Tiny Tweaks, Massive Profits: Vacation Rental Tips

Small tweaks can lead to massive revenue increases in your vacation rental business. In this video, Marc Bowman, with BrightSide Short-Term Rental Software, breaks down simple yet powerful strategies to boost your profits without adding extra work.

Key Takeaways

Here are the main takeaways from the transcript—practical strategies a vacation rental business owner can start applying now:

1. Pass On Processing Fees
   • Instead of absorbing credit card processing fees (typically ~3%), share the cost with owners.
   • This prevents your profit margins from shrinking.
2. Introduce or Increase Booking Fees
   • Charge a per-reservation booking fee (e.g., $30-$50).
   • If you handle 1,000 reservations a year, a $50 fee adds $50,000 in revenue.
3. Optimize Third-Party Listing Fees (e.g., Vrbo, Airbnb)
   • Instead of absorbing fees from platforms, add a small percentage (e.g., 2%) to the reservation to cover these costs.
4. Increase Nightly Fees with Value-Added Services
   • If offering tickets to attractions (services like Xplorie.com), charge guests slightly more (e.g., $3-$5 extra per night).
   • A small fee increase across thousands of nights booked adds up significantly.
5. Implement a Damage Protection Fee
   • Charge a damage waiver fee per reservation (e.g., $39 for small units, $80-$90 for larger units).
   • Cover accidental damage up to a set amount ($300-$500).
   • Many businesses do this, but some owners hesitate—it's a common practice.

Big Picture Takeaway

• Small adjustments can lead to massive revenue increases over time.
• Think about volume—scaling small fees across many bookings significantly impacts your bottom line.

We help Vacation Rental Owners cut expenses, increase revenues, and implement operational best practices so they can focus on growing their business.

Transcript

Attendees:
Jacob Hall, Marc Bowman

Transcript:

Jacob Hall: Mark, I wrote down your quote here because it was good. You said, "Small changes make a huge difference." And that's definitely true when it comes to switching up fees—small things can make a huge difference over the course of a year. What are some of the things you'd recommend?

Marc Bowman: There are a number of things people can do to increase their margins. Over the years, property management company margins have been getting smaller and smaller. It used to be that a 40% or 50% management fee wasn’t unusual. Now, it's being pushed down to 10% or 15%.

If you're working with smaller margins, you have to get creative to increase revenue. Especially for those who say, "I don’t want to charge my owners anything. I don’t want to nickel and dime them." When your margin is small, those nickel-and-dime charges add up—especially for high-volume rental agencies.

For example, I recently spoke with a company that has a 10% management fee but absorbs all credit card processing costs instead of passing them to the owners. If that cost is 3%, their 10% margin is actually 7%. That’s a big hit.

One way to adjust that is by sharing the cost with owners. BrightSide can help with this by charging the processing fee only on the percentage of the transaction that the owner gets paid on. That’s one way to protect your margins.

Another example: if you're paying all the processing fees yourself, that immediately cuts into your bottom line. If you’re at a 10% margin and absorbing 3% in fees, you're really at 7%. If you have $800,000 in management fees annually, that’s a considerable loss.

Another way to increase revenue is through booking fees. Many companies charge $30 to $50 per reservation. If you handle 1,000 reservations per year, a $50 fee generates $50,000 in additional revenue. That’s a big deal.

Jacob Hall: Yeah, that adds up quickly.

Marc Bowman: Another area to look at is third-party booking platform fees. Some companies absorb VRBO and Airbnb service fees instead of passing them to owners. Some platforms used to offer a flat fee per unit—VRBO, for instance, charged $600–$700 per year rather than a per-reservation fee. I think they’re moving away from that, but the key is not absorbing all those costs yourself.

If you don’t want to pass the fee directly to owners, you can adjust your pricing by adding, say, 2% to the reservation total. This can be bundled into the rent, and Bright Side can separate it out for you, helping you recover some of those costs.

Jacob Hall: Those are incredibly small tweaks that most people wouldn’t even notice…

Marc Bowman: Exactly! But they can save you tens of thousands of dollars a year. Especially for high-volume businesses—if you book 10,000 nights per year and add just a $5 fee per night, that’s $50,000 in extra revenue.

Some companies also use services like Xplorie to provide attraction tickets. Many simply pass those costs to the guest—if a ticket costs $10, they charge the guest $10. But others mark it up by $3 to $5 per night. If you book 10,000 nights a year and add $5 per night, that’s another $50,000 in revenue.

Jacob Hall: Right, that’s amazing.

Marc Bowman: Another area to consider is damage fees. Some companies don’t charge a damage fee at all—they just eat the cost if something happens. But it’s common practice to add a damage protection fee.

For a one- or two-bedroom unit, a $39 fee that covers up to $300–$400 in accidental damage is typical. For larger units, like six-bedroom properties, you might charge $80–$90 and cover up to $500 in damage. Charging this on every reservation can bring in significant revenue while protecting against losses.

Many companies already do this, but I’m surprised how many still don’t. Some probably haven’t even thought about it.

Jacob Hall: Yeah, I hadn’t thought about it.

Marc Bowman: Some people feel bad charging these fees, but the reality is—it’s just common business practice.

Jacob Hall: Yeah, exactly.

Marc Bowman: If you implement just a few of these changes, even small ones, they can make a huge difference in your bottom line—especially at scale.