holiday let business plan template uk

BUSINESS PLAN FOR HOLIDAY LET: Best 2023 Guide (Updated)

• by Folakemi Adegbaju
• August 10, 2023

Table of Contents Hide

Why do you need a business plan for your holiday let, #1. executive summary, #2. industry analysis, #3. competitive analysis, #4. customer analysis, #5. management team, #6. operations plan, #7. marketing plan, #8. financial plan, #9. appendix, free holiday let business plan template, how profitable is holiday lets, what do i need to run a holiday let, how do you make a successful holiday let, is a holiday let considered a business, is buy-to-let worth it in 2023, what is the average occupancy for holiday lets, how much can you make from a holiday home in the uk, can you make money from holiday lodges, final thoughts, do i need a business account for a holiday let, do you pay tax on holiday lets, what expenses can i claim on a holiday let.

The decision to invest in a holiday let is not one that is made quickly. Numerous considerations should be made before making your final decision regarding whether to launch a business in this expanding sector. The most important thing to consider is a holiday let business plan.  It aids in the formulation of your overall business plan for successfully managing a holiday let. You can also use it to determine risks and success prospects. Also, it is a helpful tool for you to check your progress and remind yourself of your business objectives. Read further to get more knowledge about what a holiday let business plan is and how to write one.

Download our free holiday let business plan template .

What is a holiday let business plan.

Your holiday let business plan is a comprehensive set of guidelines, objectives, and frameworks that will guide your decision-making for the present and future of your new company. 

The holiday let business plan will be a great tool to look back to repeatedly to ensure that you are moving on the correct path, as well as assist you to establish the approach you will use to operate your organisation. You can get our holiday let business plan template to help write your holiday let business plan swiftly.

Who wouldn’t be eager to get started as soon as they purchased their houses as holiday let? Any vacancy or downtime on the property translates into additional money leaving your wallet. But before you get in headfirst, remember that the holiday let business plan is what will guarantee you optimize your earnings. With a strong holiday let plan, you can recover the original vacancy costs tenfold.

A business plan for your holiday let is what will ensure that, in addition to making money, you are on the right track, achieving your objectives, and properly gauging your success. For instance, without a business plan for a holiday let in place, how can you be sure that what you are spending isn’t too high or that your average daily rate isn’t too low? This plan will assist you in laying out the foundation of your business and ensuring that you are establishing measurable goals to determine success and profitability.

How to Write a Holiday Let Business Plan

Knowing how to write a proper holiday let business is an extra bonus when you’re preparing to get a holiday let business plan for your holiday let business. We’ve listed below some steps you need to take when writing your holiday let business plan.

Here are the steps:

Your executive summary is just a few concise phrases that can effectively summarise your holiday let business and contain all of the key details you want to convey to potential customers. This is done so that anyone reading your plan will be able to quickly understand what your business includes.

It could be simpler to start by addressing the infamous five Ws: who? what? Where? When? Why? By doing this, you’ll be able to take in the important information without worrying that you’re forgetting something .

Your business management strategy must be competitive and strategic if you want to succeed in the holiday let business sector. By highlighting some salient details regarding current trends and expectations, you can use this section to introduce the reader to the environment of the industry you are entering.

One method for doing this is to do an industry analysis, which entails assessing competing companies in the same niche. This will enable you to develop a winning business plan and ensure that you are a successful business owner. Knowledge truly is power, after all!

A part of your holiday let business plan should include researching your competitors in addition to concentrating on your own holiday let business. Find your direct competitors on the market, then research them to determine how to grow your company. Similar in concept to industry analysis, competitive analysis is done with an emphasis on your immediate competitors rather than the industry as a whole.

A customer analysis is the analysis of your target customer. You may operate a profitable holiday let business by understanding your target market and what they want and need. In this section, you’ll outline your target market’s characteristics, including the kinds of visitors your company already serves or intends to serve.

You should develop several in-depth buyer personas depending on the kinds of guests you expect to attract for your business plan. Later on, having a full profile of your ideal customer, complete with details on anything from their age to their income, will help you expand your business. Consider using a fake identity while constructing the perfect guest profile. Give the person a name, age, profession, and other details so they can precisely target the right kind of visitor.

You can use these guest profiles repeatedly to learn how to increase bookings in all facets of your business. With the help of thorough customer analysis, you can predict what your visitors will do and what they will like and dislike about your holiday let.

A solid management team is crucial to proving the viability of your holiday let business. It’s an important aspect of your holiday let business plan. Draw attention to your key players’ backgrounds by highlighting the knowledge and expertise that demonstrate their capacity to expand a business.

Ideally, you and/or your team members have firsthand knowledge of managing a holiday let. If so, emphasise your experience and knowledge. Highlight any experience you believe will assist your firm in succeeding, but do so as well.

Your employment practices, corporate expectations, and how you’ll manage your business’s daily operations will all be influenced by the operations plan. Managing all the financial aspects of your properties, including taxes, insurance, bookings, payment processing, maintenance, and related administrative activities, is part of your daily tasks. Consider how your present arrangement has performed thus far.

Describe the tactics you have chosen when focusing on your main markets to generate bookings. Consider both online and offline marketing, along with any external campaigns or promotions you intend to run.

Your marketing plan essentially consists of how you will market to consumers and how you will bring in revenue. Your previously constructed buyer persona will be quite helpful at this point. Knowing the audience you’re attempting to reach will help you determine which websites they frequent and the best marketing strategy to apply.

You can employ a variety of offline marketing techniques, such as posting fliers or business cards at nearby tourist destinations, in addition to online ones like Google Ads and listing your house on various holiday let websites.

You should discuss your company’s financial history in this section. You can accomplish this by outlining all of your earlier accomplishments and how they contributed to the current status of your company. It’s a must to make a thorough financial plan and estimates. Working with an accountant to complete this section of the vacation rental business plan is a smart option. This will guarantee that your documents adhere to the requirements for financial reporting that investors need.

Your financial plan should include a 12-month profit and loss projection, a 5-year financial growth plan, a cash flow projection, an estimated balance sheet of expenditures for your business, and a cost analysis.

You ought to include more helpful information besides financial records. Indicate everything that can support the argument that your vacation rental business plan is viable.

Download our free holiday let plan template.

The main goal of this free template for a holiday let business plan is to inform you of some additional vital elements you must take into account if you want to run a profitable rental company. In addition to writing a holiday let business plan, you must utilise this free template as much as possible to see immediate results in your firm.

All you have to do is modify this template checklist and complete the tasks that still need to be done.

• Research your business market
• Decide your business model
• Choose a location
• Get a business plan
• Choose the equipment you will need 
• Decide the legal form for your holiday let
• Prepare a marketing plan
• Secure funds to launch your business

Yes! Possessing a holiday let might be a terrific endeavor and financially beneficial. Whether it’s to make money, add to retirement funds, or just pay the expenses of having a second home. However, it won’t be profitable until you approach it like any other prosperous business.

The description ought to provide prospective visitors with all the information they require, such as directions to the holiday let, its location, and its amenities. Remember that your holiday let must present itself attractively overall and that the photos are what will ultimately sell it.

Simple precautions to take into account include having enough toilet paper, cleaning supplies, seats for all visitors, and even a variety of extra light bulbs. These seemingly unimportant details, however, will have an impact on how your guests perceive your holiday let.

Positively, if the requirements of the holiday let guidelines are satisfied, a self-catering holiday let may be considered a trading business. Such properties frequently meet the requirements for small business rate relief, which exempts owners from paying business rates.

If you do not have at least 30% left over after operating costs, it is not worthwhile to consider being a landlord. You’ll need to budget money for renovations and repairs. In the uncommon event that a tenant damages your property renovations may be necessary.

Remember that the typical occupancy rate is roughly 21 weeks. However, some more well-liked places have an occupancy rate of about 24 weeks.

Your income potential is increased by the much higher weekly rate charged for holiday let. The typical holiday let owner earns about £30,000 annually.

People will enjoy a vacation lodge as much as you do if it’s in a stunning location and has all the conveniences of home. The lodge can be easily rented out between your visits to make money.

You will be able to obtain the financing you require from lenders or investors if you have a well-thought-out holiday let business plan. Also, developing a workable strategic plan for your holiday let business will aid in identifying potential hazards prior to outside investment. You can develop a professional plan using the above basic approach, but for an even better experience, you can also use our ready-to-use holiday let business plan.

Maintaining an accurate record of the revenue and expenses associated with your holiday let is crucial. In light of this, opening a business bank account might be wise. An organization’s bank account functions similarly to a person’s.

Profits from your vacation rental, like those from any business, will be subject to income tax. However, there are several legal ways to lower your income tax lawfully. You will have to pay interest if you have a mortgage on your FHL.

For furnished holiday let, the entire mortgage interest can be deducted. There are maintenance fees for the vacation rental, such as cleaning and gardening. including insurance for vacation rentals, accounting costs, advertising costs, platform fees for use of internet services, and dues for landlord/property association membership.

Related Articles

• HOLIDAY PROPERTY BOND (HPB): Unit Price, And Problems
• BUYING A SECOND PROPERTY IN THE UK: Detailed Guide
• What Is Family Holiday Insurance in the UK
• SMALL BUSINESS IDEAS IN UK: 65+ Profitable Ideas
• Travel Time Insurance: How To Get One And Reviews

Folakemi Adegbaju

She is a passionate copywriter and a good listener

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Insurance For Counsellors: Professional Indemnity Covers In The UK

Starting a business in wales: detail guide.

We noticed you're visiting from Netherlands. We've updated our prices to Euro for your shopping convenience. Use Pound sterling instead. Dismiss

Last Updated on August 11, 2023 by Folakemi Adegbaju

Setting up a Holiday Rental Business

All you need to know about starting and running your business.

In this article

What is a Holiday Rental Business

Tourism is the fastest-growing industry in the UK and is expected to keep on growing. In fact, by 2025, the tourism industry in the UK is expected to be worth nearly £260 billion.

The number of holiday rental homes in the UK is also rising, with the number of holiday homes increasing by 40% in the last three years. When you include the number of holiday rental businesses in the rest of Europe and the popularity of these homes, it is easy to understand why more and more people are choosing to set up a holiday rental business.

A holiday rental is the renting out of a furnished property on a short-term basis to tourists, visitors and holidaymakers. The property is usually privately owned and is rented to guests for a per day, per week or per month fee.

Many different types of furnished properties can be used for holiday rentals, including:

• Apartments.
• Log cabins.
• Townhouses.
• Converted barns.
• Manor houses.

Usually, holiday rental properties are located in desirable areas that are popular with tourists. These could include:

• Cities, such as London, Edinburgh, Manchester or Dublin.
• Beach or coastal locations.
• Countryside locations.
• Locations close to an area of interest, e.g. Snowdon or Hadrian’s Wall.
• Locations close to an event, such as Glastonbury Festival or the Grand National.
• Mountain locations (e.g. for skiing).
• Lakeside locations.

A holiday rental property is usually designed to be a home-from-home for guests. It will be fully furnished, meaning it will feature appropriate furnishings and equipment to be functional as a home and for guests to stay at the property comfortably. Holiday lets usually don’t function in the same way as hotels and other types of properties in the tourism industry. Not only will a holiday rental be significantly more spacious compared to a hotel, but there are usually no staff onsite and guests will stay at the property without outside intrusion.

If you are thinking of setting up a holiday rental business, you must consider the location of your property. To qualify as a holiday letting in the UK, your property must be located in the UK or the European Economic Area (EEA). The EEA includes countries in the EU, as well as Iceland, Liechtenstein and Norway.

If you are thinking of starting up a holiday rental business, there are several different ways you can choose to run and manage your business including:

• Manage the property yourself, including all bookings, payments and check-ins.
• Advertise your property on a third-party website, such as Booking.com or Airbnb.
• Hire a holiday letting agency to advertise and manage the property for you, including handling bookings, payments, check-ins, guest questions and cleaning and maintaining the property.
• Run a holiday rental business with multiple properties in the same or different locations.

There are many different responsibilities associated with running a holiday rental business. Your responsibilities can vary, depending on how involved you are in managing and running your business.

Some of the responsibilities you can expect include:

• Cleaning the entire property in preparation for each booking.
• Changing bed sheets, making the beds and washing towels and other linens.
• Advertising and marketing the property.
• Running your business website.
• Taking high-quality photographs and providing accurate descriptions and important information.
• Creating a pricing strategy.
• Managing bookings and payments and handling receipts and invoices.
• Providing advice and recommendations to guests.
• Purchasing, cleaning and maintaining equipment and furniture.
• Complying with all legal guidelines and health and safety requirements.
• Maintaining accurate records.
• Completing business and administrative tasks.

Starting up a holiday rental business can be both financially lucrative and personally rewarding. You won’t need any formal qualifications and training to run a holiday let; however, certain personal qualities can be beneficial and can help you to make your business a success. This can include good organisational skills, strong business and property management skills and a good knowledge and understanding of the tourism industry and how to make your property attractive to potential guests. An understanding of the relevant health, safety and hygiene guidelines is also recommended. To help encourage the success of your business, you will need a detailed and well-prepared business plan.

Types of Customers

Identifying your target market and the typical customers that your business is likely to attract is a key step when creating your business plan and setting up your business.

Although anyone looking to book a holiday can be a potential customer, certain factors can have a significant impact on your typical customer base and the types of guests that are most likely to book your property.

These can include:

Your pricing

This is one of the most significant factors in determining your typical customer base. Holiday rentals are priced differently, depending on the location, space, amenities, furnishings, décor and the overall quality of the accommodation. Because of this, you will likely focus on one specific pricing market.

Guests can typically be separated into three pricing categories:

• Budget: Price is the most important factor for this type of customer. They will likely choose the cheapest property and will be happy with more basic facilities and accommodation, less space and lower overall quality. Budget customers usually want to spend as little money as possible while still staying in decent accommodation. To account for lower income per guest, you will need to cut costs elsewhere. For example, your accommodation may have a lower market value, it may be smaller, and the furnishings and décor may be simpler.
• Mid-market: Mid-market customers are usually looking for a combination of quality and affordability. Although price is important to them, it won’t be the only factor they consider. If you operate a mid-market holiday let, your property will likely have more space and higher-quality furnishings and facilities. You may also offer extra features, such as free parking and TVs.
• Luxury: This type of customer is willing to pay higher prices for the best possible accommodation. Luxury accommodation is usually the highest-price accommodation with more spacious rooms and luxury furnishings and décor. You may also have additional amenities, such as a swimming pool or hot tub, which allows you to compete with hotels. Your property should also feature premium facilities (e.g. luxury garden furniture, premium bathing facilities and a superior kitchen). Your property should also be stylish and feel luxurious to your customers.

As well as the quality of your accommodation, your pricing strategy can also be dependent on other factors, such as your location, the demand, your direct competition, and your booking platform.

Your location

This is one of the most important factors in determining your typical customer base. Are you located in a city, a town, a village, the countryside or near the coast? Are you close to a landmark, an area of interest or another popular location? Does your property have good transportation links, for example, are you close to a train station? Many guests may have a location or area in mind when searching for a holiday rental and certain locations are likely to be more popular with certain guests. For example, a holiday rental close to a beach may be more popular with families, whereas a property located close to Snowdon may be more popular with nature lovers and hikers.

Your guest reviews

This is an important factor that will persuade potential guests to book your property. Holiday rentals with a higher review score and a high number of reviews are more likely to attract mid-market and luxury customers who are willing to spend extra money.

Your advertising

Advertising includes the advertisement platform you choose and whether you have your own website. Most potential guests will look at many different properties before choosing which one to stay in and your property description and the photographs you choose will be key factors in their decision. Holiday rental advertisements that feature professional photographs, a thorough description and a professionally designed website may be more likely to appeal to higher-end guests.

Equipment You Will Need

Your equipment needs can vary, depending on the type of holiday let accommodation you set up. Your required equipment can include furniture, accessories and other equipment that is essential to the running of your business. The amount of equipment you require will depend on the size of your holiday let.

Holiday rental properties typically offer guests a home-from-home experience. Unlike hotels where guests usually only have a private bedroom and bathroom, holiday rentals offer an entire home (e.g. a house, apartment, cottage or villa) that is fully furnished and offers guests similar equipment and amenities that they would expect to find in a home.

An important factor you will need to consider when planning your furnishings and equipment is your flooring. Different rooms in your property may require different flooring, for example, the kitchen and bathrooms will likely require tiles, whereas, for other areas of your property, you may choose carpet or wooden flooring. Wooden flooring can be more practical and easy to clean whereas carpets can provide a cosier feel, particularly in bedrooms and the living area. When planning your flooring, consider what you want the overall aesthetic of your property to be.

The equipment typically required by a holiday rental business can include:

Living Room

The living area will likely be the main communal area for your guests. The living room should be decorated to fit the aesthetic of your business and make it attractive to your guests. It should also be functional and comfortable. The type of furniture and accessories you purchase will depend on the size of your lounge area.

Some items you could choose include:

Sofas, armchairs and other seats

This should be one of your biggest priorities when furnishing your holiday let. You will want comfortable seating that looks stylish and attractive. It is also recommended that you choose seating that is easy to clean (for example, removable, washable sofa covers).

Lounge furniture

There are several different furnishings you could opt for, depending on the style of your property and the available space.

Your options include:

• A table or coffee table.
• A TV stand.
• Side tables.
• A mantlepiece.
• A bookshelf and books.

A television and a radio or music system

With the weather being so unpredictable (if your holiday let is located in the UK), providing entertainment for your guests is recommended. Choose an appropriately sized TV for the size of your room. You may also offer your guests access to subscription services, such as Netflix, Prime and Disney+, or the option to sign into their own services.

Lamps and other appropriate lighting

Appropriate and attractive lighting is recommended to create the desired ambience in your lounge area and ensure your guests can use the area at night time. You may opt for overhead lights and several lamps.

Other equipment

Some of the other equipment you could opt for in your living room includes:

• Board games.
• Artwork, e.g. paintings, photographs and pictures.
• Decorative accessories, e.g. candles, plants and ornaments.
• Pillows and cushions.

Most holiday lets offer a complete functioning kitchen to allow guests to prepare and cook food themselves. The number of appliances and equipment you purchase will depend on the size of the kitchen area and the available storage space.

Some of the equipment you may require in the kitchen includes:

Kitchen appliances

Some of the kitchen appliances you will likely need could include:

• A fridge and freezer.
• An oven, hob and a grill.
• A microwave.
• A food processor and/or blender.
• A dishwasher.
• A washing machine and tumble dryer.
• A sink with hot and cold running water.
• A ventilation system (e.g. exhaust fans and a ventilation hood).
• A splashback.

Seating areas

Although you may have a separate dining room, if your property has the space, you could also opt to add seating areas so that families and groups of friends can socialise in the kitchen.

You could opt for:

• A kitchen island with chairs.
• A breakfast table and chairs.

Storage areas

Your kitchen will need storage areas to store kitchen equipment and utensils and so that your guests have somewhere to store their food and beverages. Storage areas also help to minimise clutter.

Some of the storage you could opt for includes:

• Built-in kitchen units with cupboards, cabinets and drawers.
• Wine racks.
• Food storage containers.
• A spice rack.

Depending on your available storage space, there are several different pots and pans and other cookware you could purchase, including:

• Frying pans.
• Grill pans.
• Sauté pans.
• Baking trays.
• Roasting pans.

Although bakeware is not an essential purchase, you could opt to supply baking items if you have the available storage space.

Some pieces of bakeware you could purchase include:

• Bread pans.
• Muffin tins.

Eating utensils and accessories

You will need to provide enough eating utensils for the number of people your holiday rental can accommodate.

Some of the items you will need to purchase include:

• Glasses, including different-sized tumblers, a variety of wine glasses and cocktail glasses.
• A variety of cups and mugs, e.g. for tea, cappuccinos and lattes.
• Different-sized bowls.
• Different-sized plates.
• Eating utensils, e.g. forks, knives, spoons and serving utensils in different sizes.

Cooking utensils and accessories

Some items you will need to provide for food preparation and cooking could include:

• Chopping boards.
• Kitchen knives.
• Mixing bowls.
• Temperature gauges.
• A strainer and colander.
• Weighing scales, measuring cups and a measuring jug.
• Oven gloves.
• Baking paper, greaseproof paper and aluminium foil.
• Stirring spoons.
• Peelers and graters.
• Tin openers.

Tea and coffee-making facilities

Some of the facilities you may offer are:

• A coffee machine.
• Coffee accessories (e.g. coffee beans, flavoured syrups and coffee spoons).
• A teapot and cups and saucers.
• Tea, coffee and sugar.

Rubbish bins and recycling bins

You will need rubbish bins and recycling bins in your kitchen. You should also provide a food bin, so any food is disposed of properly. It is also recommended that you provide bin bags so that guests have the option to change the bins themselves.

Dining Area

Depending on the size of your holiday rental, you may provide a separate dining area where guests can eat their meals and socialise.

Some of the furniture and equipment you may require for your dining area includes:

• Dining table and chairs.
• Table cloths.
• Table settings, including mats and coasters.
• Serving platters and trays.
• A speaker, music player or radio.
• Decorative accessories, e.g. candles, plants, picture frames, rugs and decorative lights.

Hallway or Property Entrance

This will be the first impression your guests get of your property. Your entrance or hallway should be both functional and attractive.

Some of the items you may require include:

• A coat rack or cloakroom.
• A shoe rack.
• An umbrella stand.
• Lamps and appropriate lighting.
• A side table or cabinet.
• Decorative items, e.g. plants and artwork.
• A hat stand.
• A welcome pack.

If your property has multiple bedrooms, you will likely style each bedroom differently – particularly if you are setting up a family-friendly property where children are likely to stay. Your bedrooms should be stylish, comfortable, cosy and easy to clean. Your guests will want a good night’s sleep so keep this in mind when planning your bedroom furniture.

• Beds of different styles and sizes (e.g. King beds, Queen beds, double beds, twin beds and bunk beds).
• High-quality mattresses.
• Mattress toppers.
• High-quality duvets and pillows with (preferably white or cream) sheets and covers.
• Thick, full-length curtains or blinds.
• Additional blankets (for winter).
• Cushions and throws.
• Wardrobes and drawers so guests can store their personal belongings.
• Bedside tables.
• Ceiling lights and lamps.
• A dressing table.
• Mirrors (you may opt for multiple mirrors of different sizes, e.g. full-length mirrors and beauty mirrors).
• Televisions.
• A kettle and/or coffee machine.
• Coat hooks.
• Desks and desk chairs.
• Armchairs or other seating (if you have the necessary space).
• Slippers and dressing gowns.
• Rubbish bins.
• Hair dryers.
• Plenty of plug sockets.
• Décor items, e.g. artwork, candles and plants.

You will need to equip each bathroom with its own equipment and accessories.

• Baths with hot and cold running water.
• A power shower.
• Guest towels (you may need multiple sizes, e.g. bath towels, hair towels and hand towels).
• Towel racks.
• Toothbrush holders.
• Soap dispensers.
• Toilet roll holders.
• Extractor fans and other ventilation systems.
• Door locks.
• Toilet paper.
• Toiletries, such as hand soap, shampoo, conditioner and shower gel.
• Window blinds.
• Adequate lighting.
• Storage for guests’ toiletries (e.g. shelves or cabinets).

Outdoor Areas

If you have outdoor space, having a well-designed, attractive and functional outdoor space can make your business more attractive to potential guests and can allow you to charge higher prices. When planning your outdoor area, consider the space you have available.

The front of the property

This will be the first thing your guests see when they enter your property. You will also likely use pictures of the front of your property for advertising purposes.

Some of the equipment you could install or purchase includes:

• A well-maintained, wide path.
• A ramp (to make your property more wheelchair accessible).
• Automatic outdoor lighting.
• Parking spaces or a parking garage.
• Grass, flowers and plants.
• Hanging baskets.
• A welcome mat.

The back of the property

The garden at the back of your property is where your guests are more likely to spend most of their outdoor time. The outdoor area may feature a patio or decking area and a garden.

Some outdoor furniture and equipment you could purchase include:

• A fire pit.
• Outdoor furniture (e.g. dining table and chairs, lounge chairs, a swing seat, an egg chair).
• Outdoor lighting (e.g. fairy lights).
• A swimming pool.
• Water features, such as a pond or water fountain.
• Flowers and plants.

General Equipment Requirements

A computer or laptop and a booking management system

A computer or laptop can be used for marketing and advertising your property, making bookings, arranging equipment replenishment orders and any business and administrative tasks. You will also need a booking management system that automatically inputs bookings into a calendar and shows customers accurate information regarding the availability of your property.

A website is useful for advertising your business and could also act as your primary booking strategy. It should contain photographs and descriptions of your property, your location (and information about the local area), the available amenities and equipment and your customer reviews. Your website could also feature an option to make a booking online. Design your website to reflect your branding and ensure it is functional, easy to use and attractive.

Your guests will expect you to provide Wi-Fi. Because multiple devices will be connecting at one time, you will need a Wi-Fi system that is reliable, fast and can handle a higher capacity. Depending on the size of your property, you may require multiple routers or Wi-Fi boosters.

A payment system

The type of payment system you require will depend on your primary payment strategy. For example, if you accept online payments, you may require an online payment system or a way to track payments to your business bank account. If you offer bookings through third-party sites or a holiday letting agency, they will likely handle payments on your behalf.

A fully stocked first aid kit

You should keep a first aid kit on your property that your guests can use in the event of an accident or injury.

Some items you could put in your first aid kit are:

• Plasters of different sizes.
• Bandages and dressings of different sizes.
• Safety pins.
• Sticky tape.
• Disposable gloves.
• Antiseptic wipes.
• Antiseptic cream.
• Distilled water.

Cleaning equipment

Some of the cleaning supplies you may require are a vacuum cleaner, a sweeping brush, a mop and bucket, bleach, window cleaner, sanitiser, cloths, sponges and other cleaning supplies. All cleaning equipment should be clearly labelled and stored safely.

Typical Pricing

When you are creating your business plan, an important consideration you will need to make is your expected start-up costs and running costs. Calculating your expected costs allows you to determine your initial investment requirements, your pricing strategy and your profit goals.

There are multiple costs associated with setting up and running a holiday rental business. Some of these costs will be one-off initial costs that you will need to pay when you are setting up your business. Other costs will be ongoing costs you will need to pay regularly – usually weekly, monthly, quarterly or annually.

Some of the typical costs associated with a holiday rental business are:

Your holiday rental property

Unless you already have an appropriate property to use as a holiday rental, this will likely be your biggest expenditure. You will likely need to purchase or build a property, or you could opt to purchase an existing holiday rental business. There are multiple types of properties you could choose including apartments, cottages, lodges, houses and villas. The costs associated with purchasing your holiday let can vary based on several factors, such as the size of the land, the size of the property and the number of bedrooms. The location will also be a significant factor in determining the price of the property (coastal locations, city centre properties and properties close to an area or landmark of interest are likely to be significantly more expensive).

Renovation, refurbishment and installation costs

You may need to convert or refurbish your property to make it suitable for guests. For example, you may want to extend your property to add more bedrooms, convert existing rooms or install ensuite bathrooms. You may also need to install appliances, add plumbing and electricity and decorate your property to fit the aesthetic of your business and make it more attractive to potential guests. Renovation and refurbishment costs can vary depending on the level and scale of work required, from £500 for more basic work to £200,000 for more extensive work. Prices can also vary depending on the types and number of contractors and tradespeople you require.

Exterior renovations

You may need to renovate the exterior of your property to ensure it complies with safety and legal requirements. For example, you will need to make sure your exterior is safe and hazard free and you may need to make the necessary changes to ensure your property is accessible. For example, installing a ramp and widening pathways. You may also want to landscape your property or pay a gardener to make your grounds more attractive from the outside. You may also choose to install outdoor features, such as a swimming pool, a hot tub, a fire pit or a pond. You can expect to pay between £1,000 and £50,000 for exterior renovations, depending on the scale of work required.

Equipment and furniture

The type and amount of equipment you require (and the associated costs) will vary depending on the size of your holiday let and the type of business you want to set up. For example, a luxury holiday rental with higher rental prices will have more equipment requirements than a budget property. If you purchase an existing holiday rental business, you may be able to use some of the existing equipment and furnishings. However, if you are setting up your business from scratch, you will likely have more equipment requirements. You can expect to spend between £5,000 and £50,000 on equipment.

Maintaining, repairing and replacing equipment

Repairs, maintenance and replacements are ongoing costs you will need to factor into your budget. Cleaning and maintaining equipment and ensuring it is used correctly can extend its life, but repairs and replacements are still inevitable, as using unsafe equipment could be dangerous and could result in non-compliance with health and safety legislation. You will also need to replace items such as towels and bed sheets periodically (or if they become damaged or stained).

Running costs

These are the day-to-day costs associated with running your holiday let. Some running costs are paid monthly, and others are paid quarterly or annually. Your running costs can include electricity, gas, water, council tax and insurance. To maximise your profits, try to keep your running costs as low as possible.

Rental platform fees

If you advertise your business on a holiday rental site, such as booking.com or Airbnb, you will need to account for the fees associated with using this service. The fees can vary, depending on the booking site you choose, but you can expect to pay between 3% and 15% per booking. For example, if guests rent your property for a week for a cost of £700, you will likely pay between £21 and £105 in fees.

Letting agency fees

If a letting agent manages your holiday let on your behalf, you can expect to pay a commission for each booking that is made. On average, holiday letting agents charge between 15% and 25% in commission fees. For example, if your property is let out for £700, you can expect to pay between £105 and £175 in letting fees. However, for this price, the letting agency will market the property, manage bookings and offer guest support. Some letting agents also handle the cleaning and maintenance of the property and guest check-in.

A business website

Your business website is an essential advertising tool as it allows potential customers to find your property online and view pictures, descriptions and additional information. Your website may also have a booking system, allowing guests to make a booking or view your availability. Your website will need regular monitoring, updating and upgrading. You also need to make sure your website is secure, particularly if you will be collecting any customer information or banking details. You may also want to pay someone for search engine optimisation (SEO) to ensure your website ranks highly on search engines. You may choose to set up and run your website yourself or hire someone to do this for you. You can expect to pay between £20 and £100 per hour for someone to set up your website.

When creating your brand identity, consider how you want your business to be perceived by potential customers. When creating your brand, consider the type of holiday rental you are setting up and your typical customer base. Branding creates your business’s visual identity and aesthetic, your business name and your business website. You could hire a professional to help you with branding or do some or all of the work yourself. Branding can cost between £500 and £10,000, depending on the level of work required.

Advertising and marketing

To ensure your business attracts customers and creates maximum profits, you will need to spend money on advertising and marketing. It is recommended that you spend between 1%-3% of your annual turnover on marketing. For example, if your annual turnover (or your desired annual turnover) is £150,000, you should spend between £1,500 and £4,500 on advertising and marketing. You may need to invest more money when you initially set up your business or when you are trying to grow your business. To reduce your costs, capitalise on free marketing strategies, such as on social media.

Cleaning fees

Unless you use a letting agent that handles cleaning for you, you will need to ensure your property is thoroughly cleaned between guests, including washing towels and linens and remaking beds. You can expect to pay between £10 and £25 per hour for a cleaning service.

Business insurance

There are multiple coverage options available for a holiday rental business. Some types of coverage are optional, whereas others are mandatory.

Your coverage options include:

• Public Liability Insurance.
• Product Liability Insurance.
• Building and Contents Insurance.
• Malicious Damage Cover.
• Key Loss Cover.
• Guest Effects Cover.
• Business Interruption.
• Legal Expenses.

Prices can vary depending on your insurance provider and the level of coverage you choose. Prices typically start at £15 per month.

Typical Costs for Customers

Once you have calculated the typical costs associated with setting up and running a holiday let, you can then create your pricing strategy.

Your pricing will depend on multiple factors, including:

• Your location.
• The quality and size of your accommodation.
• Your facilities, amenities, equipment, furnishings and décor.
• The time of the year (prices will be higher during peak times).
• Your direct competition and the pricing of your competition.
• Your booking platform.
• Your set up costs and running costs.
• The length of time the customer makes a booking for (you may offer discounts for longer stays).

The best way to determine your pricing is to examine your target market. Focus on the typical guests you hope to attract and look at similar holiday lets that offer a similar standard of accommodation and similar amenities. Your prices will likely vary significantly depending on the season, for example, you may charge significantly more during the high season (such as school holidays and Christmas or if a local event is occurring).

The cost of a holiday rental can vary significantly, with some properties costing as little as £50 a night and others costing thousands of pounds for one night.

Safely Running a Holiday Rental Business

Implementing safety practices in your holiday rental is an important responsibility. Safety practices help to protect the health, safety and well-being of you, your staff and your guests.

Some safety practices you should employ in your holiday rental business are:

Childproof your property

If your holiday rental is marketed as a family-friendly property, you should childproof your property. This not only protects any young guests staying at your property, but it also can reduce your liability if an accident was to happen.

Some ways you can childproof your property include:

• Use plug covers.
• Avoid cords on blinds and curtains.
• Anchor furniture.
• Cover sharp corners.
• Provide a screen for fireplaces.
• Use pool and hot tub covers.

Focus on improving health and safety

Ensuring a safe environment for the guests is an important task for holiday rental owners. Ensuring your business has proper health and safety measures in place can protect you, your business and your guests.

Some safety measures you could implement include:

• Install secure handrails on staircases.
• Provide warnings for known hazards, e.g. low ceilings or uncovered ponds.
• Avoid trailing wires and cables.
• Perform risk assessments for swimming pools and hot tubs.
• Control the risks relating to legionella disease and other infectious agents if your property has a swimming pool or hot tub.

Implement pest prevention and control methods

Pests can be a major issue for holiday rental businesses, as you are not always in control of how hygienic your guests are and how well they store and dispose of food during their stay.

Some ways you can prevent pests are:

• Fill any gaps or holes in your building.
• Keep your external areas free from food, rubbish or vegetation.
• Encourage guests to dispose of food properly in closed bins.
• Keep your premises clean and tidy (i.e. offer a weekly or bi-weekly cleaning service and clean thoroughly between guests).
• Provide guests with sealed containers to store food.
• Use fly screens on open windows or doors.

Conduct risk assessments

Although not a legal requirement for businesses with fewer than five employees, risk assessments can help to eliminate risks and ensure safe practices in your holiday let. Risk assessments are particularly recommended if your business has any high-risk features, such as a swimming pool, hot tub, pond or steep stairs.

As part of your risk assessments, you should:

• Identify hazards.
• Determine who could be at risk.
• Evaluate any potential risks.
• Implement relevant safety measures.
• Record the results of the risk assessment.
• Review the risk assessment regularly.

You should keep physical records of your risk assessments as evidence of your commitment to safe practices.

Install security measures

Security measures should be implemented to protect your holiday rental from potential break-ins, thefts and damages. Security measures can also help your guests to feel safer.

Some security measures you can implement include:

• A CCTV system.
• Secure and reliable locks.
• An alarm system.

Properly maintain and set up equipment

Any furniture and facilities (such as beds, chairs and tables) in your holiday let and any equipment you supply for your guests to use (such as TVs, ovens and kettles) will need to be properly maintained, correctly set up and safe to use. You must protect your clients from accidents or injuries caused by equipment. You should also perform regular equipment inspections to ensure your equipment’s safety and help extend the lifespan of your equipment.

Check and maintain electricals, electrical outlets and plumbing

Not only can this save you money by avoiding damage, repairs and replacements, but checking and maintaining electricals and plumbing can help to protect your guests from harm. Implement a system for regularly checking outlets and plumbing and ensuring they are up to code.

Keep a fully stocked first aid kit

If a guest or employee has an accident or injury, it may not be serious enough to warrant medical intervention. Having a first aid kit that is checked and replenished regularly and is easily accessible to all guests is recommended.

Implement cleaning procedures

Having effective cleaning procedures is essential for your business. A cleaning schedule and cleaning policies should be in place that cover the cleaning of equipment, surfaces and indoor and outdoor areas. All furnishings and equipment should be inspected regularly, and you should document your cleaning and disinfection procedures. Your property will need to be thoroughly cleaned between guests and towels and linens will need to be washed.

Legal Requirements

Complying with legal requirements is essential when setting up and running a holiday rental business.

Failure to comply with legal requirements could not only result in an accident or injury, but you could also face consequences such as a warning, a fine, the forced closure of your business or, in serious circumstances, prosecution.

If your holiday rental is not located in the UK, the legal guidelines will likely differ. You will need to consider the laws and regulations of the country your business is located in. The legal guidelines listed below apply primarily to holiday rentals located in the UK.

Some of the legal guidelines you should be aware of include:

Comply with Furnished Holiday Lettings (FHLs) regulations

In order to qualify as an FHL, there are specific guidelines you must comply with:

• The property must feature sufficient furniture that visitors are entitled to use.
• The property must be available for letting for at least 210 days in the year.
• The total of all lettings that exceed 31 continuous days should not be more than 155 days in the year.
• The property must be let to the public for at least 105 days in the year (not including longer terms of more than 31 continuous days).
• The property must be situated in the UK or the EEA.

Ensure you have an appropriate mortgage

If your holiday let property currently has a mortgage, you must ensure your mortgage lender and the conditions of your current mortgage allow you to let the property out. If your mortgage does not allow this, you may need to apply for a new mortgage, such as a buy-to-let mortgage.

Apply for planning permission

If you want to alter the layout of your holiday let property, make any structural changes, build an extension or create a new building, you may need to apply for planning permission from your Local Planning Authority (LPA). You will need to contact the LPA at your local council to apply for planning permission. Keep in mind that approval can take several months, so ensure you apply for planning permission in advance.

Apply for a television licence

If you use any televisions in your property, you will need to apply for a TV licence . Because you are operating a holiday rental business, if any TVs are accessible to your guests, you will need to apply for a specific TV licence (a Hotel and Mobile Units Television Licence).

Install carbon monoxide detectors

If your holiday let has any solid fuel-burning appliances, such as log burners or open fires, you are legally required to fit a carbon monoxide detector in any room where these appliances are located. You are also required to fit carbon monoxide detectors in any rooms that have gas or oil appliances (e.g. a gas oven).

Install smoke detectors

Smoke detectors should be installed throughout your holiday let and should be checked regularly to ensure they are working. Smoke detectors should be installed on every floor of your property.

Comply with the Equality Act 2010

The Equality Act requires all holiday properties in the UK to have a written accessibility statement that outlines the facilities and services in and around the property. This document must be clearly displayed on the property and shared with all guests before their arrival. You also need to make any reasonable adjustments to your property to make it more accessible to people with disabilities, for example:

• Fitting ramps.
• Widening doorways.
• Upgrading your lighting.
• Making your website more accessible to people with disabilities, e.g. having text-only versions of each page.

Comply with the Furniture and Furnishings (Fire) (Safety) Regulations 1988

These regulations apply to all upholstered furniture in your holiday rental, including furniture, beds, garden furniture, cushions and pillows. You must ensure all furniture (whether purchased new or second-hand) meets the specified ignition resistance levels and commercial fire safety standards. The regulations do not apply to furniture made before 1950 (unless significant reworking or upholstering has taken place).

Ensure your water supply is fit for human consumption

Under the Private Water Supplies (England) Regulations 2018 , you must ensure that the water and filter system on your property is safe and fit for human consumption and use. You will need to have your water supply tested every five years to ensure compliance. Contact your local authority for specific regulations relating to your property.

Apply for a Short-Term Let Licence (Scotland)

If your holiday let property is located in Scotland, you will need to apply for a Short-Term Let Licence .

There are four different types of licences:

• Secondary Letting: Letting accommodation that isn’t your principal home.
• Home Letting: Letting your principal home when you are not there.
• Home Sharing: Letting part of your principal home when you are not there.
• Home Letting and Home Sharing: Letting all or part of your principal home when you are living there and when you are not living there.

Comply with receipt or invoice requirements

You will likely make it standard that you provide all customers with a receipt or invoice. Even if you do not make this standard practice, many of your customers will request a receipt.

There are certain pieces of information you should include:

• The word ‘invoice’ or ‘receipt’ and a unique invoice number.
• Your business name and address.
• The client’s name and address.
• A brief description of your work.
• The total you are charging the client and when the payment is due.
• The payment method.

Comply with fire regulations

As the business owner, you are responsible for fire safety measures on your property. There are multiple fire regulations you must ensure you comply with.

For example:

• Perform a fire risk assessment.
• Inform your local fire authority that you will be operating a holiday rental.
• Comply with the Regulatory Reform (Fire Safety) Order 2005 .
• Implement any necessary fire safety measures.
• Implement emergency procedures and ensure these are clearly displayed on the property.

Comply with gas safety regulations

If you have a gas boiler you will need to have it inspected by a gas-safe engineer. If your equipment is deemed safe to use and complies with government requirements, you will be issued a Gas Safety Certificate. You will need to display your gas certificate clearly for your guests and other visitors to your business to see. As a holiday rental business, you will require an annual gas safety certification.

Comply with the Electricity at Work Regulations 1989

The Electricity at Work Regulations state that any workplaces that use electricals must construct electrical systems in a way that prevents danger, maintain electrical systems to ensure they are safe, ensure electrical equipment is checked by a competent person annually and conduct Portable Appliance Tests (PAT). This includes any electrical equipment inside and outside your property.

Comply with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013

RIDDOR states that you must report all injuries, diseases and dangerous events that occur in your business. Reports must be made to the Health and Safety Executive (HSE) using an appropriate recording document. These regulations apply to any incidents that involve guests and staff.

Prepare a health and safety policy

The law states that every business in the UK must have a specific policy for managing health and safety. Your policy should state exactly how you will manage health and safety in your business, who is responsible for specific tasks and how and when these tasks are completed. Follow the recommended tips from the Health and Safety Executive when creating your health and safety policy. You should make your policy easily visible to any guests.

Implement safety measures

Safety measures can help to protect your business, your employees, your customers and your equipment.

Some safety measures you should implement include:

• Suitable fire prevention, fire detection and firefighting equipment should be provided and maintained.
• Entrances and fire exits must be kept clear of obstructions.
• A first aid kit should be kept on site.
• An emergency contact name and number should be displayed.

Comply with the General Data Protection Regulations (GDPR ) and the Data Protection Act (DPA)

If you accept online bookings, you must comply with both pieces of legislation when storing or sharing personal information, such as your customers’ personal information, contact details and banking information. You must also apply for a Notification to Process Personal Data Licence. You will also need to apply for a licence with the Information Commissioner’s Office and renew your registration every year.

Comply with employment legislation

If you employ any staff (such as cleaners or check-in staff), you must ensure you follow employment legislation, including the Employment Rights Act (1996 ) and the National Minimum Wage Act (1998) . You must also comply with legislation relating to recruitment, working hours, sickness, discrimination, dismissals, and maternity or paternity pay.

Register your business

Your business must be registered with HMRC before you begin operating. You can choose to register as a sole trader or as a limited company. You will also need to register your business name and any other relevant information.

Register for self-assessment tax

This allows you to calculate and pay your own taxes each year. You will need to track your finances every month and submit any expenses as part of your tax assessment.

As part of your tax responsibilities, you must:

• Record all forms of income and expenses.
• Complete an annual self-assessment tax return.
• Register for VAT if you earn above the threshold (currently £85,000).
• Pay National Insurance contributions.
• Keep a record of your business accounts for the previous five years.

Positives of Owning a Holiday Rental Business

Starting up a holiday rental business can be rewarding in many ways.

Some of the main pros associated with this type of business include:

Design your perfect holiday rental

The majority of people who set up a holiday rental are passionate about the tourism industry, have dreamed about working in it for years or enjoy staying at holiday rentals, B&Bs and hotels themselves. Opening your own holiday rental business allows you to design your dream business, from the atmosphere, décor and feel of your holiday rental, to your facilities, your advertising strategy and any additional services you offer.

Choose your target customers

As you are designing your business yourself, you can create your business plan with your desired market in mind. This could be the customers you feel will maximise your profits, the customers you are most comfortable with or those that are most likely to fit your brand and aesthetic. Choosing your own target customers also allows you to design your accommodation with them in mind and set your pricing accordingly.

Potentially low start-up costs

If you already own a suitable property, a holiday rental business requires minimal investment. You may only need to pay for décor and furnishings, any permits and legal requirements and your advertising costs. Low start-up costs, particularly compared to other businesses in the tourism industry, allow you to begin turning a profit more quickly and can make your first year in business lucrative, even though many other tourism businesses don’t begin to make a profit until after the first year.

It can be rewarding

A holiday rental business can be personally and financially rewarding. It can help you to take a step back from the traditional 9-5 working hours and, once your business is established, allows you to run your business with minimal input. You can also build positive relationships with your guests and get to know people from all over the UK and the world. If you are passionate about what you do, your business will likely not feel like work. For people who enjoy face-to-face interaction and spending time with other people, a holiday rental business can be very rewarding.

Low time investment

Once you have set up your holiday rental, you can run your business with minimal input. Guests will not expect any staff to be onsite, meaning all you will need to do is prepare the property for your guests. You could even use a holiday letting agent who will arrange listing your property online for rental, handle bookings and payments and arrange cleaning and maintenance. You can be as involved as you want with the day-to-day running of your business and can earn an income with very little work.

It can be lucrative

As your business grows and your holiday rental gains exposure and becomes more highly reviewed, you will have the potential to earn a higher income. Your holiday rental can begin making a good profit almost immediately. As your business grows in popularity, you can also raise your prices and scale up your business. A holiday rental business has a high-income potential and, with a solid business plan, can be extremely lucrative.

A scalable business

A holiday rental business can have a simple business model, making it easy to set up this type of business. If you want to grow your business, this type of business is highly scalable, as you will already have a solid business plan that is easily transferrable to other properties. You can open additional holiday lets in the same area or other locations and significantly increase your profits. High demand for your business and high scalability gives you great opportunities for growth.

Choose your advertising and selling strategy

You can choose whether to set up your own website, advertise on booking sites, such as Airbnb or Booking.com, or use the services of a holiday letting agency. Having the ability to advertise your property on multiple platforms can increase your customer reach and increase your revenue streams. You can even change your selling strategy as your business grows and evolves.

Easily gain exposure

The rise of social media and holiday accommodation sites makes it easier than ever for you to gain exposure. Particularly if you are able to take good photographs or are tech-savvy. Gaining exposure online is an easy and effective way of growing your business and increasing your profits with minimal or no costs.

High demand

People in the UK take on average 3.4 holidays per year, including holidays abroad, staycations in the UK and weekend breaks. With holidays being so popular and people willing to spend on booking holidays, the demand for holiday rentals is higher than ever. High demand makes it more likely that your business will succeed and will allow you to earn a higher profit margin.

Guest loyalty and recommendations

Holiday rental properties in the UK are particularly popular for staycations. This makes it more likely that people will return to the same property multiple times (if they had a positive experience) or will recommend your holiday rental to their friends and family. Guest loyalty is an effective way to grow your business and maximise your profits.

Be part of the local community

Setting up a holiday rental is a great way of connecting with the local community, particularly as you will be bringing increased business to the local area. You can partner with local businesses, including pubs, restaurants and shops, to advertise each other’s businesses and offer discounts and can create positive personal and business relationships with fellow business owners and people living in the local community.

Pick and choose your guests

You will have the option to choose which bookings to accept and decline any guests you do not want staying at your property. For example, some holiday rentals refuse to accommodate hen and stag parties. Other properties operate as adults only or have a minimum age requirement (for example, they do not accept bookings from guests younger than 25).

Be your own boss

You can make all key decisions yourself and steer your business in whichever direction you choose. You can choose how involved you want to be, the type of holiday rental you want to set up, and your property’s location. You can make the best decisions for you and your business.

Negatives of Owning a Holiday Rental Business

Although owning a holiday rental business can be rewarding in many ways, there are some potentially negative aspects to this type of business, for example:

Demanding guests

Some guests can be extremely demanding and may not understand that holiday rentals operate differently than hotels. They may expect you to always be available to help them and may expect your property to have the same amenities that they have experienced in hotels they have stayed in. To avoid negative reviews, you may feel like you have to adhere to the demands of difficult guests, which can impact your own personal life.

Bookings can be inconsistent

It can be difficult to plan your finances and predict your profits when you work in the tourism industry because bookings can be very inconsistent, with some times of the year being significantly more popular than others (for example, summer and Christmas). There could be certain times of the year when you have no or very few bookings and this can make it difficult to make your business a success long term. Although you can charge higher prices at peak times, this may still not be enough to make up for a lack of bookings at other times.

Negative reviews

Although the majority of customers leave honest reviews, some customers are difficult to please and will leave a negative review because of the smallest complaint (even if it is something outside of your control). Some customers even leave negative reviews because they didn’t read the property description properly (for example, complaining about the distance from the local town even though that is clearly stated). It’s also possible for people to leave fake reviews, which can be extremely damaging to a business and can be very difficult to remove, even if you know they are fake. Negative reviews can also result in customers avoiding your business.

Complying with legislation

There are many different pieces of legislation and legal guidelines you will need to comply with. Not only can this be complicated and time-consuming, but any non-compliance (even if this is accidental) can be heavily punished with a fine, the forced closure of your business or even a prison sentence. A holiday rental business can have high liability which can be a lot of stress and pressure on a business owner.

Potentially high start-up costs

If you already own the perfect property that already has the correct facilities installed, start-up costs can be low. However, if you need to purchase a new property or make extensive renovations to your existing property, this can be extremely expensive and time-consuming. It can make setting up your business a long process and result in you needing to take out expensive business loans, which can lengthen the time before you begin turning a profit. You will also need to account for furnishing your property and purchasing equipment.

If there’s a problem, you need to fix it

Unless you work with a letting agent, if there is an issue, no matter what time of the day or night it is, you will be responsible for fixing it. If your property has a water leak, the electricity stops working or there is another major issue late at night, you will be responsible for fixing it to avoid a negative review from the guests or to avoid needing to give them a refund. It can be difficult to manage stressful situations and solve major issues yourself, especially if they occur at inconvenient times.

It can be competitive

Not only are you competing with other holiday rentals, but you are also competing with hotels, B&Bs, caravan parks, holiday parks and other holiday properties. Having multiple businesses to compete with can make it difficult to establish your business and earn an acceptable profit margin.

It can be difficult to make your business succeed

If there are already established holiday rentals and hotels operating in your area, this can make it extremely difficult to grow your own business and make a success of it. Potential guests are more likely to choose a holiday property that is highly rated, that they have used previously or that has been recommended to them. Setting up a holiday rental business and making it succeed can be more difficult than people realise.

High responsibility

As the business owner, you will have a lot of responsibility, including ensuring the financial success of your business, ensuring the health, safety and hygiene of your property and advertising and marketing. Although you may have few responsibilities regarding the day-to-day running of your business, you will still be responsible for the success of your business and for ensuring the safety of your guests, which can be stressful.

Issues out of your control

This can be one of the most frustrating aspects of running a business, as things that are outside of your control can have a negative impact on your business and your profits. For example, a flood in the local area, local train strikes, or an electricity outage can prevent you from properly running your business, which could not only affect your profits but also result in negative reviews from customers or the cancellation of bookings.

No benefits

As you are self-employed, you won’t receive benefits such as pension contributions. You will also be responsible for doing your own taxes and organising your National Insurance contributions. You will also have a lack of job security.

Planning Your Holiday Rental Business

An effective and well-designed business plan is essential to the success of your holiday rental business. A business plan can help you to focus on the specific steps that will help your business succeed, plan your short-term and long-term goals, determine your financial needs and help your business to grow.

When creating your business plan, ensure it contains information such as:

• Your company information.
• Your company description.
• The services you will provide.
• Your branding, marketing and advertising plan.
• The structure of your business.
• The operational plan for your business.
• The financial plan for your business.

Some of the factors you will need to consider when creating your business plan are:

The type of holiday rental you are going to set up

This is one of the most important considerations you will need to make. There are many different types of holiday rentals and you will need to consider the type of business you want to set up.

• Will you set up a budget, mid-market or luxury holiday let?
• What type of property will you choose (e.g. apartment, townhouse or villa)?
• How many guests will your property cater for?
• What will the bed configuration be (e.g. double, twin, bunk beds, king-sized beds)?
• What type of check-in experience will you offer?

You will also need to decide whether to use a property you already own as a holiday rental or whether to purchase a new property with the intention of renting it out.

This is another important consideration, as many people searching for a holiday let will have a specific location in mind (e.g. Cornwall) or an idea of the type of location (e.g. coastal). Your location will have a significant impact on the types of guests you are likely to attract. It will also impact the purchase cost of the property and the rental value (i.e. how much you can charge your guests).

Your primary booking strategy

This is a key consideration and can have a significant impact on the types of customers you attract and the success of your business. On what platforms and websites will you list your property? How can potential guests make a booking? Will you use a holiday rental agency? Will you list your property on third-party websites, such as Booking.com? Will you have your own website? Whichever options you choose require forward thinking before you begin setting up your business. You could choose to utilise a combination of different selling approaches in order to increase your sales. Your primary booking strategy could also change as your business grows.

Your target market

Determining your target market is a key step in helping your business succeed. You can choose to target budget, mid-market or luxury customers. There are multiple factors that can influence your target market, including the quality of your accommodation and the facilities and amenities, your price points and your advertising. Once you have identified your target market, you can then focus on how to attract these customers to your business.

Your competition

When analysing your competition, you shouldn’t just focus on holiday rentals that operate in your area, but also similar holiday lets that operate in similar locations around the country (e.g. other properties that are located near the coast in different areas of the country). Analysing your competition allows you to look at what they do well and what you think can be improved upon. Look at your competitors’ facilities and equipment, the services they offer, their pricing, their target market and the number of employees they have. Analysing your competition also identifies whether there is space in the market for your business.

Your brand and your unique selling point (USP)

Creating your brand is a key way to ensure you stand out from your competition. Branding can help you to focus your target audience, attract customers and concentrate your marketing and advertising strategies. Some ways you can create your brand are by focusing on your business’s visual identity, designing your premises and website and creating a brand story. Your USP can also be part of your brand and can help your business stand out from your competitors. Consider what makes your business special and how this fits into what defines your business.

Your marketing and advertising strategies

Marketing and advertising are especially important when you first open your holiday rental business. Your marketing strategy needs to be effective and budget friendly. Consider your target customers and the best way to reach them.

Some ways you can market and advertise your business are:

• Build a functional and attractive website.
• Advertise on multiple platforms and forums.
• Partner with local businesses and local events.
• Offer discounts to returning customers.

The equipment and amenities you will offer

This is an important consideration as the furnishings, equipment, amenities and facilities available to your customers can have a significant impact on your typical customer base and your start-up costs. Consult the list above to determine your equipment requirements. The equipment you require will depend on the type of holiday rental business you set up and how big your premises is. Once you have determined your equipment requirements, you can then calculate the initial costs of purchasing the equipment.

Your start-up costs and running costs

Consult the list above to help you calculate the approximate costs of setting up and running your business. Determine what equipment you need and the amount of equipment, as well as the cost of your property, to help you determine your start-up costs and what your initial investment requirements will be. You can then calculate whether you can finance your business yourself or whether you need to source outside investment, for example, from a bank. Determining your start-up costs and running costs can also help you to create a budget and predict when you will begin to turn a profit.

Financing your business

Consult the list of start-up costs and running costs above to determine what capital you will require. Can you finance the business yourself or will you need to source outside investment? You will also need to calculate when you are likely to begin turning a profit. If you require outside investment, consider whether getting a mortgage from a bank or another financial institution would be beneficial.

Your pricing policy

How will you price your property? Will you charge per day or per week? Will certain times of the year be more expensive (e.g. school holidays and bank holidays)? Will you offer any discounts or special offers? As your property grows in popularity, your pricing policy may change. Consider the pricing of your competitors and your running costs when setting your own prices.

Your sales forecast

How many bookings are you realistically likely to get? Are there certain times of the year that are likely to be busier than others? What are your weekly, monthly and annual sales forecasts? You can analyse the booking forecasts of similar businesses and look at how bookings vary throughout the year to estimate demand. As your business grows, your sales forecast is likely to change.

Your strategy for growth

Your strategy for growth is the actions you will take to realise your goals for expansion and any potential challenges your business could face and how you will avoid or overcome them. This can help to make your business more successful.

Potential challenges could include:

• Lack of bookings during the off-peak season.
• High cleaning and maintenance costs.
• A lack of returning guests.

Some potential strategies for growth include:

• Offer special discounts during off-peak times.
• Raise your prices during the peak season.
• Increase your marketing and advertising.

Your business summary

Your business plan should include a detailed overview of your business, including the type of holiday rental you are setting up, your typical customer base, your equipment requirements and your business goals.

Your business goals

Your business goals or objectives are an essential part of creating your business plan. Your business objectives highlight the targets and goals of your holiday rental business and help you to create a one-year, three-year and five-year business plan.

Your business objectives should be SMART:

• S = Specific
• M = Measurable
• A = Achievable
• R = Realistic
• T = Time-bound

Check you have complied with all legal requirements

Consult the list of legal requirements above to check you have complied with all requirements and regulations and that all your paperwork is accurate. Failure to comply with legal requirements could have a detrimental effect on your business or could result in a fine, the forced closure of your business or, in serious cases, prosecution.

Download our business plan

Health and Safety for Managers

Electrical Safety Awareness

Fire Safety Awareness

Team Leading Level 2

Celebrating our clients and partners.

Vacation Rental Business Plan: 15 Steps for Success (Free Template)

Investing in a vacation rental business isn’t a decision to take lightly. However, as the short-term rental industry continues to grow, 2024 could be the perfect time to do so.

The success of any short-term rental business will depend on having actionable goals and clear objectives based on thorough market research, whether you’re a newbie or an experienced property investor.

It’s crucial to create a strategic business plan for short-term rentals before you hand over a deposit or receive the keys. A viable business and management plan will help you identify the risks and prepare you for the challenges ahead.

In this article, we look at what a business plan is, give you samples and templates to use, and analyze the 15 steps your vacation rental business plan needs to help you get started.

Don’t see the form to download our Vacation Rental Business Plan PDF? Click here .

What is a vacation rental business plan?

Simply put, your business plan is an overarching set of rules, goals, and frameworks to help you make decisions for your new business and its future.

Not only will a vacation rental business plan help you define your strategy, but you can repeatedly refer back to it to ensure you are going in the right direction.

Business plan vs. vacation rental business model

Many aspiring rental owners confuse these two documents or assume they’re the same, so let’s review the differences.

A short-term rental business plan is a detailed document that outlines your business goals and how you plan on achieving them. A short-term rental business model, on the other hand, is your core framework for providing value to guests and operating profitably. Business models are much shorter, often including only a customer value proposition and pricing strategy.

Why do you need a vacation rental business plan?

Vacation rental owners are eager to hit the ground running when they buy their first properties—who wouldn’t be? Any vacancy or downtime on the property means more money that’s coming out of your pocket. A vacation rental property business plan will guide you through the initial steps and beyond, helping you maximize your profit and success as a host.

Beyond just making money, having a good business plan for vacation rentals will allow you to measure success and identify areas for improvement accurately. For example, it will help you focus on key metrics, such as your budget, local market insights, and expansion opportunities.

How to write a short-term rental business plan: video summary

15 steps to create your vacation rental business plan

To make things easier for budding entrepreneurs, we’re including 15 steps to help you succeed in writing your short-term rental business plan. We also reached out to the following industry professionals for their insights!

• Antonio Bortolotti , founder of Vacation Rental Secrets and host of the Vacation Rental World Summit
• Cynthia Chan , co-founder of Airhosts Forum (the largest Airbnb host forum online)
• Karen Spencer , founder of The Business of Holiday Rental

Prefer a downloadable template? Scroll to the bottom of the page to download our customizable Short-Term Rental Business Plan PDF !

Step 1. Executive summary

For people outside Fortune 500 companies, writing an “executive summary” can be a bit scary. However, it’s a lot simpler than you may think!

An executive summary is just a few sentences that summarize your vacation rental business and includes all the essential information you want to get across. This is so that anyone can read the first page of your plan and know, at a glance, what your business entails.

Start by asking yourself the famous five Ws:

• Where is your vacation house located? By the beach, in the middle of the city, or in the countryside?
• What is it? A family vacation home, a glamping accommodation, or an ideal spot for business travelers?
• Who is it for? Families , couples , or large groups of friends?
• When is it best to stay at your rental? The summer, winter, or year-round?
• Why do you have this property? Is this a spare room you’re renting out for extra cash, a way to top up your pension if you’re retired, or your main form of income?

Answering these questions will help you outline what information you would like to include in your executive summary. You can then rewrite your responses to make sure your summary sounds professional.

Note: If you are still unsure about the details of your executive summary, feel free to do it at the end of your business plan—it’s a case of saving the best until last!

Step 2. Business goals

Your executive summary is going to give you a broad overview of where your business is going, but the goals section will help to further solidify this vision. Goals are what help you to set markers for what success in your business looks like.

Are you satisfied with a couple of bookings a month, or are you expecting a full reservation calendar by the end of the year? You’ll need to set goals to help pin this down.

What’s more, make sure your business goals are SMART: smart, measurable, attainable, relevant, and time-based.

Step 3. Value proposition

As with any business, you’ll need to state why customers are going to choose your business. It’s difficult to take yourself out of the equation when evaluating your business. After all, you’ve poured your blood, sweat, and tears into this project, so why wouldn’t guests choose you?

No amount of effort is enough if it’s not adding any value to your vacation rental. Consider how your vacation rental will provide a guest experience that the other properties in your area simply can’t provide.

Step 4. Company analysis

In this section, you should aim to explain the unique selling points (USPs) of your new vacation rental business, outlining what it will bring to the existing market.

Start by asking a few simple questions to figure out how you’re different (and better) than other rental properties out there. After all, once you are confident in your strengths, your guests will be, too!

Here are a few examples:

Is it better than others because of its location?

• Is it close to the beach?
• Main public transport lines?
• Is it off-the-grid?

Is the price of your accommodation better?

• Are you the cheapest accommodation around?
• Are you the best value?
• Do you offer discounts at certain times of the year?

Are the interiors of your property different or better than the rest?

• Do you offer a cozy, rustic getaway?
• Do you offer a fireplace where a family can sit at night?
• Is it a themed vacation rental ?

Step 5. Industry analysis

If you want to be successful in the rental business industry, you’ll need to be strategic and competitive in your company management plan. So, this section is where you state some key facts about current trends and expectations.

One of the ways to do this is by carrying out an industry analysis. This is basically looking at other vacation rental businesses and evaluating them.

Here are some sample questions that will help start your industry analysis:

What do vacation rentals near me charge per night?

• Would you class it as affordable or good value?
• Is it less than $50 per night? Or Is it more than $300?
• Think about the figures you come up with in relative terms, weighing the value of what the business is offering against the price they charge. This will help you start to price competitively.

Who is their target audience and clientele?

• Are they families ?
• Couples looking for a romantic break?
• Do they target students and school groups who need large but basic accommodations?

Are they luxury units or more basic rentals?

• Are they upmarket rentals in the most expensive parts of your area?
• Or are they modest vacation home rentals that students could afford?
• Do the rentals tend to fall in one end of the price range, leaving a gap in the market?

Are they self-catered or Bed & Breakfast?

• Do they offer a light breakfast?
• Or do they offer a breakfast buffet?

What websites/agencies do they use for bookings and advertisements?

• Are all your competitors advertising on Airbnb , Vrbo , etc.?
• Do they collaborate with local tourism agencies?
• Are they all missing out on a popular booking website that only you know about?

“I recommend owners to focus on profit per booking, not occupancy rates. We’re in it to make money, not fill as many nights as possible (that comes next). We could all be 100% full if we undervalued what we were offering. That doesn’t make good business sense. Be prepared to spend more when you first start out, to bring a quality product to the market. You’ll soon reap the rewards this investment in your future business will bring.” – Karen Spencer

Step 6. Customer analysis

Your customers—or rather, your guests—are how you are going to make your money. That’s why it’s important to understand and target them properly.

In your plan, create different buyer personas based on the types of guests you want to attract. This is like a profile of your ideal customer, from age to income. You should try to make it as detailed as possible because it will help your business grow later.

Creating buyer personas starts with a customer analysis. A customer analysis is just getting to know your customers and what they want and need from a rental property and a vacation.

Here are some key questions you should ask yourself about your ideal guest:

• What’s their name? It may seem silly to name a fictional person, but it will bring your customer analysis to life and help you imagine the buyer persona.
• What do they work as? For example, are they a high-flying banker, a medical professional, or an educator?
• How old are they? Think in terms of age ranges: 18-25, 25-40, and 40-60, and 60+.
• Do they have a family? If so, how many children do they have?

Keep going with questions like this until you’ve built an entire profile of the person. This will then help you understand their values, spending habits, common complaints, and amenities they’ll be looking for.

Getting anxious to dive in? Scroll to the bottom of the page to download our customizable Vacation Rental Business Plan PDF and get started!

Step 7. Competitive analysis

Another element of your vacation rental property business plan is conducting competitor research. Take a look at the market to find your direct competitors and analyze them to see how your business can thrive.

Competitive analysis is similar to industry analysis, but this time you’re going to focus on your immediate competitors rather than the industry as a whole. For example, if your short-term rental is a house by the beach, your direct competitors would be other accommodation providers on the beach.

With competitive analysis, you want to look at the people who may win a booking over you and use what you find to put yourself on top. Ask questions such as the following:

How much are my competitors charging per night?

• Competitor 1 – $100
• Competitor 2 – $150
• Competitor 3 – $200

Using this information, you may decide to drop your prices below $100 to become the cheapest option among your competitors and increase your booking rates.

What standard of accommodation do they offer?

• Are they all standard camping sites?
• Or are they high-end units?
• Are they somewhere in between, suitable for most travelers?

Do they offer airport transfers/pick-up service?

• Yes, but for a very high price.
• Yes, and for a reasonable price.

Do they offer a wide range of amenities in the house?

• No, most don’t even offer Wi-Fi.
• Yes, some offer basic things like a washing machine and television.
• Yes, all offer basic amenities, and some even include luxury amenities (like a swimming pool or gym).

Step 8. Operations plan

The operations plan is simply an insight into how you’re going to run your new business on a day-to-day basis. It will consider whether you will hire any staff, what standards you will set, and how you will keep track of inventory and other administrative duties.

This will be one of the most straightforward parts of your business plan. Chances are, you already have all of this planned.

Here are a few helpful prompts and examples in case you get stuck:

Am I going to hire any staff?

• No, I’m only renting out one room in my home, which I can do myself.
• Yes, I’m renting out several large apartments, and I have a separate, full-time job.
• No, my partner and I will do the work together.

Who is going to clean the rentals between guests?

• A cleaning agency?
• A neighbor?

Do I need to hire an accountant to help me handle the finances of my business?

• No, I’m comfortable dealing with all of those things.
• Yes! I don’t know the first place to start when dealing with taxes or business records.

Who will deal with bookings and customer complaints?

• Myself, with only one room it will be very manageable.
• I will hire an assistant to help with all of this administration stuff, I won’t have time!
• My daughter/son, it will be a good part-time job for them to give them an allowance.

To keep things simple, you can also use solutions such as Lodgify’s property management software and channel manager .

Step 9. Marketing plan

Explain which strategies you will use to advertise your business and generate bookings. Think about both online and offline marketing , as well as any campaigns or promotions you plan to run externally.

This is when your buyer persona (which you created earlier) will come in handy. If you know the people you’re trying to target, you’ll know what websites they use and what type of marketing will be suitable for them.

Your marketing strategy can be really diverse. Here are some questions to help you sketch it out:

What methods of online marketing should I use?

• I will just list my bookings on one travel website because that is enough for me.
• I will have my own, personal vacation rental website . My site, my rules!
• I have several properties to rent, so I will list them on several vacation rental websites to increase traffic and booking numbers.
• I will pay for Google Ads in my local area.

What methods of offline marketing should I use?

• None, online marketing will be enough for me.
• I will print flyers and leave them in local tourist offices.
• I will give each guest business cards and ask them to recommend me to friends and colleagues.

Do I have a website?

• No, I don’t want/need to create one.
• No, but I want one! I need to hire someone to create one for me or try a professional website builder .
• Yes, I have one, and I’m going to hire a search engine optimization specialist to help me increase the number of visits to it.

Do I have business cards ?

• No, I don’t need any.
• Yes, I have some but I won’t use them.
• Yes, I have some, and I’m going to use them as part of my marketing strategy.

“While I’m not sure there is a one-formula-fits-all, there are a few things that helped me: a great website, awesome warm-hearted, personal communication skills, finely tweaked standards, procedures and operations, an open mind and willingness to widen your horizon by questioning what you’ve achieved and learning what’s next. Because we are in an ever-changing and challenging world and only those willing to adapt to the changes will survive.” – Antonio Bortolotti

Step 10. Task delegation and employee management plan

It pays off to dream big, but make sure you have the capacity to do so. How will you manage guest turnover if you’re planning to rent your property every night? Better yet, who will manage guest turnover?

Depending on the scale, your goals will take some serious work to get there. Make sure you’ve factored in how you will manage it alone or how you plan to delegate tasks.

If you know that you’ll need to hire some staff, be it a property manager, cleaning service , or maintenance person, you’ll have to plan for how you’re going to distribute and delegate the work. Using task management tools and including them in your business plan outline will help you to make the most of your teams’ efforts.

“In such a demanding and dynamic industry as ours, finding the right combination of software that aligns with your individual business needs is key to accomplishing all this. And it’s not easy.” – Antonio Bortolotti

Step 11. Distribution plan

Websites like Airbnb and Vrbo are referred to as online travel agencies , or OTAs. For all new hosts, presence on OTAs and listing sites is essential to get bookings.

Your distribution plan should consider which channels you’ll be advertising on, how much they’ll cost you, and how you’ll manage them (hint: you might need a channel manager ).

Here are some helpful example questions to get you started writing a distribution plan:

Which OTAs do I want to list my property on?

• Every OTA that is available? I need lots of bookings!

How much will this cost me?

• Is it free?
• Do you have to pay monthly to list on these websites?
• Do they take a commission off bookings you receive from that website?

Are there any tools available to help me manage all of this?

• Yes! A channel manager .
• A channel manager is a tool you can use to ensure all of your bookings, dates, and arrangements remain in one place so you don’t get overwhelmed managing calendars from multiple OTAs.

When I do get a booking, how will I receive the payment?

• PayPal account.
• Bank transfer.
• Cash/card payments directly from guests upon arrival.

“If a host’s goal is to maximize their revenue and bookings, it definitely makes sense to list on several platforms. Based on research from one of our partners, Tokeet, they found that some of their hosts had reported a 20% increase in bookings once they used a channel manager to list across several home-sharing sites. I would recommend that if a host is listing across several platforms, they should utilize a channel management program to make it easier to manage their listings and their calendars so they don’t double book.” – Cynthia Chan

Step 12. Revenue management plan

So, this is the numbers part. But don’t worry— revenue management is not as scary as it sounds!

In this section, you’ll have to include information about the rates you plan to charge for your vacation rental, alongside any details about pricing or yield management tools you will use.

For people who feel overwhelmed by this, there are a lot of tools and software out there to help. To start with, we’ve written some quick questions to cover the basics of your revenue management plan to make sure your accounts and business stay well in the green.

How much will I charge per night?

• Fixed price: $100 per night.
• I’ll use dynamic pricing , increasing the amount during busy periods.
• I’m still undecided.

Pro tip: Lodgify Dynamic Pricing uses an algorithm that factors in 40+ listing attributes, market conditions, and local trends to automatically optimize your nightly rates.

What level of taxes will I have to pay to the government?

• I’m not sure. I need to research this before writing my revenue management plan.

How much will my utilities cost?

• Water is $50 a month.
• Trash collection is $30 a month.
• Electricity will vary depending on how many guests I’ll have.

What will my staff costs be?

• Zero, I’m doing all of the work myself.
• Low, I’m paying my teenage children an allowance to help me with some household chores.
• High, I’m going to hire a cleaning agency, a marketing specialist, a website developer, etc.

What’s my target monthly income?

• Anything above $0 at the beginning?

“Set stretching yet realistic prices. Quality holiday homes can charge more (because they are worth more) than an average place. When it comes to setting your prices, you need to know what it costs you to welcome each set of guests and work up from there, ensuring a healthy profit per booking every time. The more you charge per week, the more revenue per booking, yet your changeover costs, your marketing costs, your time spent, will be the same.” – Karen Spencer

Step 13. Financial plan

Think about how you are going to finance your new business. As with anything in life, proper budgeting will prevent future stress and help your business thrive.

So, what kind of information makes up a financial plan?

Will I need to take out a loan?

• No, I’m just renting out an existing property with everything ready to go.
• Yes, I will need a small loan to renovate this property.
• Yes, I will need a substantial loan to purchase the property/land where I’m going to build my rental.

What will the interest rates be?

Do I have savings I’m ready to invest into it?

• I don’t want to put my savings into it.
• Yes, I have a small amount that I’ll use for redecoration.
• Yes, I have lots of savings that I’ve been keeping for a project like this!

What level of monthly loan payments can I manage?

• None, my business has small incomings, so I don’t want to take a loan.
• $100 for a small loan?
• $750+ for substantial mortgage repayments?

“Not factoring in the cost of educating yourself is a luxury you can’t afford. The reason I’m part of online communities (I go to industry conferences like VRMA and I put together the Vacation Rental World Summit ) is because I’m the first one to not know everything.

I’m aware that if I want my business to thrive while this industry changes and crashes, I need to stay informed on what’s changing, adjust my strategies accordingly, and be prepared for what’s coming.” – Antonio Bortolotti

Step 14. Key milestones and business future

Write down your plans and goals for your business, plus what key milestones will help you achieve these targets.

When you start any project, whether it is going back to university, exercising, or starting a business, it is really important to track your progress. This section will be useful to refer back to and ensure you’re on the right track.

Here are some good milestones to use for your rental business:

How much do I want to make each month?

• $500? $750? $3.000?
• This answer will be linked to your financial plan, so this is a good time to go back and look at what you wrote down in Step 10.

How many guests do I want in the first quarter?

• As many as possible—I know I’m still in the beginning.

What rate of growth do I want in my bookings year-on-year?

• I’ll figure this out in the second year. I’m just getting started at the moment.

How many returning clients do I want each year?

• At least 10?
• More than 20—I’m confident in the service I provide.
• As many as possible!

“The biggest hurdle that Airbnb hosts have to get through in their first few years of business is to get enough reviews so that guests are comfortable staying at your listing. The more reviews you have, the higher your listing appears in the search results as well, so the biggest focus for hosts should be to get as many good reviews as possible.” – Cynthia Chan

Step 15. Vacation rental business plan: appendix

The appendix in your vacation rental business plan should include all of the relevant documents you have for your business, containing the vital information you need to keep things running.

For example, ask yourself:

• What’s the number for a plumber, just in case I have problems with the pipes?
• Where are my tax registration details?
• Have I kept receipts of all of the things purchased for my business recently?
• Have I backed up my online bookings and calendar somewhere?

Scroll to the bottom of the page to download our customizable Short-Term Rental Business Plan PDF and get started!

Vacation rental business plan: tips and tricks

So, you followed the 15 steps above. Now you’re done, right?

Well, not quite. With the industry growing increasingly competitive, it pays off to follow a few additional tips to get a competitive edge:

• It’s all about the timing. Writing a business plan before buying the rental home is advisable, so you can truly judge if it is a worthwhile investment and business venture.
• You get back what you put in. If you invest time, money and effort into your business, you will reap financial and personal rewards. And to be number one, you need to invest more effort and time than your competitors.
• Quality over quantity. Don’t forget that most people will choose value over price, so don’t compromise one for the other.
• Get yourself out there. The more places you advertise your business (your own website , third-party platforms , social media , etc.), the more bookings you’re going to get.
• Enjoy yourself! The old saying that you’ll never work a day in your life if you love what you do is completely true with vacation rentals. And the more you enjoy yourself, the better the experience will be for guests.

“Quality is essential in everything you do. From the product you bring to the market to the excellent customer service you offer your guests.” – Karen Spencer

Common mistakes found in short-term rental business plans

For many hosts, owning a vacation rental is their first business venture. So, it’s all too easy to make mistakes along the way. Here are some of the most common mistakes to look out for:

• Targeting everyone: We know you want to welcome as many guests as possible. Still, you should avoid trying to attract all guest types, as it might lead to attracting none. Instead, define your target customers based on your value proposition.
• Ignoring the competition: Evaluate your competitive edge in price, value, style, and availability to see where you need to improve. Recognize that rivals may outdo you, even if you believe your rental is the best.
• Making an unrealistic finance plan: Avoid overestimating revenue and underestimating the budget. You may have big goals, but maintain a realistic approach to financial planning.
• Assuming standard home insurance covers you: Include vacation rental insurance , and specifically a policy tailored for vacation rental owners, in your business plan to ensure proper coverage.

Download our free vacation rental business plan template

Don’t know where to start? Don’t worry!

All you have to do is download our free vacation rental business plan sample below and fill in your own information. Our handy guide includes all of the questions you need to ask yourself before starting your new venture.

Hi, Amazing article to learn from basics to advanced in vacation rental business. Thanks for sharing this wonderful article with us.

Fantastic article Jess as always. Even though we’re on our 2nd property and they both are doing well we are going to go back and go through the steps in the business plan. I bet it will help us refine our ideas for moving forward. Thanks again!

Well… consider yourself added to my blogroll. I have like six other blogs I read on a weekly basis, guess that number just increased to seven! Keep writing!

What kind of insurance is available?

Hi Dorothy,

I suggest you check out our article about the different types of vacation rental insurance available. You’ll find it here .

Riley & The Lodgify Team

Thanks for sharing this useful information! Hope that you will continue with the kind of stuff you are doing.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Ready to take more direct bookings?

No set up fees, no credit card details, no obligation. Try Lodgify free for 7 days.

• Our Norfolk Cottages
• Guest Rewards
• Dog Friendly
• Family Friendly
• Romantic Boltholes
• Special Offers
• Explore Norfolk
• Let With Us
• Big Skies Blog
• What’s On
• Terms & Conditions
• Housekeeping Login
• Owner Login
• Cookies Policy
• Terms of Use

10 High Street, Holt, Norfolk, NR25 6BQ

Mon – Fri 9am to 5pm Sat 9am – 1pm

Guide to Running a Holiday Let Business

Turning your second home or your holiday let investment into a successful holiday let business is not actually that complicated..

We have a few tips to help you make the most of the available benefits from both a tax and practical perspective.

Whether you are embarking on holiday letting purely as an investment exercise, or if you are holiday letting your second home to help with running costs.  The principles for success remain broadly similar.

This guide is designed to look at the principles of setting up your holiday let as a business.  For more information on the nuts & bolts of holiday letting, see our  Property Letting Guide .  Where we address some of our new owners most common questions and concerns.

It’s all in the Preparation

Everyone who sets up their second home as a holiday let is hoping to have as much of a stress-free experience of having paying guests in their home as possible. The key to managing this is in the set-up of the cottage and the information available to guests.

We will work with you every step of the way to make sure everything is in place to allow guests to enjoy their holiday without needing to pick up the phone but here are a few tips to get you started:

• Equipping your cottage in a way that you would be happy with were it you on holiday is a really good place to start.
• A comfortable night sleep will be key to your guests overall experience, so it is worth doing some homework to find really comfy mattresses. This can be done without breaking the bank (just ask us if you get stuck, we have some good mattress options that have worked well in other cottages).
• It is a really good idea to ‘road test’ your cottage as if you were a guest, or inviting some friends to stay and do just that can be a good way to get a different perspective.
• If you would like, we can arrange a member of the Big Skies team to pop over and check everything out for the sorts of things we know sometimes get forgotten.
• Often just leaving the instruction manuals is not the most straightforward way to help guests know how to use things.
• A simple ‘At A Glance’ sheet is enormously useful, with details of things like the WiFi Code, any foibles with gadgets or heating etc, will help guests fend for themselves during their stay.
• Providing a clear and easy to read ‘Guest Information’ makes all the difference. We will provide you with a lovely binder complete with all the information on the local area for your guests and together we will personalise this with information specific to your home.
• The standards of Norfolk holiday cottages is pretty high. Guests are discerning and to attract the most bookings your cottage needs to catch their eye.
• We can help with practical advice on this but as a rule of thumb it is a false economy to put cheaper items in a holiday let. Good quality fixtures and fittings will cope with the increased use and footfall much better.
• We have a really handy ‘inventory template’ that you might find useful. It is not an all-encompassing list but is often useful for remembering smaller items that you might not necessarily use but guests might (like egg cups or a tea pot).
• We all like to feel special when we go on holiday, so leaving a small welcome gift or hamper for your guests is a great way to make them feel wanted.
• If guests feel that the owner cares about their experience of staying in their home they are much more likely to forgive any small things that might be missing or not working during their stay.
• We can help with welcome packs or give you practical advice on how to make guests feel special with very little financial outlay on your part.
• Finding the right housekeeping team for your property is an essential part of ensuring a trouble-free experience of holiday letting. We can help you with this if you don’t already have a housekeeper in place.
• Your housekeeper will let you know if you need to replace some glasses or some of your towels are past their best but just in case they miss things, one of our team will pop out to you cottage on a regular basis to check everything over and we will let you know if anything needs updating or replacing.
• Encouraging feedback from your guests is a great way of getting good ideas of small ways to improve the experience of future guests too.

Qualifying for Business Rates

Unlike a longer-term rental property, a holiday let is a business and therefore you are able to move from residential council tax to commercial business rates. Increasingly local councils are keen for holiday let owners to register their holiday cottages as businesses and to move them to business rates.

As a holiday let business owner, there are some clear benefits to registering for business rates. The first is that you can take more control over your refuse and recycling collections. The main benefit of this is that during the peak season you can arrange a more frequent collection of the bins, particularly for larger properties this is very useful. It helps prevent issues of overflowing bins when collections are bi-weekly. Equally, you can reduce the number of collections in the low season when you may not be welcoming so many guests.

The second benefit is dependent on how business rates are being calculated but at the time of writing, it is likely that your holiday let business would qualify for  Small Business Rate Relief  and in many cases this will significantly reduce your business rates burden, in many cases to zero. You will be required to pay for your bin collections but as noted above having more control of this is no bad thing.

There has been some abuse of the system with less scrupulous owners registering for rate relief but not in fact letting their cottages a great deal. To discourage this, many councils are introducing a minimum number of nights let requirement to qualify for Business Rates. This in general, is around 70 nights let.

Qualifying as a Furnished Holiday Let

In order to qualify for the tax benefits of running your property as a holiday let, you need to qualify as a Furnished Holiday Let. This is a different benchmark to the one previously mentioned that might be in place with your local council to qualify for business rates.

As it stands just now, in order to qualify as a Furnished Holiday Let your property must:

• Fully furnished.
• Available to let commercially for 210 days per year, with the intent to make a profit.
• Actually let out for at least 105 of these days.
• Not occupied by longer term tenants (more than 31 days at a time) for more than 155 days per year.

You should speak to your accountant for more detailed information on qualification and tax benefits but we have a brief overview put together for us by local accountancy firm Lovewell Blake:

Furnished Holiday Lettings & Tax

This site uses cookies for marketing, personalisation, and analysis purposes. You can opt out of this at any time or view our full privacy policy for more information.

How to run a successful holiday rental business

Investing in a holiday let gives you the freedom to run a business from home in some of the most beautiful parts of the country. if you’re thinking of taking the plunge, here’s our guide to running a successful holiday rental business..

Many people dream of escaping the hustle and bustle of the city for a new life in the country. But even if you’re retired, you may not want to give up working just yet. Homes with an adjoining holiday let can generate a good income and allow you to live in your dream location. Alternatively, you may look at a holiday let as an investment, either to generate income or to take advantage of capital growth.

Whether you’re considering a new business venture or a second home, we look at what you need to consider if you’re thinking of investing in a holiday let.

Decide on the primary purpose of your business

This affects what type of property you go for, where you buy and how you run your business. If you want a holiday cottage that you can use during school holidays and let out at other times of the year, then your approach to choosing a property will be very different to someone whose primary goal is to generate income.

Choose the right location

As with buying any property, location is key. If you want your holiday let to be full all year round, then you need to choose a popular location with an active tourist market. It’s always worth checking out the competition to see if there is a niche that isn’t being filled in the local area.

For example, Church and Corner Cottage is located in a small Rutland village, close to Stamford. Nearby Burghley House and Rutland Water make it a popular area. There’s plenty of holiday accommodation but a lack of luxury self-catering properties, a gap which this cottage nicely fills.

Make sure the property suits your target market

You also need to decide who your ideal customer is. If you have a large property, then your target market is likely to be families. Whereas a cosy, one-bed cottage can be marketed as a romantic retreat.

As with any business, if you want to command top prices, then you need to offer a high-quality product. This may mean spending a bit extra to upgrade the existing fixtures and fittings and install fast Wi-Fi or offer special touches such as a welcome hamper of locally-sourced food.

For some people, renovating and upgrading a property is part of the fun. But if you want to get up and running immediately, your best bet is to choose a property that’s designed to be run as a holiday let.

Church and Corner Cottage is a recently renovated three-bedroom property with the flexibility to be let as a single unit or two completely self-contained cottages.

It’s fully fitted out with bespoke kitchens, Artisan of Devizes limestone floors with underfloor heating and Perrin & Rowe bathroom fittings. Not to mention all the technology expected of a premium holiday let, including high-speed Internet, USB charging points and integrated Freesat TVs. With the option to include furniture and bedding in the purchase, the property is ready to let from day one.

Be prepared to work hard

More work goes into running a holiday let than you may realise. But if you want to take a more hands-off approach to managing your property, there’s always the option to subcontract some or all of the work out to others.

There are many property sites and marketing professionals who can help you market your business online. Hiring local staff to help with cleaning, gardening and greeting guests takes the burden off you and boosts employment in the local area.

Other great letting opportunities

If you fancy escaping to the country and investing in a holiday rental business, check out these ready-to-let options.

• Mary’s Cottages is an established lifestyle business in Elgol on the beautiful Isle of Skye. The five-bedroom house and four thatched cottages are ideally situated to take advantage of the surge in popularity of weddings at nearby Loch Coruisk.
• This converted Welsh stone barn with stunning views over Harlech beach has two cottages and a leisure complex in addition to the main house. It’s location in Snowdonia National Park and local amenities draw visitors to the area.
• Knockbrex Castle , close to the Solway coast, is a great niche investment. The seven-bedroom castle is perfect for large groups or small weddings and there are two additional cottages in the grounds.

Like this? Share it...

Plan Projections

ideas to numbers .. simple financial projections

Home > Industry Templates > Holiday Let Business Plan Revenue Projection

Holiday Let Business Plan Revenue Projection

This holiday let business plan revenue projection template is the first step in starting a business plan, and provides a quick and easy method to estimate revenue generated by a holiday let operation for the next 5 years.

Details relating to up to eight rental seasons can be entered together with an average rental per week for that season. In addition, a weekend rental rate can be set for weekend lets.

The holiday let template calculates the number of equivalent weeks each year the property is let for (treating weekends a two days), and works our the occupancy percentage, and average weekly rental income.

Additional sundry revenue types are allowed for to give a complete revenue projection for the five year period.

Holiday Let Business Plan Revenue Projection Download

The holiday let business revenue projection template is available for download in Excel format by following the link below.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

You May Also Like

• Book with us
• Free Estimate

Heard about OccuMax ® pricing?

You can earn up to 30% more with our unique pricing strategy. Developed from managing over 350,000 bookings, it runs entirely within local regulations and has already earned our hosts over £112 Million.

What is a Holiday Lettings Business?

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.

I hope you enjoy reading this blog post. If you want my team to just manage your Airbnb for you, click here

About Houst

Houst is a leading property management company specialising in short-term and medium-term bookings in eight countries. With over 7 years of experience and managing over 300,000 bookings, we help homeowners make the most of their properties.

Have you thought about setting up a holiday let but are still deciding whether to start? Or you're probably wondering, "how profitable is the holiday lettings business?" Here’s everything you need to know.

The hospitality industry is one of the biggest global industries, boasting a market size of 3,953 billion US dollars in 2021 and 4,502.83 billion US dollars in 2022. This figure is expected to rise to about 6,000 billion US dollars in 2026.

Due to COVID, these 2021 and 2022 figures were less than the industry's market size before the Covid pandemic. As the world resets to normal, there are indications that the market size could get bigger.

For example, in the UK, the economic output of the hospitality sector was £59.3 billion in 2019. Although it noted a 42% and 21% decline in 2020 and 2021, Oxford Economics predicts that the industry will be the fastest-growing part of the UK economy in the next five years. Moreover, bookings are currently up to 35% compared to pre-pandemic levels, according to Sykes Staycation Index.

If you want to tap into this robust industry, starting a holiday lettings business is one of the easiest ways to go about it. Here, we will guide you through what a holiday let business entails and how to start one.

Table of Contents

A holiday lettings business involves renting short-let accommodations to travellers and tourists. There is an emphasis on the term "short-let" because these accommodations are equipped to cater to the visitors' needs for only a short period. The short time ranges from a few days to a few weeks.

As a holiday lettings business owner, the maintenance, daily operation, availability of amenities, risk management, and security of the property and its occupants are your responsibilities.

On a happier note, you don't have to bear the full weight of managing the risks of letting your property. For more information on how to protect your investment and manage the risks associated with short-term lets, read our blog on holiday let insurance and cover .

Also, if you want to avoid the hassle of keeping track of guests, cleaning, and making sure they have everything they need, take advantage of Houst's guest management calendar and housekeeping team.

Holiday let business models don't vary too much, so if you're wondering how to run a holiday let, it can be pretty straight forward with the right support.

Starting a Holiday Let Business

With the definition of out of the way, let us look into how to start the holiday let business. We have mentioned that the holiday lettings business is an easy way to get a sizable share of the robust hospitality industry. However, like every profitable venture, it's not without its challenges.

The holiday lettings business is multifaceted. This means that you have to consider a lot of things in the process of setting up a holiday let. We have broken down the process as easy as possible in this guide. Below are the steps involved in starting a holiday let business;

Getting a Holiday Home

The holiday home is one of the essential aspects of starting a holiday home business. There are some businesses which use a tactic called “rental arbitrage”, but we won’t cover that in this article.

If you have a second home, you can use it for a holiday home. Otherwise, you will need to rent or mortgage another property. Before renting or mortgaging a new property, you need to consider certain factors to determine its suitability and potential yield as a holiday home. The factors include;

The location is the leading consideration when choosing or buying a property for a holiday let. This is because your property's location will affect your ability to attract guests and how much you can charge for stays. Thus, finding one with tourist activity is of paramount importance.

Having said this, you should also remember that your guests are human and would appreciate some quietness in their accommodation. Therefore, the ideal location for a holiday home should be close to tourist sites but not too close to the city's noise and hustle and bustle.

If you want to run a short-term accommodation like Airbnb, the property should be close enough to amenities such as shops and restaurants so that you can offer convenience for your guests.

Some holiday let businesses do well running remote locations, but this is a niche, so it’s best to look for something which ticks the most requested boxes.

With this information and your ideal guests in mind, you can narrow down the areas where you would consider getting a property for your holiday let business.

Ideal Customers

To run a successful holiday let business, your holiday home needs to appeal to your target customers. Think about what kind of people you want to attract to your property – families, couples or groups of friends. Think about what they might want from their visit and what they may need from you as the owner.

For example, If you'd like to cater for families or large groups of guests looking for adventure, an excellent choice would be a spacious house in a seaside town. These locations would make your stay popular due to its proximity to sandy beaches, seaside restaurants and fishing spots.

If your ideal guests are high-end clients who enjoy luxury travel and are happy to pay handsomely for it, you'll want to find a holiday home in a premier location. That might mean renting a property near a well-known tourist attraction or resort town that elite people like to visit on holidays.

Suppose your target audience is more price sensitive. In that case, you can rent a property in an area that isn't quite as expensive but still has good public transport links and amenities nearby (coffee shops or restaurants).

Type of Property

It is also essential to consider the type of property you want when running a holiday let business — the more rooms in the property, the higher your chances of earning more money.

Thus, you could choose a multifamily property that allows you to house more than one tourist at a time or a single-unit property where you can only accommodate one tourist at a time.

For more insight on mortgages for a house let business, read through our blog which covers holiday let mortgages .

Preparing the Property for Business

Once you have acquired the property, the next line of action is putting the right things in place to make it an ideal holiday home.

You need to understand that the holiday lettings business is competitive as many people provide the same accommodation services that you provide. Therefore, you should strive to implement strategies that can make your guests prefer your property over your competitors.

To start with, you need exquisite interior decor for the holiday home. You need not break the bank, but it should be unique and can stand the test of time. The furniture pieces that go into the property should also be of good quality. It also does not hurt to have extra features and amenities in the property to benefit the tourists patronising the holiday let business.

Amenities such as parking spaces, Wi-Fi, hot bathtubs, gardens and usable lawns, and the likes could be why a tourist would enjoy their stay on your property and recommend it to friends and family.

You should also look into making arrangements for pets. Hoo's research reveals that the lack of pet-friendly accommodation is one of the reasons that hinder guests from having the "pawfect" staycation.  

83% of pet owners in the UK feel guilty about leaving their dogs behind, and 56% do not mind travelling with them. Hence, making provisions for pets would make your place more appealing to visitors.

Regulations, Laws and Permits

Despite being a holiday home, your property is not exempted from some property rules and regulations that guide the purchase and ownership of properties in the UK. If you decide to turn your home into a holiday let, you would need to apply for a "change of use" permit.

You may also need to obtain a hotel licence to run your business. In any case, you should check in with your local council to avoid breaching any rules. These will ensure that your holiday lettings business runs smoothly without any inference from the government.

In this blog, we have simplified the process of starting a holiday rental business by explaining what the business entails and how to go about starting it.

Keep in mind that Houst is a professional hosting management company. We help our hosts optimise their listings so they'd earn the highest rental income on their properties without putting in the extra effort. For more information, contact us today.

Remember that people going on holiday in the UK will want:

• Dog-friendly stays
• A contactable property manager
• Potentially a hot tub
• Furnished holiday lettings
• Maybe a holiday letting agency to give them peace of mind

FAQs About Holiday Lettings Business

Is a holiday let business a good idea.

Yes! Holiday letting business is a good idea because several factors make it profitable. Firstly, the number of people travelling during the holidays, especially in this post-Covid period, is increasing. Hence, you can start a house let business and earn from accommodating tourists and visitors.

The second reason is that plenty of platforms out there that allow you to easily list and market a property you own or rent for short-term rentals. Moreso, you can start a short-term rental with no money.

The most important thing is to know how to manage your guests and the holiday rental property properly.

How do I Start a Holiday Let Business?

There are three processes involved in starting a holiday let business. They are:

1. Getting a home: You can use your second home if you have one, but in the absence of that, you need to acquire or rent a property. When getting a house let property, you should consider;

• Ideal customers
• Type of property

2. Preparing the property: It's important that you finish and set up your house in a way that would appeal to your target customers. This will go a long way in determining whether you'd have returning guests or bad reviews after their visit.  

3. Obtaining the necessary permits: Speak to an expert in your local area to find out what the necessary permits are that you must get before setting up a holiday let. Rules vary significantly in different areas, so don’t get caught out!

Other businesses that you might start with a property include a self storage business, which you can streamline with a self storage software .

What are the Legal Requirements for Holiday Lets?

For your property to be acknowledged as a holiday let , it must be well-furnished, equipped, and available for commercial letting for 210 days a year.

The exact legal requirements vary, but you should always have holiday let insurance, ensure the property is safe and follows proper health and safety regulations, plus ensure you have a permit for the desired area.

The Insider @ Houst

The Insider team at Houst is dedicated to providing up-to-date and relevant information on short-term rentals. If you have hosting inquiries, please write to us at [email protected]. For guest inquiries, reach out at [email protected]. We are here to help you navigate the world of short lets and look forward to assisting you with your needs.

Related Posts

Popular categories.

• Airbnb hosting
• Booking.com strategy
• Short-term rentals
• Holiday lettings
• Industry news and trends
• Guest Experience
• City and destination guides
• Industry performance updates
• Regulation and compliance
• Home buying tips

Commission-Based Pricing From

Complete property management services.

We streamline the process of short-term lets and assist in maximising your rental revenue in London.

Listing Management

• Multi-platform listings
• Professional photography
• Listing creation
• Price optimisation

Guest Management

• Guest vetting
• Guest check-ins
• Linen and toiletries
• Guest communications

Property Management

• Cleaning and housekeeping
• Property maintenance
• Property insurance
• Property management software

Cookie Settings

We use cookies to make sure you get the best experience on our website. We don’t track you or share your information with third parties.

🔑 Use our Airbnb Calculator & Unlock Your Property's Full Potential

• Maximise Your Earnings – Find out how much extra you could earn with Airbnb short-term rentals.
• Tailored Insights – Receive a customized income estimate tailored to your property’s features and location.
• Optimized Listings – Enhance your property’s appeal with our expert tips and industry insights.
• 24/7 Management – Enjoy stress-free hosting with our comprehensive guest support and seamless check-ins

No commitments — just a fast, free estimate.

We hope you enjoy our blog!

If you would like to find out more about how our team can help you get the most of your Airbnb, just book a call with us.

• Optimisation des annonces – Maximisez le potentiel de votre annonce. Faites l’expérience d’une croissance tangible.
• Photographie professionnelle – Des visuels captivants qui attirent instantanément les invités.
• Filtrage des invités – Garantir uniquement les invités les meilleurs et les plus sûrs pour votre propriété.
• Fastracked growth: Quick portfolio expansion and up to 20% booking commission for property managers.
• Guest Support and Tech: 24/7 support and tech streamlined operations, enhancing occupancy and guest service delivery.
• Pricing Optimisation: Increased earnings with algorithm-based pricing strategies.

How to start a holiday let business

15 quick and dirty hacks to help you set up a holiday cottage business.

As we complete a decade of renovating and running holiday cottages in England and Wales and enter our 6th year at Cambrian Escapes, we've been reflecting on the changes in the staycation industry.

Back in the day, you listed with a single agency; January was the hottest booking month of the year and everybody booked their week-long holiday.  Short breaks were still the domain of hotels and B&Bs and 80% occupancy (in England anyway) was the no-sweat breaking norm. Airbnb was still a toddler and not on the cusp of becoming an Oxford English Dictionary entry for being the dark destroyer of local housing and colloquial noun for short term accommodation.

As we enter 2024 it’s a fiercely competitive domestic market, with some blow-your-socks-off properties and a plethora of back garden pods and cabins.

Everybody is doing it, which means you need to work even harder to stand out from the crowd.

This year, it’s set against a backdrop of recession and, following the pandemic, governments have waded in with some extremely impactful regulations that have hit people working in tourism, hard.

Wales has introduced new regulations around minimum occupancy, which means that if you don’t achieve 182 nights occupied (105 nights in Scotland and England), your business gets taken off Non Domestic Rates, is classed as a second home and liable to up to 4x council tax, albeit with a few exceptions, like if it’s an annexe. 

There’s a new and expensive statutory licensing scheme in Scotland - you cannot rent a property on any platform without having a short term letting license. In Wales, as well as an imminent licensing scheme, a tourism tax will be introduced in 2026 and collected by accommodation owners.

With Cornwall always being mooted as the most blighted county for second homes ownership, England is just beginning to stir its stumps.  Michael Gove has just announced (Feb 20 2024) that a short term holiday lets will need to go on a national register and will need to apply for planning permission to operate. If an area has too many, then it's likely they will be registered as a second home and come in for large council tax bills.

All this means your business has got to be blinking brilliant, attracting loads of guests and still make you money - even if you slash prices to rock bottom, pay 25% commission to multiple booking platforms, and offer often loss leading one night stays to keep up with the Jones’s.

Photography hacks: New York rocking the rumpled bed look. Don't fall for the old towels on beds shots

Sands of Time

Photography hacks - it's all abot the detail: The gramaphone in Skyloft

Beyond Boundaries

Photography hacks: Details. A lovely sheepskin bought from our friends at Penbanc pasture, on a handmade bench in Glanyrafon

Faces of Humanity

Photography hacks. No need to shoot the whole room on wide angle. Details of the interiors

 patterns in the bathroom in Skyloft

THE PROPERTY

Who, what and why.

The crucial questions to ask yourself are: Why are people going to choose to stay at your place? 

What are its USPs? Has it got a wood fired hot tub ? Or a stunning coastal view, a downhill mountain bike run or an outstanding gastropub next door?

Who is your target audience? This includes their age, interests, families, friends or couples and what they want from a holiday. Are you going to take dogs or cats?  Design your place to attract your target guests and how they will use the space.

Research is Jack, Queen and King. As well as doing desktop exercises and looking at what other local accommodation providers do, go and stay in places similar to whatever you are planning to do and in a similar price bracket. 

And Development We also think you need to keep researching and developing your business. Unless you’ve got a rock solid USP it’s always worth staying on top of travel trends. It means you can hook into social media and add extra value to your offer – often for low or no cost. 

We keep asking our accountant if our research staycations are tax off-settable – after all every other business has a Research & Development budget. He keeps saying no.

Interiors & styling

Chances are, you already like interiors and styling and your hosting gene runs into making things as beautiful as possible.

Check out my Pinterest which I used extensively to research and save ideas for the interiors at Cambrian Escapes  You can decide whether I stayed true to my initial themes (the boards are Glanyrafon, New York and Holiday Costs).  I backed this up by sprawling over interior magazines like House & Garden and latterly the bible Conde Naste Traveler and a few interior books ( Ros Byam Shaw , Axel Vervoordt I also have a strong history in Annie Sloan and furniture auctions prior to that. Plus there’s loads of blogs on the best way to hang paintings, what to grow up a north facing wall and so on. Thanks also to a few brilliant friends who were there for wobbles and paint advice.

Scale plans

When you’re working on a layout, we follow the Rita Konig tip of working from the centre of the room out to the edges. Don’t just shove everything against walls and leave the centre empty. Divide rooms up into areas, do scale plans with cut-outs of furniture to help work out layouts, it makes such a difference to see things in plan.

Farrow & Ball has a section on its website to help you put together colour schemes - genius if you’re looking for inspo or don’t feel comfortable with complimentary colours and the colour wheel. We do think it’s worth buying good quality paint, by the way. It’s a totally different beast and far more durable. Also: don't forget to keep a list of which paint you've used where - totally essential to get the touching up right!

The boring interiors bit

It’s worth applying a few questions to your chosen pieces: How are your furnishings going to stand up to wear and tear? Are you happy to sand down and reoil wooden worktops every year? Are furniture and furnishings good to clean? 

Support small local businesses

Tourism at its absolute sustainable best, should support other small businesses and your local community. Try to resist shopping online or the last minute Dunelm Dash. You can find so many fantastic things in local furniture and interior shops, vintage and antiques fairs and you’ll be supporting and connecting other small businesses, which often leads to recommendations and stays. These small businesses will also become part of your social media community.

LISTING & MARKETING

Cottage agencies, rental and listings.

The days of the exclusive cottage agency are long gone. Now you can be on as many platforms as you wish, for about 25% commission, or on a listings site you’ll get charged an upfront listing fee.  But watch out: some agencies will list you on Airbnb , Booking.com and a gazillion others. All you need to think about is what best suits your property and your location, whether that's a curated set of cottages, or Airbnb.

Photography

You must have brilliant photos. It’s not about squeezing the entire room in to the shot like an estate agent would. it’s about capturing the mood, the essence of the place and the little touches.

Wide angle lens shots and folded towels on beds are out, rumpled linen-clad beds and steaming baths are in.

Always pay for a professional photographer – they often stay for a night or two so you get a range of shots taken throughout the day and night. If you’re listing with an agency they will arrange this.

Creating your own website

There’s a few things to consider about cost here: there is the cost to design & build it, plus an annual hosting fee, booking system charges and the charge of taking online payments via stripe, and so on. 

From a purely financial point of view, if you have a single unit, it is better value to pay the 25% commission to have your platform(s)/cottage agency do it all for you – from listing to marketing and collecting the payment.

If you have more than one unit, developing your own brand, like we have at Cambrian Escapes , is important.  But, the most important bit: you need to work to make sure your pages rank well and Google drives online traffic and hopefully bookings, to your site. If you don’t have good Search Engine Optimisation (SEO) no one will find you, no matter how pretty your website is.

Listing yourself on Google business gives you a free online presence and you can use it as a function to gather reviews that are then seen by prospective guests, too.

Social media

Everybody is a photographer and a vlogger and it’s important to be on social media – you can share guest posts as well as your own. If you only have time for one channel, match it to the one with the right demographics for your guests. We prefer Instagram but have fettled in all of them.

MONEY MONEY MONEY

Finance & business modelling.

Talk to an accountant from the start who is experienced in working on accounts for holiday cottages. They will help you decide on your business structure - are you going to be sole traders or a LTD company; are you going to need to register for VAT; will you be liable for Capital Gains Tax when you sell.

Business modelling is essential, whether or not you need finance for your project. After all, you want to make some money for all of your endeavours.

You need to model different occupancy levels. For example, in Wales, the average is 54%, what occupancy do you think you can achieve (looking at other places you have researched) and what is a reasonable rent for it? 

What are your capital renovation and project costs to get the property on the market? What are your overheads ? These include Insurance (*do not skimp and watch for those super important rebuild costs because these have rocketed), marketing, any loans, energy, tax, boiler services and the ones that everyone forgets (or ignores) paying your own time for cleaning, laundry and admin.

Does the figure give you a reasonable return on investment? How many years will it take before you can pay off your debt or investment and turn a profit? How will you finance the required investment? It is easier to borrow against an existing business than a new start up.

 If, after doing the modelling, it doesn’t give you a good return and you need finance, you won’t get it.

Pricing 

All agencies make suggestions on pricing – including Airbnb. But you need to make sure it reflects your business model. Pricing is usually based on your target audience and your USP – You are looking at comparable properties, which may not necessarily be local.  So for example with 

Glanyrafon we look at the price of renting a rural cottage with a wood fired hot tub, in a good location near a National Park.

There are now dynamic pricing models available. Many properties have a nightly price based on length of stay – the longer the stay, the lower the nightly price and the shorter, the more expensive. Some agencies work on the basis of a short break costing 70% of a week price.

IT'S THE LAW, GUVNOR

Rules & regulations

The industry is changing fast and new regulations are introduced regularly. You need to be abreast of the second homes issues, licensing, fire regulations, insurance, registration for business rates, PAT testing, tourism tax. These regs change from country to country – we recommend becoming a member of PASC UK. They have all this information in one place, but also work hard for the industry and represent us and try and influence the regulators to get the most workable solutions for us as an industry.

And finally, we're members of our local tourism associations - Brecon Beacons Tourism and Carmarthenshire Tourism Association. Working in tourism, isn't like working in an office. Your only colleague is often your spouse or partner and it can be lonely.  We find it hugely beneficial to meet up with colleagues in are area, to chew the fat and find out how business is for everyone locally, and to network with each other. The tourism associations came into their own during the pandemic. Fighting our cause, keeping us abreast of changing regulations, promoting and supporting us and keeping us linked together and part of a group. Recommended.

< Older Post

Newer Post >

Cambrianescapes

The best walks off the beaten track Cwm Sawdde Fechan Bannau Brycheiniog

The best walks off the beaten track - Brecon Beacons| Bannau Brycheiniog

The best walks off the beaten track - Cambrian Mountains

The best days out for food & views in Wales - coast & country

The best weekend in Wales for petrol heads - 11 brilliant experiences

How to spend a weekend in the Brecon Beacons & Carmarthenshire

How to start wild swimming: 121 open water swimming experiences and adventures in the Brecon Beacons

Best dog walks Llandovery, Brecon Beacons, Carmarthenshire

Best waterfalls in the Brecon Beacons and Cambrian Mountains

Best Lakes in the Brecon Beacons & Cambrian Mountains

Cambrian Escapes CYF

Penstacan, Cilycwm, Llandovery SA20 0TF I T 01550 720 712 I E [email protected]

Cambrian Escapes

Penstacan, Cilycwm, Llandovery SA20 0TF

T 01550 720 712

E [email protected] 

How To Start A Holiday Let Business

• 28th November 2019
• Advice & Articles , News
• Stewart Hindley

Home / Blog / How To Start A Holiday Let Business

Whether it’s a short break or a longer summer holiday, more and more of us are choosing to holiday in the UK.

As demand for holidays in the UK continues to grow, so do the opportunities available for those considering letting out a property to holiday makers.

If you’re thinking about starting a holiday let business, it can be an exciting yet daunting process. Here’s our guide:

Do Your Research

Before starting any business, it’s vital that you complete your research. So, the first step in setting up your holiday let business should always be to research the market, location and competition.

Points to consider in your research include:

• Is the location popular?
• Is there a demand for holiday lets in the area?
• How much rental income could you earn?

Work Out Your Letting Rates

Your research will also help on pricing your letting rates. It’s important that you get your rates just right – too high and you risk your property sitting empty and too low and your profit margins will be down.

Conduct your research then set your letting rates accordingly. Once you’ve launched your business, you should also constantly review and adjust your letting rates to ensure that they are in line with market trends.

Prepare Your Property

If you want to attract guests and ensure they have an enjoyable stay, you need to make sure that your holiday let is well presented and kitted out with all the expected amenities.

The first thing your potential guests will see is the photos of your property, so décor should be stylish and appealing.

As well as looking the part, your property needs to comply with all relevant legislation and regulations.

Start Your Marketing

Once your property is prepared and your holiday let business is ready to go, you’ll need to start marketing your property so that guests can find you easily and book their stay.

Your business should be as visible as possible online and it’s also beneficial to have an online booking system to make reserving rooms as simple and straightforward as possible.

Find Out More

If you’re thinking of starting a holiday let business, it’s important that you have the necessary funding in place. To find out more or for a free, no-obligation quote, please get in touch .

More by the author

Related articles

Purchasing a marina or watersports facility

The Pink Book updated with card charges legislation

Most Popular Types of Beer in the UK

How Profitable Are Holiday Lets?

You are here: Home / Help & Advice / How Profitable Are Holiday Lets?

If you’re hoping to purchase a holiday let, we’ve got good news for you: if you buy the right property and things are operated correctly, then they can be a fantastic financial investment with the potential to generate a very healthy profit. The key is to do your research beforehand and keep putting the work in afterwards.

Let’s run through some of the key factors around holiday let profitability ….

Ever heard of the 8%-10% rule?

Being holiday letting experts who have seen the holiday letting industry from the customer, owner, and lender perspectives, we have a unique lens on this world!

We are often asked, “What is the one thing we must get right to make holiday letting work?” Our answer is, it’s the ratio of expected gross rental income to the purchase price of the property. If you can get that number to work out at between 8% and 10%+, you are off to a great start!

The reason this is so important is that some properties attract what we call ‘postcode value’, meaning that they are expensive properties to purchase purely because people want to buy and live in them as a residential property. The rental potential of these properties does not change proportionally with purchase price; holiday makers, on the whole, just want a nice property in a pretty village and they don’t have the specific local details to know one village from another.

A good example of this is in the Cotswolds, where the village of Lower Slaughter is very desirable to live in and properties command a significant premium compared to other villages. Travel a couple of miles in any direction to another ‘normal’ village and you will find that a like-for-like property will be much cheaper. However, and this is the key part, the rental income is roughly the same .

Look at this in numbers. If you purchase a three-bedroom property in Lower Slaughter and it costs £600,000 and the rental income is £35,000 that is 5.8% ratio. Move a little further away from that village and you might find a similar three-bedroom property for £350,000 generating around £34,000 gross rental income, which is 9.7% ratio.

Key takeaway: try to find a property that falls within the golden ratio of 8% to 10%!

What should I buy?

Buying a holiday let isn’t a decision to make on a whim! Choosing the right holiday home is vital and if you make a bad business decision, your future profits will be affected.

Firstly, you need to settle on a good location : somewhere that attracts tourists, has plenty of amenities nearby, good attractions for all ages, and is easy to get to. The most beautiful house in the country won’t prove very popular if it’s hidden in the middle of nowhere and you have to drive for miles to find a shop!

The issue of location is even more important to consider after the new 2024 regulations came into play which can veto the addition of new holiday let properties in certain areas. The new rules have emerged because a small number of places have been overwhelmed by the addition of new holiday homes. Essentially, individual councils will now have the final say as to whether buyers have to seek planning permission to turn a regular residential house into a holiday let.

Secondly, the property itself needs to be structurally sound and aesthetically pleasing, especially with so much competition out there. If you want to buy a place that’s in need of some TLC, make sure that you have the funds to cover the necessary work… and that the finished job will be worth it!

The size of the property will also affect your profits as sizeable properties can be rented out for more money. As such, you can reduce the number of guests you need to make a healthy income and minimise your maintenance costs between bookings. However, there is the downside that you might also hit the VAT threshold (£85,000) with a minimal number of bookings per annum, and as a result will have to pay VAT.

What does a typical holiday let profit and loss account look like?

Another very common question from owners and clients!

Holiday lets are unique and each one will have slightly different operating financials, but to help you plan and to make sure you are including all key costs, we have created a P&L table below, based on a real cottage that we know very well (yes, we used to own it!):

Indicative P&L for Sleeps 6, No Restrictions, Available All Year

The above is an example only, but it is based on a real cottage using a professional holiday letting agency for marketing, and a professional housekeeper to do the turnarounds and linen. The housekeeper was also paid to be on-call and deal with out of hours issues.

Depending on how you decide to run your holiday let, you could save on certain costs (see below), like housekeeping – if you do it yourself – but be warned, it’s a tough job! 

Note: following the government’s decision to remove the FHL status from holiday lets, from April 2025 you will no longer be able to offset mortgage interest against profit for the purposes of income tax.

The costs of running a holiday home

When you’re putting together a holiday let business plan , you have to consider your outgoings – and there are a lot! Holiday let properties require considerably more maintenance than buy-to-lets: a proper clean and replenishment of goods between every guest, as well as year-round marketing to generate footfall, and management to handle day-to-day tasks such as bookings.

It’s easy to underestimate the sheer amount of work it takes to run a holiday home to a high standard – and believe us when we say that standards these days are very high! You’re going to want a slick website and booking system, savvy marketing which shines against the competition, and a property that’s good-as-new for each and every guest. For this reason, we’d advise holiday let owners to go with a professional when it comes to marketing, management, and maintenance – something that should be factored into your budget.

Cost savings

There are plenty of ways that you can control your spending, so long as you’re careful not to cut costs so drastically that your holiday home suffers as a result. As we mentioned, keeping below the VAT threshold is a good way to lower your outgoings.

The main areas in which you can save are marketing, management, and maintenance. When it comes to marketing, there’s a whole host of strategies for promoting your holiday let yourself: design a website, promote through social media, utilise platforms such as Airbnb, create and distribute leaflets. However, it has to be said that by doing the marketing yourself, you’re unlikely to get the exposure necessary to achieve nationwide, let alone international, exposure.

Moving onto maintenance, we have the same issue. You could choose to do your own housekeeping or find a friend who can undertake the job, but you should understand the risks involved with this. Unlike a professional housekeeper, a friend can easily cancel on you, which could cause havoc if there’s little notice. Even without this issue, the time and effort required to get the house ready between each guest is a sizeable undertaking, which goes far further than just cleaning and tiding. Think washing and ironing linen; making bedrooms up; replacing necessities such as toilet roll and toiletries; checking cupboards to ensure everything is in place, the list goes on… and that’s not to mention larger tasks such as cleaning windows and gardening!

With regards to management, you can save money if you go without a professional holiday letting agency. If you choose this route, you should be prepared to answer calls from your guests at any time of the day or night and be willing to sort any issues yourself. If the boiler fails during the night, you should go to fix it!

What makes a successful holiday home?

As the holiday letting industry has boomed , so have guests’ expectations – gone are the days of measly coffee sachets and a pile of generic attraction leaflets, now it’s about welcome hampers, lavish amenities, and thoughtful guides to the area. It’s also not uncommon to see deluxe features such as hot tubs, which add an extra lap of luxury for guests.

At the very least, you need to ensure that your holiday home has fully functioning facilities, reliable internet, and all of the necessary comforts such as bed linen, toiletries, and towels. Think about the little extras which could make or break a booking, such as allowing pets, and make your home accessible to the widest possible audience. It’s important not to cut corners and cheapen the experience – a top quality holiday home will give you the best chance to generate bookings, garner good reviews, and see return customers too.

Seasonality

Holiday let profits will vary significantly throughout the course of a year, depending on the season, national holidays, and local events. The location of your holiday home comes into play here. Coastline homes see a spike in bookings for 17-18 weeks during the summer months but face a quieter period between summer and Christmas. On the other hand, mid-England destinations such as the Cotswolds generally get bookings all year round.

That being said, with proper management and marketing, it’s possible to maintain a stable income over the course of the year. If there are specific time periods which aren’t popular, it’s time to get proactive and offer special discounts that will tempt people to book a holiday, even if it’s not prime season.

Pricing structure

You can’t think about profits without planning a pricing structure for your holiday home. The key is to charge an amount that will allow you to benefit financially, but that isn’t extortionate so as to deter bookings. To find a good price point, it’s a good idea to do your research on the local competition to get an idea of what you should be charging. If in doubt, speak to a holiday letting agency who will be able to offer advice.

A commonly used strategy is to stipulate a minimum night stay, especially at weekends or during high season. Just beware that this has the potential to put people off booking and we wouldn’t recommend a minimum stay that’s longer than a couple of days.

How do holiday let properties compare to buy-to-lets?

In the right location, holiday lets can be more lucrative than buy-to-let properties , because you can charge a more premium price for a short-term stay than you can for a long-term rental. Imagine a popular music festival taking place close by, or a horse racing meet; guests will be willing to pay the price and you could make more money in a week (or even weekend!) than you could over an entire month with a buy-to-let tenant.

Until recently, there were to be tax advantages to owning a holiday let, such as no limit on the amount of mortgage interest that you can offset against your profits, unlike buy-to-let. However, that perk will be removed from April 2025. There’s also the option to split the profits for tax purposes, if you’re running your holiday home as a husband-wife team. This major benefit may also be removed when the FHL status is abolished, so check with your accountant.

But let’s not forgot the great reward of owning a holiday let: you can stay in it yourself! You’ll be able to enjoy free getaways in your very own home away from home, something that you wouldn’t be able to do if you own a buy-to-let property.

This being said, it’s important to be aware that holiday lets pose different challenges, the most obvious being that running a holiday let is effectively the same as running a business and you need to be prepared for all that is involved in that, including dealing with your guests! Also, seasonality means that your income changes throughout the year, just about covering costs during the cold months and making hay in the summer.

A flourishing market

It’s been a wild ride for UK staycations over the last few years, with the pandemic surge and then the cost of living crisis and interest rate rises, and now the new government changes to the way holiday lets are treated.

Still, the desire to stay in a beautiful cottage in some of the nicest parts of the UK remains unchanged and despite all the ups and downs, we expect the industry to remain a popular choice for the foreseeable future . After all, we’ve discovered how much more affordable and convenient staycations can be – why would we go back?

To conclude

If you’re in the position to invest in a second property, a holiday home is a lucrative business idea. It’s essential to do your research to get a realistic idea of potential revenue, as well as calculating your outgoings to ensure that, even with a healthy number of bookings, you don’t make a loss.

For more information about how HCM can help you click around and read our other articles, or if you are ready to find out how much you could borrow and at what rate, complete your initial assessment in just 5 minutes by clicking here .

Get your copy today!

Free eBook: The Ultimate Guide to Holiday Let Mortgages

How much can you borrow.

Use our free mortgage calculator created by the UK's leading holiday let mortgage specialists, and find out how much you can borrow today!

FCA disclaimer

The information contained in this article is accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time and so please speak to one of our Consultants to confirm the most accurate up to date information. Nothing in this article constitutes financial advice. You understand that by clicking any external links on this page that you will be leaving the website of Holiday Cottage Mortgages and we cannot be held responsible for the content of this external website. Please always consult your accountant or solicitor for all financial, taxation or legal matters.

• Property News
• Home Improvement
• Advertise with us

• Resources & Guides

Free Holiday Let Tenancy Agreement Template UK

The number of landlords in the UK who let their properties as holiday lets has increased significantly in recent years, largely driven by the rise of platforms like Airbnb and the demand for short-term rentals.

According to data from property and holiday letting sources, as of 2023, there are around 148,000 holiday lets in the UK. This number includes properties specifically let out for short-term stays, such as holiday homes, cottages, and city apartments. The number of landlords involved can be slightly less, as some may own multiple properties.

This figure has been growing, particularly in popular tourist areas like Cornwall, the Lake District, and certain urban centers like London and Edinburgh. The trend reflects a shift by some landlords from traditional long-term rentals to the potentially more lucrative short-term holiday letting market.

We know of many householders in the Wimbledon area, for example, who leave their homes to players, officials and tennis fans for three weeks each summer when the Grand Slam tournament is taking place in SW19.

Who uses holiday lets in the UK?

Holiday lets in the UK attract a diverse range of users. Here’s an overview of who typically uses them:

• Families : Holiday lets are popular with families who prefer the flexibility and space that a rental home offers compared to a hotel. They often seek properties in coastal regions, countryside areas, and popular tourist destinations.
• Couples : Couples, particularly those on romantic getaways or short breaks, frequently use holiday lets for the privacy and unique experiences they offer.
• Groups of Friends : Groups often book holiday lets for events, celebrations, or simply for a group vacation. Properties that accommodate larger numbers are particularly popular in scenic or culturally significant areas.
• Tourists from abroad, particularly from Europe, North America, and increasingly Asia, use holiday lets as a base for exploring the UK. They are attracted to the variety of options, from quaint countryside cottages to city-centre apartments.
• Some business travellers, especially those on extended stays, prefer holiday lets for the comfort and home-like environment. This trend has been noticeable in cities where business travel is common.
• The staycation trend, where people take holidays within their own country, has boosted the popularity of holiday lets. This became particularly pronounced during the COVID-19 pandemic when international travel was restricted.
• Visitors attending specific events, such as festivals, weddings, or sporting events, often choose holiday lets for their accommodation, especially in areas where hotels may be fully booked or more expensive during peak times.
• With the rise of remote working, some individuals or couples use holiday lets as temporary residences while they work from different locations across the UK. These users often seek out properties with good Wi-Fi and comfortable workspaces.
• Many holiday lets are pet-friendly, attracting pet owners who prefer to bring their pets along on holiday. This option is especially popular in rural or coastal areas where pets can enjoy outdoor activities.

Holiday lets are popular across a broad spectrum of users due to the flexibility, privacy, and often unique experiences they offer compared to traditional hotel accommodations.

Do I need to sign a holiday let agreement?

Private landlords who jump on the home-from-home bandwagon need to be aware that they must get their short-term guests to sign a holiday letting agreement. A Holiday Letting Agreement Forms part of a landlord’s raft of necessary paperwork. This is why Property Division is pleased to offer you a free agreement. Simply print off two copies, sign one and hand it to your tenants, then get your tenant or tenants to sign the other and hand that agreement to you.

However, ASTs do not cover agreements where tenants pay more than £100,000 in rent per year or when a limited company rents a residential property.

The latter often involves companies renting residential accommodation and letting the property to their employees, usually under a licence agreement (as opposed to a tenancy).

If you like a custom, completely personalised holiday let agreement, use the link below. It takes about 5 min to create, and you will end up with an agreement tailored to your specific property.

Download CUSTOM Holiday Let Agreement Form

Alternatively, if you just want to download a generic holiday let tenancy agreement template, use the link below.

Download GENERIC Holiday Let Agreement Form

While the employee will usually pay rent and other costs to the landlord, ultimately the company is liable.

A Holiday Let Rental Agreement typically includes the following information:

• Names of the landlord and tenant
• Property address and description
• Rent amount and payment details
• Duration of the tenancy
• Purpose of the tenancy (e.g. holiday letting)
• Inventory of items provided with the property
• Maintenance and cleaning responsibilities
• Restrictions on the use of the property (e.g. no pets allowed)
• Cancellation and termination conditions
• Insurance requirements
• Security deposit arrangements
• Liabilities of the landlord and tenant
• Complaints and dispute resolution procedure
• Jurisdiction and governing law

Note: The specifics of a Holiday Let Rental Agreement (or a holiday let contract) may vary depending on the jurisdiction and local laws. It’s important to have a clear understanding of all the terms and conditions before signing the agreement.

Download this free holiday let agreement template, by clicking on the banner above.

……………………….

All content on this form and other forms for landlords published by Property Division are provided “as is”, with no guarantees of completeness, accuracy or timeliness, and without representations, warranties or other contractual terms of any kind, express or implied. Property Division does not represent or warrant that this letter or other material supplied by Property Division will be accurate, current, uninterrupted, error-free or omission-free.

TO THE FULLEST EXTENT PERMISSIBLE PURSUANT TO APPLICABLE LAW, PROPERTY DIVISION DISCLAIMS ALL LIABILITY TO YOU AND EVERYONE ELSE IN RESPECT OF THE CONTENT ON THIS SITE AND ALL SERVICES PROVIDED THROUGH IT, WHETHER UNDER ANY THEORY OF TORT, CONTRACT, WARRANTY, STRICT LIABILITY OR NEGLIGENCE OR OTHERWISE, AND WHETHER IN RESPECT OF DIRECT, INDIRECT, CONSEQUENTIAL, SPECIAL, PUNITIVE OR SIMILAR DAMAGES, EVEN IF PROPERTY DIVISION WAS ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.

The information presented on this site should not be construed as legal or any other professional advice or service. You should consult with a professional adviser familiar with your particular factual situation for advice concerning specific legal or other matters before making any decision.

RELATED ARTICLES MORE FROM AUTHOR

A guide on how to find the perfect rental property in sittingbourne, what to do when you become an accidental landlord in the uk, how to support tenants moving into a new flat.

• Blog for us
• Privacy Policy
• Terms and Conditions

Pros and Cons of Using a Holiday Let Management Company

28th Apr 2022 by Philip | 10 Comments

You’ve bought a holiday let, kitted it out, and now it’s ready for guests. The next step is to decide whether you should manage everything yourself or use a holiday let management company. There are advantages and disadvantages to each option.

Your decision will depend on many factors such as how close you live to your holiday home, how much time you can devote to the business, and your experience in holiday letting.

What is involved in managing a holiday let?

Here are just some of the key responsibilities:

• Maintaining the property, furnishing, cleaning, changing bed sheets, towels and replacing amenities after each guest.
• Admin tasks such as managing bookings, enquiries, guest queries, pricing and payments.
• Managing check-in, check-out and welcome packs.
• Marketing your property on listing sites and social media.
• Responding to the guest’s needs before, during and after their stay.
• Calculating taxes, sending invoices and complying with regulations and legal issues.

To help you decide, we’ve listed the pros and cons of doing everything yourself versus outsourcing everything to a holiday home management company.

If you’re thinking of going it alone

For someone who is just getting started and wants to maintain a close reign on their holiday let or Airbnb business from the start, the self-managed option has several advantages:

Potential to earn more If you’re not paying agency fees and commission, you get to keep 100% of the rental income you make after deducting tax and expenses. This can significantly boost your bottom line if you manage to secure a good number of bookings by yourself.

With time, your profit per booking will likely increase considerably due to repeat bookings and recommendations which have a low cost per acquisition.

Quick entry to market Holiday rental portals (OTA’s) have empowered holiday let owners to easily create an advertisement and handle bookings by themselves. In a matter of days, you could be receiving enquiries.

Guest screening You can  personally screen  potential guests and have the final say in who stays in your holiday home.

You are in control You decide when you or your friends and family can stay in your holiday home – with no agency restrictions. You’ll also be able to visit the property to check on maintenance and any problems whenever it’s convenient for you.

Manage guest satisfaction If you’re good with people and like the idea of a hands-on approach to holiday letting (for example, greeting guests in person when they arrive), managing the property yourself will give you lots of opportunities to ensure great guest satisfaction. You’re your very own quality control department.

Flexibility in setting rental rates If you’re directly in charge, you can quickly adapt to the market and offer guests special deals, discounts or increase prices easily and quickly if you choose. This may allow you to secure extra last-minute bookings more quickly and efficiently compared to, perhaps, needing to go through an agent who would first need to check discounts with you and might need some extra lead time to roll new rates out.

Regular inspections If you’re living close by to your holiday rental, handling the management allows you to keep a close eye on your holiday let. You’ll be more likely to see if items need replacing or fixing and have a much better idea of the state of your property.

DIY holiday let management isn’t all about benefits. There are several downsides too…

No guarantee of bookings Quite simply, running everything yourself and doing the best job you can still doesn’t mean there’ll be a steady stream of income at the end of each week.

It’s time-consuming For most, this will be the biggest negative; the fact that looking after your holiday let will take up a lot of your time.

Holiday rental owners spend an average of 9+ hours per week marketing and managing bookings. This is often in addition to having a full-time job and a family. Running everything yourself means you’ll need to put in the hours during your evenings and weekends too.

The administration work involved in managing a holiday let is surprisingly time-consuming when you don’t have the benefit of an agency handling reservations for you.

There’s also the greeting of guests, dealing with their requests, cleaning, changeovers and ongoing maintenance – not to mention the handling of any other issues that may arise at any time of day (or night!).

Getting there Unless you’re based near to your holiday home, managing it yourself won’t be as practical for you compared to those owners/agents who are close by. It might take you hours to get there should something go wrong or if there’s an emergency of some kind.

Guests expect someone to be on hand asap to solve problems.

Lack of expertise If you’re a newbie to the holiday letting business, it’s a steep learning curve, and you’ll probably make mistakes (perhaps costly ones) whilst you’re finding your feet.

Marketing expenses You’ll need to invest in marketing and advertising, which is a significant outgoing – especially when you’re just getting established.

Expenses may include getting a website designed and built, booking/management software, placing adverts on several listing sites, and perhaps even some pay-per-click or social media advertising campaigns too. You might not have a particularly clear idea of how much your marketing activities should cost over time – meaning you end up unsuccessfully overspending or even spending too little on certain things.

Extra responsibilities if you take on help If you hire people to help you out with the running of your holiday let (e.g. cleaners and gardeners), you could be responsible for their contract, working conditions, health and safety and pay (including arranging tax for HMRC).

It also means you must have the appropriate level of insurance in place for staff employed.

This alone can cause another admin headache for you as a business owner; especially if you’re unfamiliar with employment law and legislation.

Competition With more and more holiday lets and Airbnb’s entering the marketplace, it’s becoming increasingly difficult to stand out amongst the competition.

In addition to general competition from other holiday rental owners, you also face competition from professional letting agencies that have better online exposure for their rentals – as well as lower costs and more commercial experience.

To stay competitive, you’ll need to be responsive and reply to guests quickly to secure bookings, choose where and how you advertise and provide a top-notch guest experience to guarantee great reviews, word of mouth referrals and repeat bookers. All of which involve a lot of work.

Using a holiday let management company

Handing over the management of your holiday let to an agency also comes with advantages and disadvantages. On the plus side…

Saves time Using an agency will free up your time so that you can spend it doing other things, whether it’s for work or pleasure. Some hosts can end up spending 9+ hours per week running their business, and this can mean that important moments and time with family and friends are postponed or even missed out on altogether.

It’s convenient Using an agency can also be convenient for you. It’s not uncommon for holiday rental owners to live far away from their second home. Using an agent means that you’ve got someone close by in case any urgent visits are needed.

Knowledge Good agencies have a huge amount of booking data and trends to analyse the ever-changing market demand in your area. This expertise should translate into higher occupancy rates and better guest satisfaction as they find the right clients for the right properties

It’s also likely that you will have a dedicated account manager who will be on hand to answer any questions and give advice on how to make your holiday rental a success.

Automated pricing Pricing your property can be difficult. If your rates are too high bookings will suffer, too low and you won’t maximise income.

Some agencies use automated pricing tools to adapt pricing to market demand, therefore making owners more money.

Marketing expertise A good agency will have a tried and tested marketing plan ready and waiting for your property, and they’ll know how to target your ideal guest.

Your agency will likely advertise your holiday home on multiple websites and channels, many of which you may not have heard of.

They’ll take care of time-consuming tasks such as taking professional photographs of the property, writing a professional property description, setting up and managing your holiday rental online.

It’s also likely that they’ll have thousands of followers on social media, a PR team and a huge marketing database of past and potential bookers, which can be used to promote your holiday let.

Dealing with enquiries and complaints As well as ensuring the way your rental is promoted online is as impressive as possible, they’ll know how to deal with enquiries and guests too.

An agency will take care of all guest queries, avoid double bookings as well as dealing with arrivals, departures and cleaning the property. A good agent should also be on hand for guest emergencies at any time, so you don’t have to answer the phone in the small hours.

A well-established agency will also have experience in dealing with problematic guests, complaints and have a good idea of which bookings to accept into your property in the first place.

Guest complaints can be stressful, frustrating, intense and feel very ‘personal’ for a holiday home owner. Your agent can support you as part of the service and use their experience and knowledge to deal with any arising disputes and diffuse/resolve situations as quickly as possible.

Paperwork If you hire a management company they’ll take care of all the paperwork; from dealing with booking requests to issuing the booking contract and sending out the final arrival details to your guests.

Taking and chasing payments Payment Card Industry (PCI) compliance, which allows you to take debit or credit card payments, can be costly, time-consuming and arduous to set up.

As well as taking any deposit payments upfront, chasing guests for late payments isn’t exactly an enjoyable task. This is where a property manager can help. They’ll handle this for you, remove the stress and admin, and have the right systems and technology already in place to ensure that all balances are collected in full – and in a compliant way.

They will also deal with cancellations and re-letting your property to ensure you aren’t out of pocket.

Extra security If you can’t visit your holiday rental regularly, using a management agency can provide some comfort when it comes to having to leave it unattended.

The extra support for bookings and marketing that an agency can provide means that your property is more likely to be occupied throughout the year, meaning that it’s less likely to be ransacked by burglars looking for an empty holiday home to steal from. They can also inspect it in winter for signs of damage or burst pipes.

Useful industry connections Agents often have the details of reliable tradesmen, housekeepers and providers of other professional services at hand to help with property maintenance. Whereas, you may be taking a chance when hiring someone to do a job.

Legislation A good holiday cottage letting agent should also ensure you are kept updated with regards to current legislation. Rules and regulations related to the holiday home industry can move quickly and create confusion in some situations.  A good holiday letting agency will be on top of tasks such as the gas boiler needing a service, PAT testing, health and safety and fire risk assessments as part of their service.

The disadvantages of using a holiday let management company

Although there are many positives that come with using a holiday home management company, the possible disadvantages include:

No guarantee of bookings Just like DIY management, there is no guarantee of income and bookings if you use a managing agent.

Less rental income You’ll have to pay between 25% – 30% commission on the income you earn from bookings to your agency for services rendered. This will take a big chunk out of your rental earnings.

Also, some agencies work on a model of obtaining ‘maximum lettings at minimum rates’. This fills your booking calendar – but not your pocket – as more guests doesn’t necessarily mean more profit.

To look at it another way, if the agency lets your holiday home at a higher (i.e. more realistic) rate you could achieve the same revenue over fewer weeks – meaning you’d likely save on cleaning, energy, commission and wear and tear costs too.

Lack of control You may have little or no control over which bookings are taken. Agencies only earn income if properties are rented out, so they may be less discerning with guests than an owner would be.

Also, depending on your contract you may not be able to market the property how you’d like or use the property yourself when you want to.

Complex contracts When you sign up with a management company you will enter into a complex contract. The terms of the contract are likely to favour the agency and their commission. Before signing up, you should consider taking legal advice.

To summarise…

The choice is a difficult one, so it can be worth getting further advice from agencies and owners who have tried both approaches before you make a final decision on how best to manage your holiday let.

Often, it’s easier to start off by trying to get your own bookings and using an agency (to learn how they do things), rather than going completely alone from the outset. Once established, experienced, and more confident in what you’re doing, you could seek to go it alone.

For many, it is a case of:

Holiday let manager = less hassle, less profit vs DIY = more hassle, more profit

However, an agency  may  create more bookings and profit than your efforts.

Do you have any advice for holiday let owners? Please add them in the comments…

10 Comments

This all resonates with me !! we have just bought our first holiday let,and,were all set to sign up with an agency,then found out that to stay in my own property I have to book it !! also need permission to turn up to do maintenance and worst of all have to check in to my own property in their time scale.Will not be happening, and we have decided to go it alone and keep control.We have the time and are close by so hopefully are quite well placed to do this.Wish me luck !!

Those seem like stringent terms, but well spotted. There are some agencies that are flexible which may be more suitable for your needs. I hope going it alone works out. Good luck with the bookings.

I would always recommend using an agent. Negotiate the fees% and ask questions if you feel your property is not being marketed properly or prices are too high/low. You can also negotiate ‘Owner days’ so you can use your property yourself without having to pay. My advice would be look at the contract and tell them what would make it right for you. Remember they need you just as much as you need them! Our agents earned their commission during Covid. They kept us informed about the legal side of things and dealt with the cancellations and the refunds. Any thoughts of going solo vanished immediately!

Hi Lesley, good point about Covid and legislation. Agents certainly had a tough time dealing with the constant changes.

This is an excellent article. As an Agent I would point out that some agents are more like 20% commission than 25-30% and will do a LOT of work for that AND will not dictate how often you use the property. This is an excellent article though . I always find your advice absolutely on point so thank you.

Great article. Thank you. As something my husband and I are considering, are there any holiday let agents you would recommend? We need to be able to use the property quite a bit ourselves during term time but could let it during the school holidays

Hi, I would follow the advice in this article and check review sites.

Has an agent the right to stop you taking bookings yourself?

Hi, it depends on what the contract says. Some stipulate that they are the exclusive agent.

Very interesting article. Over the past couple of years commission rates charged by agencies have gone down dramatically and can be negotiated closer to the 12-15% rather than 20-25% depending on the property, but the lack of flexibility can be a real issue, and also the so-called expertise in pricing is not always there. We decided to manage our property alone after meeting with three holiday let agencies in 2021 and based our prices (after extensive research) on the many available platforms rather than what the agencies were recommending which was significantly lower. The income we generated was 25% higher than predicted and this doesn’t take into account the agency fees, so it total for us it was a 40% upside to go at it alone, but it did create a lot of work for us. This year is challenging, bookings are slower to come in and more last minute but when comparing with the major holiday websites we find so far that our occupancy level is about the same or higher than what it seems to be on the major websites so for now we will carry on with managing our property alone.

Write a Comment

Email Address hidden

Website optional

See how much you could save!

How much could you Save?

Newsletter sign up.

Sign up to get all the latest news, holiday home marketing tips & more

• Holiday Home Insurance
• Holiday Home Marketing
• Holiday Letting
• Latest News
• Maintenance Advice

Popular Posts

• How to Make a Complaint About Holiday Cottage Accommodation (107)
• Coronavirus: Advice for Holiday Cottage Owners & Holiday Let Businesses (61)
• How to Avoid Holiday Scams When Booking a Villa or Apartment (60)
• Holiday Let Damage Deposit Guide: How To Protect Your Holiday Rental (54)
• What Happens if Your Cottage Holiday Is Cancelled (34)

Recent Posts

• Top Tips for Attracting Families to Your Holiday Cottage
• Holiday Letting Advice, Blogs, Podcasts, Forums & Experts to Follow
• Is It Worth Getting a Tourist Board Star Rating?
• What Is the Impact of Second Homes on Rural Communities?
• What to Do If a Guest Is Injured at Your Holiday Cottage

Useful Links

• Holiday Let Insurance
• Second Home Insurance
• UK Holiday Cottage Insurance