Vacation Rental Business Plan Template
If you want to start a new Vacation Rental business or expand your current Vacation Rentals business, you need a business plan.
The following Vacation Rental business plan template gives you the key elements to include in a successful Vacation Rental business plan. It can be used to create a short term rental business plan, a long term rental business plan or a plan for any kind of vacation properties.
Vacation Rental Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a vacation rental company located in [Location] that rents residential properties around landmarks and points of interest to provide convenient lodging for travelers.
[Company Name] offers top-rated yet affordable vacation accommodations that can be rented daily, weekly, or monthly. It offers bed and breakfast-style rooms, as well as whole-property rentals.
Products Offered
[Company Name] will offer 5 different property types:
- Cabins
- Waterfront properties
- House or Apartment in town
- Mountain getaways
- Bed and Breakfast accommodations
Customer Focus
[Company Name] will primarily serve tourists and business travelers. The demographics of these customers are as follows:
- 85% domestic tourists
- 15% international tourists
- Average income of $80,700
- 48% married
- 51% in Management/Professional occupations
- Median age: 35 years
- Average group size: 2.6
Management Team
[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed real estate broker for over the past 20 years. He has spent much of his career working in different real estate agencies where he specialized in rentals for 5 years before moving to specialize in vacation sales for the next 10 years.
[Company Name] will also employ an experienced assistant to help with various administrative duties around the office and a design team that will lead the repairs and renovations that needs to be done.
Success Factors
[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed real estate broker for the past 20 years. He has spent much of his career specializing in vacation property sales and rentals. Furthermore, [City] is his hometown, so he is intimately familiar with all the local tourist attractions and desirable neighborhoods.
[Company Name] will also employ an experienced assistant to help with administrative duties around the office and a design team that will oversee new property renovation.
Financial Highlights
[Company Name] is seeking a total funding of $200,000 to launch the business. The capital will be used for funding capital expenditures, salaries, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office Build-out: approximately $50,000
- Working capital: approximately $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Topline projections over the next five years are as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,980,125 | $2,832,031 | $3,409,160 | $3,783,447 | $4,100,713 |
| Total Expenses | $1,375,530 | $1,561,763 | $1,866,977 | $2,027,436 | $2,107,349 |
| EBITDA | $604,595 | $1,270,268 | $152,183 | $1,756,011 | $1,993,364 |
| Depreciation | $372,760 | $372,760 | $372,760 | $372,760 | $372,760 |
| EBIT | $231,835 | $897,508 | $1,169,423 | $1,383,251 | $1,620,604 |
| Interest | $164,782 | $144,184 | $123,586 | $102,988 | $82,391 |
| Pre-Tax Income | $67,054 | $753,324 | $1,045,837 | $1,280,263 | $1,538,213 |
| Income Tax Expense | $23,469 | $263,663 | $366,043 | $448,092 | $538,375 |
| Net Income | $43,585 | $489,661 | $679,794 | $832,171 | $999,839 |
II. Company Overview
Who is [Company Name]?
[Company Name] is a vacation rental company that is located in [Area], that rents residential properties in the heart of [Area] for vacation accommodations. They are conveniently located near known landmarks, and are accessible to travelers who want a cozy place to spend their nights after touring around the area’s popular destinations.
[Company Name] offers top-rated yet affordable vacation homes that can be rented for as long as the customers need. It offers bed and breakfast-style rooms as well as whole house rentals. Many of these accommodations are pet and children-friendly, which positions them as being a home away from home.
[Company Name]’s History
In [month, year], [Founder’s Name] founded [Company Name]. [First name] has been in the real estate brokerage business for some time, when he met with an old friend, an architect, who has had success with residential renovations and restorations. This friend encouraged him to pursue his business idea of renting beautiful vacation accommodations in key cities. [Founder’s Name] clearly understands the need for vacation accommodations in [Location], and because of his real estate experience, is well positioned to enjoy significant success.
Since incorporation, the Company has achieved the following milestones:
- Acquired a centrally-located office from which to operate [Company Name] headquarters
- Began recruiting key employees
- Acquired rental contracts with 10 different residential properties
[Company Name]’s Products/Services
[Company Name] will be able to provide its clients with 5 different property types:
- Cabin
- Waterfront property
- City dwelling
- Mountain getaway
- Bed and breakfast accommodations
These properties are available for overnight to a few days stay. They are also available for monthly rentals, depending on the customers’ needs. [Company Name]’s whole-property accommodations provide guests with a more private, and more homey vacation experience, while its bed and breakfast accommodations are ideal for solo travelers or those who enjoy interacting with other guests.
III. Industry Analysis
Over the past five years, the Vacation Rental industry has grown steadily. Millennials are the major force in boosting the growth of the vacation rental industry. Rising expenditure on travel, vacations, and accommodation among this generation is fueling market growth.
Travelers in this demographic are more inclined towards vacation rental property over hotels owing to the comfort, low cost, and additional privacy of these accommodations. In addition, many rental properties accept pets for additional fees or a security deposit, and feature fenced backyards.
Additional key factors affecting the market include:
– Domestic trips by US residents: This industry is sensitive to changes in the number of domestic day trips and overnight stays. The more consumers travel domestically, the more likely they are to spend on tourism-related activities.
– Consumer Confidence Index: The Consumer Confidence Index measures consumers’ feelings regarding their current and future financial prospects. Changes in consumer sentiment have a significant impact on travel intentions, demand and expenditure, especially during recessions.
– Consumer spending: Consumer spending measures the total amount Americans spend on services and new goods, both domestically and abroad. When spending levels are high, consumers are more likely to spend on discretionary tourism and travel-related activities.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the leisure and business travel market of [location] and its immediate surrounding area.
The market we serve is value-conscious and has a desire for high comfort and basic amenities geared towards the business traveler’s lifestyle.
Customer Segmentation
[Company name] will primarily target the following three market segments:
- The U.S. Business Travel Market: Travelers to [Location]’s businesses, corporate events and tradeshows.
- The U.S. Leisure Travel Market: Travelers to [Location], including those looking to explore local tourist attractions and visit family and friends.
- International Tourists: Travelers from outside the country who want to explore [Location].
V. Competitive Analysis
Direct & Indirect Competitors
Boho Cottages
Boho Cottages is a luxury cabin rental company nestled in a mountain community. Boho Cottages are located near Redwood National Park and the Trinity Alps Wilderness. Boho’s six cabins feature elegant amenities, like walk in tiled showers with heated floors, soaking tubs, quality linens, fireplaces, outdoor grills, convenience kitchens, original artwork, XM Radio, Direct Dish Satellite, 32″ plasma flat screens, WIFI, and large furnished screened in porches. Each cabin also has its own private outdoor area.
The cottages are owned and operated by a local family, who are available to offer recommendations on activities, events, and sightseeing in the area.
Little Creek Cottages
Established in 1928, Little Creek Cottages is a collection of individual cabins strewn about in a dense forest of oaks, madrones and old growth Douglas Fir trees. Rooms feature Wi-Fi, satellite TV, new heating and cooling throughout and fresh bathrooms.
Little Creek offers 7 cottages, many of which have been completely remodeled and updated. Each cabin accommodates between 2 and 4 guests. The surrounding area offers white water rafting, parks, live theater, redwood viewing, museums, and wineries.
River Houses
River Houses is a Humboldt County Vacation Rental available in the mountains. The houses can accommodate up to 10 people. The kitchen is fully equipped, and the living room has stereo and Wi-Fi access. The pool area features a 9ft deep solar heated saltwater pool, shaded outside dining, lounge chairs, umbrellas, and water toys. Guests may also avail the grassy lawn area to play games and enjoy a campfire (seasonal). Other amenities include games, books, and toys for adults and kids.
River Houses is situated on the Trinity River, where guests may swim, white water and calm water float, fish, paddle board, snorkel, and view wildlife. The surrounding area offers a variety of wineries, organic farms and restaurants.
Competitive Pricing
Vacation Rental pricing varies widely depending on location, property type, amenities and dates of travel.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name]’s location in the downtown area is central to the airport, tourist attractions, corporate center, downtown, shopping district, and restaurants.
- Business Amenities: All of [Company Name] vacation properties have basic business amenities including high speed internet.
- Management: The management team has years of business and marketing experience that allows the company to market and serve customers in the same manner as its most sophisticated competitors.
- Relationships: Having lived in the community his whole life, [Founder’s Name] knows all the local leaders, as well as many of the area’s newspaper reporters and other influencers. As such, it will be relatively easy to build the [Company Name] brand.
VI. Marketing Plan
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering rooms and entire residences suited for individual, families, and business travelers
- Offering multiple properties for rent in [Location]
- Providing excellent customer service
- Offering business-class rooms and houses
Promotions Strategy
[Company Name] expects its target market to consist of leisure travelers mainly from [state], as well as travelers from across the U.S. The Company’s promotions strategy to reach these individuals includes:
Phone Prospecting
As [City] is home to many business headquarters, [Company Name] will assign salespeople to contact area corporations to arrange for bulk corporate rates for their visitors.
Public Relations
[Company Name] will contact local and regional area newspapers and television stations to announce its grand opening, and showcase its properties. It will also connect with the local business community, and the city’s development authority to grow its reputation.
Advertising
[Company Name] will advertise on social media, as well as on travel websites, which are popular avenues to booking accommodations, both for their ease of use and for their reviews.
Ongoing Customer Communications
[Company Name] will maintain a website and publish a monthly email newsletter to tell local corporations and past customers about promotions and events.
VII. Operations Plan
Functional Roles
In order to execute on [Company Name]’s business model, the Company needs to perform many functions including the following:
Service Functions
- Housekeeping
- Check-in focused on customer service
- Maintenance personnel to keep the properties clean and in working order
Administrative and Management Functions
- General administrative tasks including marketing, bookkeeping, etc.
- Corporate sales to individuals and groups
- Sourcing new properties
- Hiring and training staff
Milestones
[Company name]’s long term goal is to become the premier provider of vacation accommodations in the [city] area.
The following is a series of steps that leads to [Company Name]’s vision of long-term success. It expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Hiring Plan
[Founder’s Name] will serve as the company CEO and president. In order to launch the business, [Company Name] will need to hire:
- Vacation Rental Manager (will manage day to day operations of the properties)
- Housekeeping staff (2 to start)
- Sales and Service Staff (4 full-time employees so that at least 1 staff person is on duty at all times). These employees will assist current guests, field questions about the different properties, and assist prospective guests with booking accommodations
- Bookkeeping and other Administrative tasks (1 employee)
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenue will come from accommodation rentals. The major costs for the company will be staff salaries, property maintenance, and brand-building. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $200,000 to launch the business. The capital will be used for funding capital expenditures, salaries, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office Build out: approximately $50,000
- Working capital: approximately $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | Per location |
|---|---|
| Year 1 | 10 |
| Year 2 | 15 |
| Year 3 | 20 |
| Year 4 | 25 |
| Year 5 | 30 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
