleaning service
  6. Market for direct bookings by being visible and on-brand
  7. Set up digital guidebooks

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