Applying the maturity model

to vacation rental companies

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Over the past decade, the vacation rental industry saw rapid Vacation Rental Companies by Number
growth, change, and evolution. As this $115 billion industry of Properties Managed
continues to mature, a profitable niche - vacation rental
management companies (VRMCs) - continues to grow with it.
80000
VRMCs are hyper-focused and rely on a paradigm change
in the hospitality industry. Platforms like Airbnb, VRBO and
Booking.com have eliminated the cost to entry for individuals
and small companies to enter the hospitality industry.
60000
Although tech-enabled hospitality companies are a relatively
new phenomenon, their growth follows traditional business
models. They start from a “mom and pop” operation that
manages under a dozen properties, and can grow into 200+
40000
property, multi-investor corporations.

Within this context, business analytical tools can be used to

help VRMCs evaluate existing processes, and determine
where gains, growth and improvements can be achieved. 20000
One of these tools is the maturity model. This simple, yet
powerful tool is used to paint a picture of how efficient and
effective a company operates within an industry.
0
100+ 20-99 1-19

The maturity model - what it is and why
it matters for vacation rental management
companies (VRMCs)
Marketing Sales Distribution
Procedures in place for all
processes, automation replaces
Level 5
manual tasks, business analytics
guides strategic decisions.
Level 4
Processes defined, standard
Level 3 operating procedures in place,
automation for parts of processes.
Level 2
No set procedures, processes rely
Level 1 on manual input, decisions based
on crude business data.
03
A maturity model identifies processes every company in a
sector relies on for day-to-day functions. For each process,
5 levels of maturity are defined (level 1 being the least
mature, 5 the most mature). These levels are then used to
identify where a specific company finds itself compared to
mature and established competitors in the field.
Most businesses and companies continuously improve their
processes over time - one could say they mature. However,
sometimes some processes fail to evolve. Less mature
processes can lead to stunted growth, and in some cases,
overall company stagnation. By objectively identifying
which processes aren’t mature, managers can implement
corrective measures and unlock potential growth.
Sadly, however, auditing, improving or redesigning processes
can be a perilous journey for managers without the right
tools. According to operations guru and management professor
Michael Hammer “I have personally observed hundreds of companies
try to rejuvenate themselves by creating or redesigning business
processes. In spite of their intentions and investments, many
have made slow or little progress.”
This is where the VRMC maturity model is useful for managers.
Because there isn’t much variability between VRMCs of the
same size across the industry in terms of processes, managers
can learn from peers within their maturity categories.

The maturity model in the VRMC industry
Because all VRMCs rely on similar channel distributions,
marketing strategies, and offer a similar service (hospitality),
it is possible to create a universal maturity model.
In collaboration with dozens of VRMCs, ranging from single
operators to multi-departmental companies, the following
11 processes were identified. These processes map how
most VRMCs operate on a day-to-day basis:
Distribution: this involves posting and
managing property listings on popular
platforms like Airbnb and VRBO. It also
includes operating a standalone website.
04
Marketing and search engine optimization (SEO):
maintaining a consistent marketing strategy to
attract guests on top of traditional distribution
channels. This can range from operating a polished
direct booking website, to paid ads on Google, and
even a social media strategy
Pricing: establishing a suitable average
daily rate (ADR) for a property.
Turnover management: cleaning and preparing
properties after guests check out. The level of
maturity of this process is directly dependent on
the level of automation involved.
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Messaging: communicating with guests, from Business operations: the system or process
the time they show interest in a property, to used to assign, monitor and resolve tasks
when they are checked-in, and ending with (for the day-to-day operation) or action
when they check-out. items (for strategic issues).

Guest experience: all the processes which Accounting: the level of sophistication
affect the guest experience, ranging from and automation of accounting.
check-in procedures, to offering local
recommendations (either in-person or
through digital guidebooks).

Owner management: how and at what Reporting and business intelligence:

frequency owners and investors are notified collecting, analyzing and reporting various
of progress, growth, and returns. business metrics to inform managers, owners
and investors on the health of the VRMC.

The Hostfully VRMC maturity model
With the major processes of operating a VRMC outlined, it’s now time to describe what each level of maturity looks like:
Distribution
Level 5 • on multiple bookings platforms
• managing calendars with direct sync
• using channel manager
• multi-channel distribution is part of a
strategy for guest acquisition growth
Level 4 • on multiple bookings platforms
• managing calendars with direct sync
• using channel manager
Level 3 • on multiple bookings platforms
• managing calendars with sync app
• no channel manager
• may be using a property
management software
Level 2 • on Airbnb and Vrbo
• managing bookings
with basic calendar app
Level 1 • single booking platform
Marketing / SEO
• custom marketing website with direct
bookings option
• proven paid and social media strategy
• referral program
• remarketing program
• custom marketing website with direct
bookings option
• paid ads and basic social media
• high quality out-of-the-box marketing
website but with limited customizations
• basic direct bookings site
• none
Turnover Management
• complete system to automatically notify
jobs and mark them as complete
• Has some method (software or operating
procedure) for quality assurance
• 3rd party cleaner management software
• automatic notifications go out to cleaners
and other services when necessary
• system records job completion
• automatic notifications go out to
cleaners when turnover necessary
• one or more regular cleaner
• no automated task management
• no task automation
Pricing
• seasonal pricing
• geolocation comparative analysis
• comparison against same period year over year
• dynamic pricing, period discounts, and
channel adjustments
• seasonal pricing
• geolocation comparative analysis
• 3rd party dynamic pricing software
• period discounts
• channel adjustments syncing
• seasonal pricing strategy
• comparative pricing
• long period discounts
• price manually adjusted for seasonality
• flat nightly rate
06
Messaging
• automated messages across all bookings
platforms and via different communications
channels: native, email, SMS
• customized messages that contain
personalized content for each guest
• backup messages for different guest scenarios
• automated messages across
bookings platforms
• using native messaging where possible
• custom messages with personalized
fields for guest and stay
• automated messages across
bookings platforms
• using native messaging
where possible
• email and platform messaging
(one channel)
• copy pasting custom messages
• email and platform messaging
(one channel)
• all custom messages are manual

The Hostfully VRMC maturity model (continued)
Guest Experience
• digitalized local guide and property
Level 5
information
• full scale concierge services
• active upselling of additional services that
are personalized for the guest
Level 4 • digitized local guide and property
information
• two or more touches from guest services
• active upselling of additional service
• some light personalization.
Level 3 • digitized local guide and property
information
• one touch from guest services after
booking confirmation or during stay
Level 2 • self check in
• local guide (printed or online)
Level 1 • manual check in process
• no personalization
Owner Management
• more than 50 owners
• ongoing communication with owners via
email or owner portal
• different regions and rules for regions
• reporting for owners and customized reports
• more than 25 owners
• ongoing communication with
owners via email or owner portal
• reporting for owners
• more than three owners
• quarterly communications with owners
• attempting to bring on additional owners
• three or fewer owners, providing
quarterly reporting
•no regular communication with owners
• not bringing on any new owners
• none required
Business Operations
• using 3 or more purpose built software tools
to manage different aspects of the business
(including task management, cleaning, and
pricing)
• using a purpose-built software
to automate and gain visibility
into tasks across a team
• some sort of project management
software to manage tasks across the team
• skeletal networked team
• working with email and spreadsheets
to manage tasks
• none required
Accounting
• ongoing accounting
• monthly or more frequent
• an accountant works part-time
(if not more)
• monthly accounting
• quarterly tax filings
• using an accounting software
• possibly trust accounting
• monthly and quarterly collection
of data
• still no dedicated accounting software;
very manual or time-intensive
• accounting managed manually
once annually
07
Reporting/Biz Intelligence
• real time updates on monthly
metrics: revenue, bookings rate,
Y-O-Y and geolocation comparisons
• monthly summary and review
• reports specialized for owners including
occupancy rate
• quarterly summary and
review
• annual summary that includes data
from two or more bookings platforms
• annual summary
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What each level of VRMC maturity looks like in the real world

Level 1

The owner and host who manages just one property and does it
on top of a day job. The extra income is an added bonus to the
family’s finances. Time-consuming tasks like cleaning, check-in
and messaging are manual. The costs of PMP and other
software solutions aren’t justifiable for the income generated.
Creating standard operating procedures isn’t practical; who will
read them if the only employee is the owner/host?

“The definition of success is different

for every vacation rental manager. But in
determining your goals, it's helpful to know
all the possibilities (and work involved).”
Matt Landau
VRMB (vrmb.com)
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What each level of VRMC maturity looks like in the real world

Level 2

The entrepreneur (or group of) who see the value of investing
time and energy to gain a financial return. Typically manages a
small portfolio and is new to the vacation rental industry. Even
though it’s small, the size of the portfolio makes
it impractical for the entrepreneur(s) to be involved in all the
processes required to run the operation. Contractors and
cleaners help fill the gap. The process of assigning tasks
remains largely manual. However, the company generates
income that can be optimized. Seasonal pricing is implemented to
boost revenue (but the calendar is still likely adjusted by hand).
Marketing is still an afterthought, but the entrepreneur sees
value in diversifying away from the major distribution channels.
Some revenue is generated from direct bookings.
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What each level of VRMC maturity looks like in the real world

Level 3

The types of VRMC that generate enough income for the

owners to quit their day jobs and invest themselves full-time
into managing and growing their business. At this stage, there
are too many moving parts to the company for one person to be
involved in all of them. Part-time help is required. Tasks like
cleaning and turnover are outsourced and coordinating these
services is partially or fully-automated. Guests are still acquired
from the major distribution platforms, but a dedicated website and
a basic social media strategy attract direct bookings.
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What each level of VRMC maturity looks like in the real world

Level 4

the company manages several properties and may even do

so for other owners. The manager is now a vacation rental
professional and knows the intricacies of running a VRMC.
The requirements of handling bookings, guest communication
and delivering a great guest experience outgrow the capabilities
of a direct sync application. The VRMC migrates towards a PMP
and slowly integrates niche software solutions (ie dynamic
pricing) into it. Full-time employees help with one or more
aspects of the operation, forcing the manager to develop
some standard operating procedures. As a well-established
company, task assignment is handled by dedicated software.
These types of VRMCs also make use of standalone accounting
solutions to track income and expenses.
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What each level of VRMC maturity looks like in the real world

Level 5

This is a large-scale VRMC, typically across multiple regions (or

with a presence in different neighborhoods of a city). The scale
and complexity of the processes at play forces the VRMC to
heavily rely on technology. Employees or members of the team
can justify specialization. Each employee knows where to find
standard operating procedures and implements them. At this
stage, large VRMCs strive to gain independence from listing
sites (cost savings and diversification of leads).
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Where do you fit in the VRMC maturity model?

Level 3 Level 2 Level 1

With a clear picture of what the VRMC maturity

• on Airbnb and Vrbo
model looks like for companies at each level, Distribution • managing bookings with basic
you can use it to determine which processes calendar app

in your VRMC are holding back growth. high quality out-of-the-box

Marketing / SEO marketing website but with
limited customizations

For example, a VRMC with the following

Automatic notifications go out to
maturity model profile could benefit from Turnover Management cleaners when job is ready.
revisiting how it manages the guest experience
(see table to the right) Pricing
Seasonal pricing, comparative
pricing, period discounts

Greeting guests at check-in works for a single Email and platform messaging
Messaging (one channel). Copy pasting
property host. However, the time requirements custom messages.
of doing this in person may be an impediment
to growth. Note that the rest of the processes Guest Experience Manual check in process,
no personalization
are mostly automated, or on their way there.
Three or fewer owners, providing quarterly
Owner Management reporting. No regular communication with
owners; not bringing on any new owners.

Dealing with exceptions Some sort of project management

Business Operations
softwaretomanagetasksacrosstheteam.
When using the maturity model, VRMCs need to interpret
the results with a grain of salt. In this example, there Accounting Using an accounting software.
may be a valid reason why check-in is still a manual Possibly trust accounting.

process. It could be that the VRMC manages high-end

short-term rentals where greeting the guest at arrival is Reporting/
Quarterly summary and review
part of the experience. Biz Intelligence
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Moving forward along the maturity model

Knowing which processes are less mature (and likely holding back growth) is a step in the right direction. But how can an owner or
VRMC manager unlock more growth? For each of the 5 levels of maturity, there are a few action items that can be implemented:

$
Level 1 to 2: the jump from host to entrepreneur

Most VRMCs start off with a host who manages a property

on top of a regular day job. To achieve day job income
replacement, the host needs to re-invest income and acquire
additional properties. At this point, multi-channel distribution
tools and booking management software are critical for growth.
For cost-saving measures, most other processes can still be
performed by hand.
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Level 2 to 3: build a team

With the acquisition of multiple properties, the entrepreneur

needs to outsource tasks. This is where the age-old challenge
of delegation comes in. Luckily in the vacation rental industry,
there's software that can automate almost any task. Some SaaS
solutions even have quality assurance built in. The upside with
automation and delegation is that the entrepreneur can use the
extra time to acquire new properties and grow the portfolio. As
time-consuming tasks continue to be delegated, growth skyrockets.

Level 3 to 4: implement standard operating procedures

With so many moving parts to the VRMC, the entrepreneur now

functions as a high-level manager, overseeing all facets of the
company. Most, if not all, day-to-day tasks are outsourced or
delegated. With so many properties on various distribution
channels, it’s now time to implement standard operating
procedures to handle maintenance, guest experience and
customer service issues.
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Level 4 to 5: push for automation at all levels

Interdependencies between various processes are hampered

by human involvement. The VRMC must push for automation
to assign and resolve most tasks. As automation propels growth,
standard operating procedures are developed to handle
exceptions and emergencies without the owner or manager’s
involvement.

Level 5+: use existing processes to scale

With the VRMC operating like a large corporation, existing

processes and automation create a self-perpetuating wheel
of growth. Growth is limited by market saturation. The
owner or manager can look at existing processes to identify
redundancies and cost-savings, or redesign them completely to
boost efficiencies. Now that the company is well-established,
managers can experiment with new