This post by Nancy McAleer of AMI Home Rental is for anyone thinking about starting a listing site. Nancy is also the Co-Founder of Florida Rental By Owners an online vacation rental listing website, designed to allow owners and managers full control advertising of their properties without the fees associated with 'Big Box' style OTAs.
So you think you can do better than Verboh and are ready to start your own listing website? It seems to be the flavor of the month in the vacation rental travel industry lately. Lots of people are asking questions about it and if you want to jump on the bandwagon you’re probably wondering how easy it is to do. Just set up your vacation rental listing website then start contacting your local property owners to get started and the travelers, bookings and cash will roll in, right? Let me put myself in the juicer and serve a fresh cold cocktail of reality.
I’ll start by saying this… a vacation rental listing website is do-able and can be successful but you need to realize exactly what you are getting into before you even start. It’s hard… really hard to build a successful listing website and there are so many facets that encompass this business, for the purpose of this article I’ll just be touching the surface on some key points.
Even while I was writing this article my business partner, Michele Totino, looked it over and mentioned that it’s difficult to really divulge the full scope of work required to start and run a successful listing site until you are knee-deep into it. That being said let me give it a go and explain to you in a nutshell what you are contemplating.
We started Florida Rental By Owners (FLARBO) in order to meet the demand in the vacation rental industry for a fair and reasonable marketplace. A website for travelers and owners to connect without the unnecessary corporate dictatorship and ever-increasing fees of larger world-wide online travel agencies.
We dreamed of building an alternative listing site specifically for the sunshine state where we focus solely on the needs of the Florida traveler and Florida property owners. Quite simply we wanted to build a rental website “By Owners…. For Owners” as a viable alternative to the existing OTAs.
From our official launch date in May to December 2017, those first 8 months of business was really tough. Gaining property inventory (300), inquiries through our owner networking, telemarketing team and website traffic was super challenging. It’s the proverbial “Which comes first, the chicken or the egg?” To gain website traffic you have to have the property inventory. But to gain property, inventory owners want to invest in a website that already has traffic driven to it and is ranking on page 1 of keyword searches. Back in year one we needed approximately 90 website visitors to get just 1 inquiry. That’s how hard it was.
Lesson #1 For any listing site to be successful you have to have the inventory (property listings) to satisfy the needs of the traveler.
In our first year, the two of us (co-founders) put in approximately 5,000 man hours working all hours of the day manning the phones, answering customer service issues, overseeing website development, driving travelers to the website, handling fraud issues and most importantly working on sales, marketing and advertising deals. In those early days it was just the two of us and the telemarketing sales team.
By year end 2018, we had increased our inventory by 83% (550), the inquiries had increased by 892% and the number of website visits (traffic) needed to gain inquiries was narrowing. We were still working with a skeleton staff but had clearly structured our responsibilities, outsourced whenever we needed work done and laid out a path of where we needed to add business modules for maximum growth.
We’re heading into mid-year of 2019 and we are ecstatic with our performance. FLARBO has close to 1,000 property listings. In 6 months we have doubled the website traffic of the entire year 2018 and the number of inquiries has already tripled that of year 2018.
As a property owner myself I couldn’t be more satisfied. For my three properties in the first half of 2019 (Jan - June), I received more inquiries through FLARBO compared to the entire HomeAway - VRBO group websites. Now that’s an achievement!
Understanding How Much Work Is Required
I get asked a lot about how we started Florida Rental By Owners. At least once a month if not more. Vacation Rental professionals want to know how we launched and what we did to get where we are today. Co-Founder Michele Totino, approached me a few years back. We are both property owners on a small island in Florida and her idea was to create a “hub” so to speak for our local owners to share resources, guest referrals, and if the idea was successful, ultimately create our own listing site for the region.
We started by testing the interest in our area using social media and good old fashioned personal outreach. Our business model proposal was met with fantastic participation by both owners and travelers immediately. From there we decided to move forward with launching for the state of Florida in order to reach maximum potential.
I have to admit we knew we were in for a lot of work in researching software and launching the business but I didn’t understand at the time how much work it would be. We, the co-founders don’t have a background in tech so there was a learning curve we had to tackle in the early days understanding what different software options were available and what would work with our business model and what wouldn’t work. We definitely have the passion for the business and the knowledge but you need to work for nothing in the beginning. Yes, I said nothing!
Lesson #2 If you personally finance the entire business expect to work for at least 1-2 years without pay while working not only full-time but over-time on it, often up to 7 days a week at all hours of the day. After about a year and a half of sitting in front of our computers we were both exhausted, pulled in too many directions and quite frankly I had no personal life. My family started calling me by my new text message nickname “Sorry I can’t talk right now.” for all the times I was too busy to speak with them. It was time to think about scaling up or losing our sanity.
Expect to constantly optimize your website, business practices, and answer customer service queries every… single… day. Now that we are a couple of years into our business we have scaled up and added team members, but there is not a day that goes by where we, the co-founders don’t work together on the business.
You Need to Have the Right Stuff
We partner and network with other complimentary vacation businesses as well as other regional vacation rental listing sites to improve and offer our clients the best we can to help our owners get bookings. Networking is one of the keys to our success. As a founder of a vacation rental listing site you need to be professional and be able to network with other companies and people in the industry not just the property owners, managers and travelers. Making deals with other businesses to get more exposure and add monetary funnels to your model is part of being successful.
I’ve watched other vacation rental listing site owners crash and burn through their own inflated egos, and hot heads. This is a direct downward spiral to running your business into the ground. Never forget that you work for the person that pays your paycheck, the client, which encompass the property owner/manager, the traveler, other affiliate businesses and advertising partners. You should do everything you possibly can to improve their situation and remain professional even if they are challenging.
Lesson #3 You have to understand the vacation rental industry. We’re really lucky that both of us (co-founders) have owned and successfully run our vacation rental properties for over 10 years. This gives us a complete edge over the tech startups that I’ve been watching that don’t have a founding team member who knows about the emerging vacation rental movement intimately. We understand the entire attraction, booking and hosting cycle from start to finish. We understand their pain points and find ways to improve the user experience. Every day we work on ways to improve things. If you don’t know what the client and traveler want then you can’t give them what they need.
Lesson #4 Be ready to hear the word “No” a lot!
When we first launched it was really, really hard to get owners to sign up with an unproven listing site. We set up a sales team and put into place our statistics, explained the benefits, advantages and protocols to prospective clients. Then we heard the word “No” over and over again. No from the owners we were trying to sign up because there was no inventory. No from the property managers, and definitely No from the integration sites because we had a unique book direct model that they just didn’t understand. Everyone wants to work with a winner that has lots and lots of inventory and subscribers that have already paved the way.
I say "You have to have the right stuff" and I have to give my co-founder Michele a lot of credit in this area. She is like a pit-bull and forges on day after day to fight for what we want and need for our website to continue to be successful. She’s fought to make deals with channel managers from Day1 to get integrations to the FLARBO website. I’m happy to say that we are celebrating our first one with NextPax that went live just as we passed our second year of business. That’s tenacity!
What Is a Vacation Rental Listing Website?
Before you start you need to understand that there are many different vacation rental software designs and booking script models in the marketplace. This process is long and arduous to ensure you can find something that will meet your needs.
There currently aren’t many software designs that actually serve the vacation rental listing website industry well. An abundance are offered where you are tied to the development company to use their services for hosting and IT tech support so they make money after the website purchase. This means you’ll not be in charge of the website and any changes you want to make yourself you can expect to pay a lot to the software development company (think something similar to monthly HOA fees) which will cut into your profits.
Matt's Note: Not unlike "Listing Site Independence," Nancy reminds us the importance of not being too dependent on any third-party company to further our own goals. When entering any relationship with a software company, it's important to know what you get up front, and then what is required for ongoing maintenance and costs, in order to ensure that the relationship is sustainable for both parties.
Vacation Rental Listing Sites versus Property Management Website Designs
A vacation rental website is completely different than a property management website. A property management website software does list owner properties regionally but has completely different functionality in the back end where the nuts and bolts of the website are.
For example: Think about the mailing and notification system which is completely different from a localized property management company that handles all inquiries and bookings sent into one mailbox.
To create a vacation rental listing website you need to decide how your business model will function… will it be charging owners a percentage of the booking, a subscription model per property, or something entirely different? If so you need to set up the back-end of the website to support that from the base structure. You’ll need to map out exactly how you want the website to function in order to be able to not only launch but to buy/use the correct software.
Lesson #5 Make sure you choose the right type of software.
Do you want to start with a script, a plug-in or a complete new build from the ground up. A script or a plug-in will allow you to access what the developer has created for mass market purchase but you won’t be able to make many changes to the actual structure of the website after the fact unless you ask the developer for custom changes which will cost you. So if you are attracted by the price of a $2,000 - $5,000 script. Think about the developer that you will have to pay to create the website on top of this (another $5,000 to $10,000 or more) and you may need a graphic designer too (add on another $2,000 - $5,000).
A new build is more expensive and often completely prohibits the launch of a listing website due to the tens of thousands of dollars that it will cost to invest in before you even start taking one dollar from vacation rental owners for listings. We got quotes from $60,000 to $200,000 USD for what we wanted. At the low end of the spectrum ensure you understand exactly what you are buying, in this instance we would have to rely on the IT company’s pre-existing patented booking code that required custom changes for what we wanted to do, in addition to fees for support tickets and host servers that they managed. We didn’t choose this option.
Don’t even get me started on the best code slash programming language to use to build the website. There are so many different thoughts on which code and platform to use. Php, C, C++ programming, etc… It’s really an individual preference based on what you want to accomplish and if you can hire the code developers that you are interested in using. It’s a good idea to understand your options fully before you build something and then have to tear it all down and start again.
We started with a PHP script and developed aspects of the website with WordPress where we needed quick and easy content (think traveler blog, special offer landing pages, etc..) We’re already underway with plans for a complete rebuild from scratch. Our goal in doing this was to keep the costs low to start, scale up and then build a website structure with all of our wish-list features that we think would optimize the user experience. That being said we’ve optimized and modified the current script we use with a ton more features than what we started with, all changes at extra cost using the developer, so that it’s now almost unrecognizable for the better!
There are many, many facets to a vacation rental listing site that require special attention with the knowledge of website coding, development, and design so if you don’t have the knowledge yourself hire a strong team that can do the work for you and be available 24/7. Based on what you need accomplished and your own ability to work within the website this could cost you a few hundred per month for a limited contract with a specific scope to upwards of $120,000 USD per year for one full-time, experienced programmer.
Lesson #6 You’re not just Starting a Vacation Rental Listing Site… You’re Setting Up an Entire Company
Before even launching you need to check legal requirements, start your business incorporation, registration ($2,000+) and have a strong understanding of what your state requirements are to run a vacation rental listing site for the area you are promoting. Many states in the USA require certification for the exchange of money towards the payment of booking rental properties. It’s something you need to research first to ensure that your business is set up correctly and legally!
Don’t forget all the nuts and bolts of running a company like the accounting ($2,000+ /year), sales tax remittance, payroll, legal fees, etc… Each of these departments cost money and should be budgeted for.
We knew we would be able to scale up we just didn’t know how soon that would be. We work hard… really hard… to get our brand out into the industry and driving traffic to it. We didn’t know how fast we would have to set up protocols and different “departments” to ensure the business would run smoothly. Think about all the different aspects of running a company that you’ll need to address. We had to add team members and assign responsibilities for sales, social media management, customer service, marketing, advertising, fraud prevention, IT, content writing, SEO optimization, legal, analysis, accounting, payroll, CRM, and creative within the first 2 years of launching. If you don’t have any experience in managing a large team then this is not the business for you.
Understanding How Much Money You Need to Market and Run a Successful Listing Site
So you decided to launch. Great! Now the real work starts and the reality sets in. It takes passion, incredible dedication, professionalism and money… a lot of money… to run a successful vacation rental listing site. The lion’s share, gets poured into our advertising and marketing of Florida Rental By Owners to drive quality traffic to our listings. This is something that most property owners don’t understand. Last year we had a marketing distribution reach of 33,000,000 travelers, in 2019 we are targeting to reach about 50,000,0000 travelers. Because remember, if you don’t have the traffic, you don’t have bookings and if you don’t have bookings you don’t get owners to subscribe to your business.
There are endless ways to advertise and market vacation rental listings and each option requires analysis and weighing of costs. It’s a constant juggle to analyze what’s working and what’s not. As you scale up and add more inventory into new regions this increases the advertising coverage and advertising budget. Depending on the locations you want to promote, get ready to easily spend into the hundred thousand dollar range in advertising alone. You read that right!
Lesson #7 A listing site is not a set-it-and-forget-it situation. You’ll need to optimize how the website is functioning and over time you may decide that it will work better with some changes. Each change to the website costs money and can work it’s way from hundreds to thousands of dollars pretty quickly depending on the difficulty and scope of the changes. SEO optimization alone can average $2,400 per month for quality on-site optimization and targeted backlink campaigns. Adding content to the website also costs money and again can range from a couple of hundred dollars to thousands depending on the quantity and research required. I like to think of a listing website as a living thing. You need to feed it to keep it alive and well.
As you add more properties expect to scale up your host server functions as well as add more software solutions. We manage thousands and thousands of images and tons of data on our website. With each new addition it takes more and more space on our host server and sometimes we need to look for more software solutions to manage the ever increasing number of property listings for marketing purposes. Again this requires more and more investment as we grow in both image management and host server requirements. Expect to pay at least a few hundred per month for each software management tool.
I often tell clients (property owners) looking for other sites like ours to stay away from the rental listing sites that advertise $40 for a listing.
Lesson #8 In my experience, there is no possible way vacation rental listing sites can successfully advertise and market properties for less than $100 per year per property….. period! If it’s too good to be true.. it is. Run don’t walk away from these type of listing sites.
Get Ready for the Scammers, Copyright Infringers, and Wanna-Be’s
You’re at the stage that the vacation rental listing site is up and looking incredible. Now get ready for the scammers, copyright infringers and wannabes. At our company we learned early on the advantage of verifying owners before listing their properties. This helps us keep the site virtually scammer free. There are still those that try but we’re getting pretty good at verifying owners and spotting scammers. This takes some man hours to invest in but definitely is a must for us to be successful and trustworthy.
The copyright infringers and wannabes I have to admit drive me a little crazy. Be ready to invest in time and copyright software to minimize duplication and brand confusion, and if it persists be ready to invest in a legal team to fight for your business. In year 1 we already had to contact a lawyer to explore copyright infringement and what I call ‘corporate sabotage’ with a look-a-like company. Not only that but we had to send out DMCA (Digital Millennium Copyright Act) take-down’s to 3 different companies for copyright infringement. Are we having fun yet?
Is it Even Worth It?
At the end of the day our team at FLARBO is in it to win it. At Florida Rental By Owners we’re in it for the long haul and we celebrate every success big or small. We love setting goals and more importantly reaching them. We love it when our property owners tell us they get more inquiries and bookings through our vacation rental listing website versus VRBO. We love working with and getting feedback from our ‘pioneer' owners in new listing areas that need to be developed and grow. We love analyzing our traffic, inquiries and business statistics. We love closing new advertising deals that drive more traffic to our owner’s properties. We’re excited with our team’s growth and see Florida Rental By Owners (FLARBO) as a major contender in the Florida vacation rental marketplace as we reach milestone after milestone.
We’re super proud of our accomplishments with our listing site and feel we’re on the cusp of breaking new ground in the vacation rental industry. It can be done, you can be profitable but you need a great combination of skills to get there. A great cocktail mix of business savvy, tenacity, management skills, a strong understanding of website functionality, marketing and advertising experience, hosting and booking knowledge, time, and money to build and run a successful vacation rental listing site.
Note: We are often asked when will we start new vacation rental listing sites in other areas of the world, although that’s not entirely outside of our future plans, at this time we are focusing solely on the state of Florida. For those who wish to start their own websites unfortunately we do not offer consulting services but we may in the future offer website software opportunities. For business inquiries or to stay up to date on Florida Rental By Owners developments you can contact Nancy at nancy at floridarentalbyowners.com