Kigo Blog

Counting The Cost of Every ChangeOver

Vacation Rental Websites

It’s no secret that many vacation rental businesses start small. Even as just a hobby or a way to fill up a few empty weeks in a holiday home. This means that the business model is forced to grow as the business grows. There is no master plan in place from day one and no carefully hewn profit margins on every aspect. Counting every cost and making sure that there is profit, however small, is one of the first steps you can make to turning this project into a lean and efficient machine.

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Once you have a system, you know your costs and can project your profits, you can expand your business using this template. You will have a good idea of your first year before you even take your first booking. So, one of the ways you can start to really understand the potential of your business is to know just how much every changeover is costing you. Every time a guest leaves your property and a new one arrives, there are costs to consider. If you add up the following you can understand exactly how much every single changeover is costing you.

 

One night of REVPAR

Revenue per available room. This is the cost that your business endures by not having a guest in your property. This cost is not your nightly rate, but the average amount in revenue you take from that property over the course of the year. This is your yearly income divided by available nights and it will be lower than your nightly rate. The more changeovers you have per year, the more your revenue per available will decrease. If you can make your changeover efficient enough, and have regulated check out and check in times then you can even eliminate this cost.

 

Cleaning Fees

If you hire people to assist with cleaning, this is where you have to start counting the cost. As well as occupying you property, cleaning is a major expense. However, trying to save time or money in this area is a quick and simple way to start losing guests. Cleanliness is up there with location in terms of importance to guests and it’s cost that is always better to be properly factored into your business model rather than ignored.

 

Maintenance

The best way to count this is to consider it as an average. Whilst it’s possible that a boiler could explode the same week that your electrics fry, it’s possible to get an average cost for all the property maintenance each changeover requires. If you divide your yearly costs by your number of separate bookings you can get an idea of how much each stay costs you in maintenance fees. Having a regular maintenance schedule and checks will also help you to plan for the unexpected.  

 

Comestibles

These are the things that are used up during your guests’ stay. Washing up liquid, the contents of your welcome basket, these are all little costs that can eat into your profit margins if you’re not keeping careful watch over them.

 

Your Time

Whilst it’s impossible to put a price on the time you spend working on your property, this is a cost that you will have to consider. If swathes of your time are being consumed by changeovers, can you afford to have multiple guests in a week, and is this costing you bookings? Once you have a cost effective and streamlined process you can apply to it every property. Having a standard procedure that generates profit is how your business will develop and grow.    

 

Ask yourself where you can save time and money whilst still keeping your checkout and changeover process at the highest standard.

 

This information should now influence you nightly rate, your minimum stay, and when it’s really worth pushing a promotion or offering a discount. The more you count, the more you analyse the easier it becomes to make the decisions that will bring consistent profit to every single property. Big businesses work on fine margins and know their product and model well enough to gather these into large profits. Counting the small costs may seem far removed from the bottom line of your business, but efficient management of the smaller aspects can often the difference between a profitable and sustainable business and one that lurches between disaster and success every month.

 

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