Luxury Short-Term Rentals: What Changes at $10,000+ Per Night?

We've had the pleasure recently of bringing on some insanely amazing short-term rentals with weekly reservation rates as high as $100,000. Now, I know that sounds mind-boggling, but it is the truth and we are learning a ton. If you own or manage a luxury short-term rental that charges 1,5 10 $15,000 a night, what most people don't tell you is there is a lot of differences between managing that property and an economy short-term rental. So, I want to break down a lot of those details for you today.

Welcome back to the show. I'm happy you're here again. We recently had the opportunity to work with some incredible owners with some incredible properties. I'm talking some properties that sleep up to 100 people. Multiple pools, pickle ball courts, indoor and outdoor, private lakefronts, just amazing amazing properties with not really anything else like it around. And we are learning a lot through this process. It is a slower process because we've got to make sure we're not missing any details. These properties are doing several million dollar a

year. And so today, I want to break down some of these details and what we've learned so far. The first thing is these are unlike any traditional short-term rental, right? And there is no instant booking going on here. These are all inquiry based and it really turns into a sales process. And that sales process could include negotiating with the guests. Of course, these are usually bookings that can happen very far out in the future, a year, 2 years out from now. And there's often lots of

options, right? Does it come with jet skis? Does it come with the boats? Does it come with catering? Can I have an event there? Maybe they are allowing events. And those are separate charges. And so all of these things become part of the negotiation. There may be many times, for example, that your property that sleeps 50 people has an inquiry for 10 people. They might not want to spend the same amount as 50 people, but if your calendar's open, you're going to be negotiating, right? A

lot of times there can be multiple people involved in making this decision. If it's a larger property, then it's not just your typical short-term rental guests that might be staying there on vacation, although that could be a really large segment. You could be having corporate events, weddings, or whatever it happens to be. And those involve businesses. They involve all kinds of decisions that might not come into play on your normal traditional reservation. And so because this process can take weeks or months, you really need to

have a sales process in place. You need a CRM system so that you can remember all the conversations that you had with this potential guest. Ideally, you're using a phone system like Quo or what was previously open phone that can record your transcripts so you can save information in the past and use that for messages in the future. But this really does become a process where you need to be following up with these potential guests. It really goes without saying that if you're working with potential

guests that are spending 10, 20, $50,000 on a reservation, you need to be extremely professional in the way that you talk with them. One thing that we find though is that when we're working with these higher caliber guests, you could say a lot of times it's really easy, right? They're organized. Comparing that with the very economy segment of short-term rentals where people are asking for discounts, not that they won't with these really large reservations, they can afford it, right? And they are just a different caliber

guest. Damage is not going to happen at these type of properties that often out of negligence or intentionally, right? There will be damage at these larger properties because they are much larger, but it's because of accidents and the guests are going to tell you, right? So, it's just a totally different caliber of guest as well. Now, these guests are going to need a lot of information as well, right? If they're making a reservation to sleep dozens of people potentially, they're going to want a floor plan.

If you have a massive property and grandma's 89 years old and she can't walk upstairs, they're going to want to arrange those things before they make the reservation. So, having a detailed floor plan, very helpful. Having a thorough guide book to answer all their questions. Our goal really with any short-term rental is to answer our guest or potential guest questions before they ask them. And so if you have an elaborate guide book that also helps with the sales process, then you're going to be able to

close more reservations. Now, when you do have a reservation on the books, your guests are going to be expecting some sort of concierge level service. It's up to you whether or not you want to provide these things inhouse and coordinate them or if you want to just give them third-party names. So, our current partner that we're working with has opted for the latter option because if someone hires a chef and they don't really like the outcome, that's going to be a lot different than if we

hired the chef and they didn't really like the outcome. Of course, we want to make sure that we're giving the best reference as possible. But, this does take some of that challenging coordination out of it and even liability if something doesn't go exactly as planned. All right, so I'm just really touching the surface on these things. I'm still learning a lot personally and our team is as well. Been very exciting and I'll make sure to come back to you guys with other updates. One of the

other really big changes with an extremely luxurious property is that it's not that likely that there's a lot of comps just like it, right? If there are, great. You can use that data to help with your pricing decisions. But if there is not, you really need to be testing things, right? And using a tool like Price Labs or Wheelhouse isn't going to help you so much. Of course, a lot of the settings that are built into these pricing tools like seasonality and booking windows, those types

of things, those still play a very important piece in the overall revenue management. But if you have a tool that's changing your prices based off market demand and there's no other market like you, then it's not doing that much good, right? And so, we need to make sure we really understand our booking windows. That's going to be the biggest lever when we're pricing luxury properties. Having historical numbers is also helpful. But again, a difference with these very luxurious properties is that they're often building their own

book of business, right? And so if you had these corporate events coming in annually or you had birthday parties coming in annually and your calendar starts to get filled up further and further into the future, well then you should be able to be charging more as your demand increases. Just like with any property, we don't want to be relying on historic data only. When it comes to actually taking payments, imagine getting a $10,000 booking on Airbnb. You pay 15.5% right off the bat. And so having

your own direct booking website is going to be much more important. And with these luxury properties, there's going to be a lot more research done before someone actually makes a reservation. And so you absolutely want to make sure that you are advertised on all the OTAAS, but you want to make sure that your property's name is easily searchable so that people, they're intuitive, right? They're going to find you outside of the OTAAS. Now, when it comes to actually paying you, they're probably not going to want

to pay by credit card, right? If you've got a 3 or 4% fee and so most of the time, you're going to be receiving a transactions, which you can do through Stripe as well, but you got to make sure that that payment setting is enabled. Now, let's talk about property protection. And I already mentioned that we're really dealing with a different caliber of guests, but we are dealing with much larger guest counts. And the more guests we have, the more potential for damage or accidental damage.

And so it's much less likely that you're going to have parties or people taking advantage of your property. But we want to make sure that the property is protected. Has a $25,000 damage waiver program. We're using this currently for all reservations, but there are other levels to the protection that we want with every short-term rental, no matter how much the average daily rate is. That is, we want a good entity structure. We want good short-term rental insurance. Now, you could also take it another step and

you could charge a deposit as well as a damage waiver. It's really up to you when you're dealing with direct bookings. You have limitless options. If the guest is open to those options is another thing. But again, with a luxurious property, most people understand the need to protect it. Now, let's talk about the OTAAS in general and the strategy there. The strategy is like every other short-term rental. It's to get your property out there and as many places as possible, but there's much more pressure on

a very luxurious property or high average daily rate to make sure that we're taking those bookings direct. So, we want to be extra careful that none of our messaging through the platforms mentions that, but people will figure it out as long as you have some subtle notes in there. Now, one difference on the OTAAS is that they often have calendar availability capped at about 2 years. Very possible with these luxurious properties, you're taking reservations further out in advance. Again, another reason you want to make sure

direct booking website is topnotch, fully updated, and really has a good conversion process on it. Another limitation on the OTAAS are are guest caps, right? So, Airbnb doesn't let you advertise over 16 guests. And so, we need to put in the details that we have 20 bedrooms. Each bedroom sleeps four people or two people or whatever it happens to be. People will figure this out, but searching for a property of this size, you can't really do that easily on Airbnb. VBO, you have a little more

leeway. You can advertise a larger property just like you can on Booking.com. So, there we go. Just touching the surface on managing extremely luxurious short-term rentals. I'm really excited to be working with one of our newest partners and these properties. They are amazing and we are learning a lot. We will make sure to keep you posted on things that are working for us. Until next time, I hope that gave you a little bit of insight and I hope you have a fabulous week.