Lately, there’s been a lot of talk in the industry about the vacation rental franchise model. Seeing the success of franchise programmes in other industries, the potential benefits of such a setup would be hard to ignore.
But is a franchise model the way to go if you want to grow your property management business?
In this post, we take a look at how vacation rental franchise programmes work and what opportunities they hold for property managers.
We’ll also share examples of property managers who have been successful at running franchise programmes, complete with exclusive, first-hand insights.
According to Investopedia, a franchise is “a type of license that a party (franchisee) acquires to allow them to have access to a business’s (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name.”
In return for these benefits, franchisees usually provide an initial investment and pay an annual licensing fee.
The franchise model has proven to be an effective way of increasing market share or expanding to new markets in many industries, from fast-food restaurants to hotels. From the franchisee’s perspective, it’s a good way to start a business and enter the world of entrepreneurship in competitive markets under the aegis of an already established brand.
Franchise programmes are becoming increasingly popular in the vacation rental world. Property managers have realised that offering a franchise option allows them to break into new markets and offer new destinations to their travellers quickly and effectively.
Property management companies who choose to grow through a franchise model provide their franchisees with their branding (to establish authority), technology (to automate and streamline processes), marketing channels (to increase presence), as well as other aspects of their expertise and know-how regarding property management.
Franchisees receive continued support and training from franchisers. In return, they run all ground operations that require a local presence such as cleaning, maintenance, check-in, etc. For franchisees, it’s a great opportunity to start a property management business from scratch or increase the revenue of their existing business by partnering with and receiving support from a large property manager, instead of trying to go it alone.
Let’s take a look at a few examples to see what a vacation rental franchise looks like in practice.
“It’s a dream for the property manager because someone else brings you the guests.”Harold Lubberdink, CEO of Happy Holiday Homes
Happy Holiday Homes, based in Lugano, Switzerland, has 1,500 rentals in Europe, with a strong emphasis on Italian destinations. They first introduced their franchise model six years ago and since then have managed to work out the perfect formula.
“To be able to franchise, you have to have a really good model. If you walk into a franchised McDonald’s or an owned McDonald’s, you should not notice the difference,” says Harold Lubberdink, CEO of Happy Holiday Homes in the latest episode of the Secret Sauce Podcast.
According to Harold, the franchise model is a great way forward for property management businesses.
“It’s a dream for the property manager because someone else brings you the guests,” he says.
Happy Holiday Homes offers a franchising opportunity to aspiring PMs or property managers with an entrepreneurial spirit who find themselves overwhelmed with managing 20 or more homes on their own. Staying on top of administrative tasks and complying with all the regulations can be very difficult without any support. This is where Happy Holiday Homes steps in.
They provide their partners with all the technology they need to run their business (including a PMS and an accounting system), take care of all marketing tasks (advertising properties on more than 25 international booking sites) and constantly support their partners with training and assistance. All so that property managers can focus on what they do best, locally.
“Their job is to get the homes, organise them and clean them and make sure they’re in good order for the next guests,” Harold says. “We’re looking for people who are interested in doing a really good job in property management, get many homes on board and be very local so that we can do all the rest for them.”
In 2020, Happy Holiday Homes is planning to open 15 new franchises.
Read more about the Happy Holiday Homes vacation rental franchise programme here.
One of the top 20 property management companies in the world, iTrip Vacations also offers a franchise opportunity to entrepreneurs who want to “own a business in paradise”. The company currently provides full-service management to 2,500 properties across the US and Canada and serves over 100 destinations. They recently made the news when GSV added iTrip to its extensive rollup of vacation rental companies.
iTrip provides its franchisees with proprietary software and international distribution to help them expand their reach, increase their revenue and accelerate their growth. They also provide extensive training, so no previous industry experience is required. According to their profile on Franchise Gator, all you need to get started is a computer and a smartphone (and some initial investment, of course).
Read more about the iTrip Vacations vacation rental franchise programme here.
A US-based property management company, Book by Owner manages vacation homes in 9 US states.
The company aims to help people find “a year-round recurring revenue stream in a resort town” by offering a franchise option. They give their franchisees access to their proven processes, proprietary software, a network of partners and suppliers, training, and an exit strategy when they’re ready to sell their business.
Their way of working is different from other property managers in that they don’t provide marketing services – which means they also don’t charge commissions on bookings. They take over once the property is booked and cover all the operational or “ground services”, charging a monthly flat fee for the services provided.
They look for partners who can operate businesses locally and cultivate strong relationships with property owners.
Read more about the Book by Owner vacation rental franchise programme here.
London-based Pass the Keys swears by growth through the franchise model. The full-service property management company has grown 300% year on year since it’s inception in 2015 and maintained a 100% franchise success rate. They operate in 17 cities across the UK and offer a franchise option to entrepreneurs new to property management.
Pass the Keys provides its Franchisees with full access to their technology, which consists of three products: PTK Plus (a mobile app for managing operations), Client Portal (for updating listings) and PTK Connect (a platform for account managers and city managers). They also give their partners operations, training, branding and marketing support.
Read more about the Pass the Keys vacation rental franchise programme here.
Although the Danish property management company Feriepartner Danmark does not use a franchise model per se, they’ve built their own system which works similarly to a franchise.
The company has over 7,000 properties in Denmark. They just started out in Sweden, where they currently manage around 150 homes.
Feriepartner Danmark’s CEO Flemming Toft Andersen shared with us that the company works as a chain of 27 independent holiday rental home agencies. They require a significant level of entrepreneurship from their local partners who own their businesses (and their contracts with the homeowners) themselves. Partners are provided with Feriepartner’s tried and tested processes and state-of-the-art technology. There is a close relationship between the chain and the agencies based on exclusivity and 83% direct bookings.
This franchise-like model has helped Feriepartner grow steadily for the past 30 years and is expected to help them become the number one property management firm in Denmark, as well as expand to other countries such as Norway and Germany in the future.
Interview with Flemming Toft Andersen, CEO at Feriepartner Danmark coming soon on the Secret Sauce Podcast!
With over 7,000 units, Direct Booker is one of the largest property management companies in Europe. They too have chosen to grow through the franchise business model.
3,600 of Direct Booker’s properties (more than half!) are managed by their franchisees, in 21 cities across 7 different countries. They’re planning to open more locations in the future. The company is based in Dubrovnik, Croatia and covers the Balkan region.
Direct Booker is looking for vacation rental agencies who want to upgrade their business model and entrepreneurs who want to start their own businesses to join their franchise programme.
Read more about the Direct Booker vacation rental franchise programme here.
Running a vacation rental franchise programme can be a great way to grow your property management business. By finding local entrepreneurs to partner with, opening new markets and adding new destinations to your inventory is made possible without your company having to establish ground operations in the area.
In the competitive world of vacation rentals where consolidation is rapidly affecting the face of the industry (in fact, experts say it’s one of the main trends that are going to shape the industry in 2020!), franchising may just be one of the best ways for property managers to start gaining ground.
Have you heard of any other companies that we should add to the list? Would you consider starting a vacation rental franchise programme? Let us know!