To own a vacation home in your favorite destination and rent it out while you’re away. Two good things happen in every version of the dream: The home is looked after by a trusted property management company, and it generates considerable revenue through bookings.

But is it really that easy? And what do prospective vacation rental owners need to consider before making the move? Are there costs involved in onboarding a vacation home rental? What kind of revenue can an owner reasonably expect? How many weeks of the year will the vacation rental likely be booked?

If you’ve ever been curious, read on.

A Few Words About My Team

In the interest of full disclosure, I am Alexander Curry, the Director of Business Development for 360 Blue. Every day my team and I work with prospective vacation rental homeowners who want to know what they can expect in terms of home care and, of course, the anticipated occupancy and Gross Annual Revenue (GAR).

We know the local and regional markets better than anyone. How can I say this with confidence? We have access to real-time booking data—not only for our company but for the markets of Destin, Miramar Beach, along 30A, Panama City Beach, Cape San Blas, Mexico Beach, and Port St. Joe. In short, we have an incredibly accurate picture of where the market currently is, and a good idea of where it’s heading. Naturally, the further out we look, the cloudier the picture becomes.

On a related note, we also know what guests want in a vacation home rental, from location to design to amenities. Our people talk to guests all the time—literally every day. This constant contact gives us incredible insight into what they’re looking for. And we pass it along to our clients.

One of the most important tools we offer prospective owners is a rental revenue projection for their homes. This projection provides the number of weeks it’s expected to book, how much revenue it will generate per week, and the expected GAR for the year. This information is vital to prospective owners, as it gives them an idea of what to expect regarding the return on their investment.

Just as we know the benefits of vacation rental ownership, we also know the drawbacks. And I’m going to share both with you here.

What are the drawbacks of owning a vacation rental?

You have to divorce yourself from the notion of it being your personal home year-round. Once the home is booked by a guest, it is dedicated to their use for that period of time. They have paid to have exclusive use, and we are committed to providing them with a luxury experience.

On a related note: If you are looking to maximize returns on your property, there will be long stretches of time when the home is unavailable to you—especially during high season. On the Emerald Coast and Forgotten Coast, high season is June, July, and much of August. Spring Break is also incredibly busy. If you want use of the home during this time period, it’s best to block it off well in advance. By doing so, however, you’ll forfeit that potential income.

You must also reinvest in this income-earning asset. Why? To avoid diminishing future returns. Improvements need to be made to keep up with trends and the ever-shifting tastes of the traveling public.

What does it take to get a vacation home on a rental program?

You need to find the management company that’s right for you and your home. Vacation rental companies tend to specialize in a specific caliber of property, and you want to find a company that’s all about yours. We have three brands: Callista, which focuses on mid-size luxury homes and condos; 360 Blue, which is for larger luxury homes; and our Alaya Collection, which is made up of the finest luxury homes on the entire Emerald Coast.

Once you’ve found the right company, you need to keep in mind that there are start-up costs for things like a KABA lock for access control, new linens, and housewares. You will also need property photos for marketing purposes. Typically, these costs can be a negotiating point when considering which company to go with.

The effect of the national economy on the local market

The state of the local market and the national economy will also play a huge role in the GAR a vacation home can generate. So let’s take a quick contemporaneous look—but with the understanding that this information will feel a bit stale as time goes by.

Over the past few months, there has been steady talk of a looming recession. Current predictions run the entire spectrum—from a deep and prolonged recession to a short and shallow slowdown to no recession at all.

So far, this ongoing speculation, as diverse as it is, has had a minimal effect on the Emerald Coast and Forgotten Coast markets.

Current numbers with regard to Occupancy for Summer 2023 are slightly behind those for Summer 2022. The GAR for our homes is expected to come in slightly lower as well. Last year we noted an increase in last-minute bookings and saw smaller booking windows. We expect the same for this year.

Bookings for 2023 are pacing nicely throughout our brands, and we are seeing an increase in reservations for early 2023 in particular. The takeaway: Based on our overall pacing data for the Emerald Coast market at this point in time, we anticipate rates and occupancy for 2023 to be remarkably similar to last year.

Have questions?

If you’re looking to invest in a vacation home rental here on the Emerald Coast or Cape San Blas, drop us a line. We can put together a rental revenue projection and offer insight that may help you along in the process. It’s an extraordinary time to be in the vacation rental space. And the feeling among many in the industry is that this is only the beginning.