How do you make adjustments when you face a crisis in your life? How do you prepare yourself to safeguard against unpredictable happenings that may change your life? Your business is also a live growing entity which needs to be fully prepared and quickly adjustable in the face of upcoming surprises and rainy days. 2020 showed us how everything can become so unpredictable, thanks to the most unwelcome of guests, COVID-19. So, during this time, the concept of mid-term rentals became significant.
The hospitality industry was hugely affected by this pandemic as it has always been susceptible to economic and social changes. Even before the pandemic, vacation rental owners naturally might have experienced many shifts in demands. Property managers are among the most flexible business owners who could pull through this hard time with creative solutions such as switching their short term rentals into mid-term rentals.
What Is a Mid-Term Rental?
Mid-term rentals are an in-between ground when it comes to short time rentals and long term rentals and can come out as a savior of your vacation rental or serviced apartment business during turbulent times. By being flexible and adjustable toward your rental’s length of stay limits, you can keep your business going in times when huge financial losses seem real and inevitable. Let’s proceed with answers to the following questions:
- What are the benefits of mid-term rentals?
- How can you incorporate this idea into your short term rental business plan?
Thinking about house rentals and Airbnbs in general usually brings two most common forms to mind: short term rentals and long term rentals. Both are also popularly known as vacation rentals. However, mid-term rental is another underrated option that can come in between, offering other sources of profit and targeting yet another group of renters. Shifting to mid-term rentals can fill up your vacancies and increase your occupancy rate. You need to always keep the cash flow in the business as an empty property is a waste of money with each single night passing!
The Differences Between Mid-Term, Short Term & Long Term Rentals
Definitions of the three types of rentals vary slightly. The definition for rentals in legal terms states that the duration of short term rentals is less than a month (1-30 days), mid-term rentals less than a year but longer than a month (1-12 months), and long term rentals typically last for a year or more. The pricing strategies should also be based on these models, nightly, monthly or yearly.
Here are some factors defining the differences between short term and mid-term rentals:
Short-term Rentals have higher prices per night compared to mid-term rentals. On the other hand, there are usually no security deposits for short stays, but there are charges like cleaning fee, booking commission fees, etc.
However, shifting to mid-term rentals can be a smart move to increase your income during off-seasons and times of crisis like that of now and stop looking for renters for occupancy. A two-month booking in advance means several short term bookings, which come with higher commissions, more time and energy spent, and obviously less efficiency.
Mid-term rentals are especially worthwhile because they also save a huge amount of resources, time and energy, and you can get rid of several check-ins, cleanings and management costs. Compared to short term rentals, mid-term rentals may yield less money, but at the same rid you and your staff of heavy workloads. You would deal with fewer guests who are expecting some essential needs.
This is more easily manageable and a wise choice when you cannot go on with the crazy pace and frequency of tasks associated with short term rentals. You can work slowly and more easily, but never stop the cash flow. Mid-term rentals are especially a good option if you manage several properties, and you don’t want to shut down your properties due to workload and costs.
According to regional laws, there are different legal models for tenant rights. For short term rentals, the tenant rights could not be applied and for long term rentals you have to consider the tenants right for sure. But, there is a vague haze around midterm rentals that makes it different according to location. Make sure if your tenants are covered by this law based on their length of stay.
Short term renters and mid-term renters are two different kinds of customers with different needs. Short term renters are mostly vacationers who want to stay away from home for a weekend or few weeks. They seek fun and a list of full amenities. You need to prepare every detail so that they would not need to bring in anything. There is a higher chance of parties, damages, and deeper cleaning work after check-outs.
In contrast, mid-term rentals attract bookers wishing to live, work or simply look for an accommodation solution with essential amenities for a limited time. They look for the basics like Wi-Fi and a decent furnished place to feel at home. These are mostly students, interns, travelling workers, freelancers, people who are looking for a new house, divorced people, etc.
How to Switch From Short Term Rentals into Mid-Term Rentals
In order to make your vacation rental or serviced apartment business adaptable to the fluctuations in demand, you can get your properties listed on some OTAs which are specialised in longer stay rentals. Some OTAs such as Airbnb give you the option of setting a monthly rate with a discount on your profile while you can also rent out your property for a short time.
While using a PMS, make sure it is adaptable to different models of renting. The property management system you use should allow you to:
- set nightly, weekly and monthly rates;
- issue identical monthly invoicing for extended stays;
- and create multiple rate plans running in parallel for one unit type.