Interesting observation with VRBO average rate and bookings

[Matt Donley]

I've been doing some research on a condo community near Disney to assess whether it would make a good investment property, so I've been compiling data on the type of condo I'd like to buy and recording their average daily rate and how many days over the next few months they are booked. I applied a conditional formatting in excel to create a heat map, sorted by average price of unit:

So the interesting thing I discovered is that there is a clear trend. The units that are priced higher have significantly more bookings 5 months into the future than the lower priced units. So not only are they earning more money per night, but they are clearly achieving a much higher occupancy rate as well. On the extreme ends of the spectrum the higher priced condo earns 300% of the low end unit. 

Now, obviously, the higher rate is generally associate with a newer remodeled unit which is professionally furnished and decorated, so what I'm trying to determine is the sweet spot for how often I should remodel in order to justify the high end price. I'm trying to run the numbers at refurnishing every 3 years and it seems to work out. Is this a common interval for remodeling a short term rental in the Orlando/Disney area?

[Keith Courtney]

Matt -

I'm in the Orlando/Disney area. I totally agree with what your study revealed.  I see it everyday. Vacation rentals, that are either new or recently refurbished and that are in good locations with amenities vacationers want, rent much more often at a much higher rate. Thus, they are much more profitable. When investors buy resale vacation homes, it is so important that they refurbish the homes. Unfortunately, many don't because they don't have the cash to do the refurbishing after making their purchases.

Regarding the refurnishing every 3 years, it all depends greatly on the quality of the furniture and the location of the furniture in the home.  Other than mattresses, bedroom furniture usually lasts longer than furniture in the common areas of a home. Regardless how often refurnishing is done, it is so important that it is done to keep vacation homes "new".

Thanks for the information above.

Keith