Just because the morning news is focusing on the not-so-hot economy doesn't mean you should start panicking about your vacation rental business. Your guests might have some concerns, but if you learn how to address and work around those issues, your bookings should remain unaffected.

Cancellations
When times are tough, some renters might be more inclined to rethink extraneous expenses and ask to cancel their reservations. But before you let out a sigh and simply issue a refund, consider your options.

1. Adjust Your Payment Policies. Your guests might not be discouraged about taking a vacation, but rather, making that payment in one fell swoop. Your first step should be to talk to the guest to find out the reason behind the cancellation request. If his/her concern is making a large payment upfront, then a payment plan will easily solve the problem. Even if the reservation is a year away, you could allow your guest(s) to pay a designated amount every month. Some merchant accounts will even let you set up automatic payments, so it shouldn't mean any more work for you. Just remember – you should always have payment in full before sending directions or issuing keys.

2. Reiterate Your Cancellation Policy. If you receive a cancellation request for a reservation in the near future, you should remind your guest of the cancellation policy spelled out in your rental agreement. Sacrificing the deposit or any initial payments might be enough for them to decide to keep the reservation.*

If you receive a cancellation request for dates that are further down the road, say 6-12 months away, you have a couple of options. On the one hand, you could encourage the guest to wait. Many owners offer a cancellation policy that entitles renters to cancel 60-90 days before the reservation with no penalty, so remind them that they have some more time to reconsider. Since some guests might simply be overreacting to the gloom and doom reports in the media, you might be able to convince them to ride it out and keep the reservation.

On the other hand, you could just let them cancel. By encouraging them to hold off, you're putting yourself in a bit of a risky situation. If they do decide to cancel 60-90 days before the reservation, that means less time for you to find a replacement renter. However, letting them go right off the bat gives you more time to fill those dates, and there are likely plenty of other travelers out there to take their place.

*NOTE: You might also want to revise your rental agreement to encourage guests to purchase travel insurance.

Prices
You might find that you're not receiving quite as many inquiries as last year or that you're getting a few more discount requests. Before you decide to lower your prices, here are some pointers to consider.

1. Don't Act Prematurely. Just because the market has one bad day doesn't mean you should cut your rates in half. Before you make any drastic changes, examine how your inquiries and bookings have been affected, and see how the other vacation rental owners in your area react in terms of their own pricing. You certainly don't want to lower your prices too far in advance and give your home away. And remember, your bookings may not be on the decline after all; your travelers might just play it safe and book closer to the date of the trip.

2. Lower Your Prices Incrementally. After careful consideration, if you do decide to lower your prices, do it gradually. Consider what makes sense in relation to your own expenses, and test the waters with your advertisements. If you find that you're inquiries have increased after a small cut, you might stop there. If you haven't noticed any difference, you might try a bit more. Just take it one step at a time, and evaluate the response at each price level. And remember, if your price is too much lower than your competitors, travelers might assume there is something wrong with your home.

3. Offer Promotions. If lower prices haven't made a big difference in your number of inquiries, you might try another angle. Highlight a promotion in your headline (2 Free Nights, Fall Specials, etc.), purchase a special offer on HomeAway, or include “extras” with your bookings to add to the perceived value.

Procedures
When you're facing a more uncertain economy, you might receive fewer far-in-advance bookings and more last-minute requests. But don't let these seeming procrastinators get in the way of your bottom line. Keeping your calendar up-to-date, responding quickly, and accepting credit cards should help you to keep your rental processes in place, even with shorter notice.

And remember, you might need to cut costs in some places, but marketing costs are not the place to start. This is actually the time when you should step up your marketing efforts, increase your exposure and try to grab more travelers.

Given the current state of the economy, what are you doing differently with your rentals? "We are offering a free 5 day cruise with a 30 day rental." - Matt, Boynton Beach, FL. (VacationRentals.com) "I've started a 15% discount for bookings for the current and next month. Also, I'm thinking of including several local tours with weekly rentals. One item I'd like more info on from HomeAway is travel insurance... maybe you can have your staff members satrt researching this issue. There are alot of company's that offer it. Who are the most reliable, ect. rates??" -Glenn, Costa Rica.  (HomeAway #205244, VRBO #22582)

How to Keep Your Home Booked in an Uncertain Economy Tips for marketing your vacation home during these tough financial times.   Offering Discounts to Potential Vacation Rental Guests While it may be tempting to jump on any offer from a renter, consider these discount guidelines.   How to Make the Most of Your Marketing Budget 5 ways to analyze your current advertising spending to get the most for your marketing dollars.   How to Book Last-Minute Rentals at Your Vacation Property Tactics you can use to increase last-minute bookings of your vacation rental property.

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