Vinayak Mahtani is the CEO and cofounder of bnbme Holiday Homes.
A property management company is typically hired to oversee a property’s daily operations, maintenance and overall management in order to earn revenue by way of short-term rentals. As a space, the short-term rentals market is ever evolving. As the CEO of a property management company myself, I’m well-versed with the kind of challenges involved in deftly managing short-term rentals for a collection of properties. Here are nine smart practices to guide your hiring decision:
1. Understand the nature of the current portfolio under management.
Often, a competent company is one with extensive experience managing properties. However, I find that the kind of properties under management is a key factor distinguishing the good from the exceptional. For instance, hiring villa specialists catering primarily to large holiday groups to manage a sprawling apartment catering primarily to luxury corporate travelers might prove damaging. The stark contrast in the day-to-day running of each could result in failure to meet expectations. Ask for referrals and testimonials that reflect appropriate past experience.
2. Identify the primary category of guests.
Tailoring interiors to the sensibilities of your guest is fundamental to delivering a superior experience. The design, amenities, color schemes, layout and furnishings must all be led by the preferences, expectations and needs of your archetypal guest. For example, catering to larger groups means creating spaces designed around spending time together, such as laidback nooks with chaises, ottomans, bean bags and a large dining space. Ensuring durability in materials that withstand basic wear and tear and avoiding colors prone to staining prove effective when children frequent the place. For discerning corporate travelers, factors like location, wifi, availability of a workspace and proximity to public transport options are crucial.
3. Delve into the quality of personnel.
In my experience, hospitality is a core aspect of being a property manager. Tasks can include screening guests, checking them in and out, maintenance, optimization, managing every miniscule need and aspect of their stay (including tackling unforeseen situations), marketing the property on various platforms and collecting feedback. Thus, the caliber of the property management team is paramount. I find that meeting the head of guest relations and operations and understanding their hiring process can give you the reassurance you’re looking for.
4. Ask about their maintenance approach.
While it seems like the most obvious factor, a strategic cleaning and maintenance plan not only translates into repeat guests but attracts those who are willing to pay that cleaning fee difference to enjoy an immaculately maintained property. Draw up a service-level agreement with a cleaning services provider that clearly outlines the scope of work and standards to be maintained. In the case of an in-house cleaning team, clearly outline key performance indicators to ensure a frequently and thoroughly cleaned space. In the long term, I’ve seen this lower the need for repairs and replacements, controlling capital costs.
5. Evaluate their performance on guest satisfaction criteria.
Collecting and analyzing guest feedback, to me, is non-negotiable. It means the company values opinions and are genuinely invested in improving the guest experience. Determine where they stand on different metrics—booking, communication, the amount of time taken to address issues, anticipation of guest needs, cleanliness, and the like. Understanding if and why their performance is not satisfactory on any of these grounds may help you decide one way or another.
6. Analyze the quantum of management fees.
Too often the temptation of a low management fee will sway a homeowner in favor of the company offering it, but it’s important to closely analyze how they’ve managed to keep costs so low. Often, this is achieved by compromising on basic requirements, leading to poorly maintained properties and inadequately trained staff. This could sully the guest experience and cost you occupancy in the longer term. A lower pay-off typically equals lower motivation to treat the property like their own, too.
7. Pick a revenue share arrangement over a minimum guarantee.
In my experience, a revenue-sharing approach is not only more collaborative, but it also makes the company more accountable in ensuring higher revenues as higher profitability benefits them directly. In the case of a minimum guarantee, there is more room for complacency as the goal is to only hit the agreed number, so the full potential of the property is rarely exacted via rentals. With the management under pressure to meet this number year-round, the property tends to get neglected and overall quality can take a hit.
8. Consider a minimum three-year time horizon.
The way I see it, a shorter time horizon is not sufficient to gauge the ability of the company to ensure continuity in occupancy. In order to really capture the pulse of the quintessential guests and give them what they are looking for, the company needs time to establish standard operating procedures and nurture guest relations. This is why I recommend a contract with a minimum of three years.
9. Examine the degree of sophistication in the technology employed.
A centralized property management software that tracks bookings, inventory, pricing and guest communications is key to optimum efficiency. A step further would be storing data related to guest preferences collected over past stays, adding a degree of personalization for better guest satisfaction. Dynamic pricing tools that are in tune with market corrections can ensure you’re competitively priced. Supplementary software tracking legal compliance, accounting and even internal communications can minimize human error and save time that can be spent on more productive tasks.
Through my years in the industry, I’ve developed the view that while a renowned property management company can increase your property value and occupancy rates, it is more critical to consider the flipside and understand how detrimental hiring an inexperienced company can be for your property. Engaging a great property management company is a business investment, but crucial to success.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
