9.2 Operations

CHAPTER 9

9.2 Operations

Guest-facing operations under this model are very similar to what travelers would experience at any luxury resort. For example, there is a 24-hour front desk experience unique to a particular resort. At Margaritaville Orlando, for instance, a guest will experience the energy and fun of Jimmy Buff ett immediately upon arrival thanks to carefully chosen, upbeat music and a welcoming cocktail. A guest’s fi rst impression is so key to their overall vacation. A bellmen team will give guests a tour of the resort and escort them to their cottage, ensuring a pleasant and memorable welcome. Check out is exactly like it is at a hotel; guests can go to the front desk or just leave. The front desk staff keeps a card on fi le for damages.

Owner-facing operations are separate but just as detail-oriented under this next-generation management model. An owners’ portal allows the VRP owner to go in, see what’s been booked, and instantly see reports and information about your property. Every unit is cleaned daily, but owners can put a PRIVACY PLEASE notice on their doors if they want the service skipped while they are living in their vacation home.

Owners pay a 30 percent commission on their rental income, and there is a fi ve percent commission reduction for owner-sourced bookings—down to 25 percent. There is no management fee above and beyond that commission, although there are some additional fees that pay for things like linen replacement (this is generally a fi xed cap cost based on an algorithm). An R&M fee covers houseware replacements such as dishes, small appliances, and minor repairs like paint touchup, A/C line cleaning, lightbulbs, fi lters, and drywall gouges. The pool heat fee passes through to the VRP owner.

Under this model, no minimum reserves are required and owner stays are unlimited. However, it is good if owners know their blackout dates ahead of time. The further out an owner know their plans for their vacation home, the better because this allows for a longer booking window to improve returns. As long as a guest is not reserved,

WEALTH AS A VACATION

the owner can stay in their unit. If an owner wants to stay at a peak time, however, that decision will aff ect the investment return, as those are the days with the highest ADRs. This type of VRP management company follows the same accounting guidelines a hotel would under chapter 509 of the tax code.

The Next Generation of VRP The continuous evolution of this business is exciting for those who are educated about where it is today and where it is going. The next logical step in our industry is a Total Solution Development/Management community. This is where the major growth is occurring, and where some of the best opportunities for investors can be found.

These VRP management operations and marketing companies are typically partnered with very well-funded real estate developers who have made the business decision to enter solidly into the VRP world. As you just read, they create the developments from the ground up based upon a Vacation Rental Homeowner model and have their own or associated Vacation Rental Management fi rms.

The services included with this model are vast and include, but are not limited to:

• Specialized new construction communities with sales and support staff educated and experienced in working specifi cally with the VRP Investor. These homes are built with the vacation renter in mind and include special features like in-home movie theaters, game rooms, themed bedrooms, outdoor kitchens, and much more. • Top-notch locations: Developments are close to major natural amenities like beaches or ski slopes, or manmade amenities like theme parks and golf courses. Built in community amenities that include multiple pools, spas, fi tness centers, water parks, golf, tennis, skiing, boating, whatever is popular in the area, you will typically fi nd in these communities. • On-site teams dedicated to each community that includes