Measure the Performance of Your Vacation Rental Business

Owning a short-term vacation rental home business can be rewarding and especially enjoyable because of the friendly people who become your customers. However, it is critical to know just how significant the rewards, i.e. profits, are in your business. If you are running a business renting out vacation homes and you aren’t exactly sure where the business stands, it’s time to measure the metrics of your company.

    1. Net Sales Revenue
    To measure this metric, you’ll need to subtract any sales in a six-month period that didn’t occur (nonperformance of guests, home defect or problem) from the total rentals during that same period. The result is your net sales revenue. If your revenue is over your estimate, congratulate yourself. If it is under expectations, you can improve by lowering the costs of your service or products or increasing the rental price of the homes.

    2. Return on Marketing Investment (ROMI)
    The measurement of this key metric is focused on the sales attributed through the marketing efforts of the business. It can be calculated by subtracting the marketing cost from the sales growth divided by the marketing investment multiplied by 100. The ROMI metric will inform the efficacy of the sales investment and if the marketing efforts are turning into sales.

    3. Customer Acquisition Cost
    Measuring the cost of turning a potential rental customer into an actual customer is crucial in determining the effectiveness of your sales staff. Measure the total amount of marketing and sales dollars spent within a six-month period and divide that by the number of new customers. The total will let you know how much each buying customer cost the company to acquire.

    4. Customer Retention
    Do your renters return for another vacation? First, determine how many customers are retained by subtracting the number of customers added in 6 months from the number of customers at the end of 6 months. Divide the final number by the number of customers at the beginning of the period. This will inform how many customers were retained during that time.

Measuring the key metrics for your vacation rental home business is essential to run a successful business. If you do not yet have a short term rental business plan, you’ll want to complete this as a start to tracking and measuring the success of your business.

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