With the economy slowing down and fewer inquiries coming in, you may want to take a closer look at your marketing spending. While it is unwise to stop advertising during an economic dip, it is important to make sure that you're getting the most for your advertising dollars.

 

1) Track your inquiries, phone calls, and bookings. If you don't currently track how many inquiries and bookings that you get from each vacation rental site that you're on, you may be squandering your marketing dollars. You may be able to go back through your inquiry emails to compile a spreadsheet or chart of your inquiries and bookings, but don't forget to factor in phone calls as well. It's best to work with at least one year's worth of data because the vacation rental business tends to be very seasonal. Below is a simplified example.

 

 2) Determine the quality of inquiries and calls coming from each source. You should keep track of not only how many inquiries that a site sends your way, but also how many bookings result from those inquiries. To do this, you should calculate the booking percentage for each source. The formula for calculating the booking percentage for a website or other advertising vehicle is:

 

{[(# of Email Inquiries) + (# of Phone Calls)] / (# of Bookings)} * 100

 

Once you've determined where your rental income is coming from, you should calculate your return on investment for each website or advertising vehicle. ROI is calculated by subtracting your initial investment (advertising fee or subscription cost) from your rental revenue from the site and then dividing the result by your initial investment. Here's the formula to calculate the ROI for vacation rental advertising:

 

ROI= (Rental Revenue Generated – Advertising Cost) / (Advertising Cost)

 

The ROI for vacation rental portal websites tends to be quite high. Consider yourself lucky: the acceptable ROI for most industries is between 200% and 500%. While it's important to look at the ROI for the different advertising vehicles where you advertise your home, you should also consider the types and quality of rentals that certain sites are sending your way: Are the renters coming from the site a different type of renter than you usually get?   Are they booking longer stays or off-season weeks that may not be booked otherwise?

 

4) Determine if you're spending enough. Most small businesses spend anywhere between 4% and 6% of their annual revenue on advertising, and many large companies spend upwards of 15%. If you're not booking as well as you'd like, you may not be spending enough. If you're booking well and spending less than 5% of your annual revenue on advertising, Woohoo!, you're beating the curve.  To calculate your current advertising % of revenue:

 

(Total $ Spent Advertising Your Home / Total Rental Revenue) * 100

 

5) Decide where to spend next year's marketing dollars. After you have a solid set of data to look at (at least 1 year), determine which advertising vehicles are working for you and which don't work as well. Then you can make an informed decision about whether to renew/buy more advertising space or whether to spend your marketing dollars elsewhere. However, before you make the decision to discontinue listing on a certain website, take a closer look at your ads: The site may not be to blame, your photos and descriptions might be.

What are the different ways you advertise your vacation rental? "I advertise my home on VRBO and VacationRentals.com.  I also like to advertise with my local Chamber of Commerce.  And sometimes when I have openings I'll do last minute ads on Craigslist.  Besides online advertising, I basically just send postcards and Christmas cards to past guests."  - Karen D., Port Aransas, TX. "I send a thank you card to each guest that includes coupons for friends and family towards their next stay. I not only place an ad on Craigslist but also check the housing wanted ads and send them a link to my vacation property if their need fits my home." -Karen, Myrtle Beach, SC (HomeAway #143413)

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Creating a Top-Notch Marketing Plan for Your Vacation Rental   Pointers for attracting more travelers, getting your financials in order, and determining your personal keys to success.   Determining theTarget Renter for Your Vacation Rental By narrowing your focus, you can more effectively target your vacation rental ads.   How to Encourage Repeat Renters  Having a past renter come back to your vacation rental property makes good business sense.   The Benefits of Listing Your Vacation Home on Multiple Web Sites  Exclusivity is not a good idea when listing your vacation rental property.

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