Vacation rental owners pinched by this summer's travel season squeeze, may want to consider a new option for attracting guests -- the Layaway Vacation Plan.
Retailers are doing it, so why not vacation rental owners?
Get guests to opt for an installment payment plan now so they can secure their vacation later.
Not only will stretching out the payments be easier on guests' travel budgets, it'll also keep vacation property owners from guessing about occupancy next year.
This summer past, thanks to the lingering soft economy, many vacation rental owners were besieged by vacation and daycation bargain hunters. And that force some property owners -- who didn't plan ahead -- to succumb to accepting lower rates than preferred.
"Obviously, the best way to avoid last-minute hagglers who want your place for a song is to make sure you're booked up well in advance," says Christine Karpinski, director of Owner Community for HomeAway.com, a vacation rental portal for property owners and travelers.
"And one way to set yourself up for success is to make it as easy as possible for budget-conscious travelers to choose your property," added Karpinski, author of "How to Rent Vacation Properties by Owner" (Kinney Pollack Press, $26.00).
Vacation travelers typically have more discretionary cash than those who don't travel, but coming up with a lump sum that amounts to a few thousand dollars is daunting even for them in today's economy.
Karpinski suggests the following approach:
• Instead of asking for the traditional 50 percent down, get 20 percent down and divvy up the rest in monthly installments. Charge a small administration fee of, say, $25 for the installment plan effort.
"Today, if you require 50 percent down, you could alienate potential renters who might have booked with you if you had offered a payment plan. You never know how many great guests might be passing you up because of your inflexible payment policy," Karpinski says.
• Use a solid contract. Vacation rental owners should already have a solid rental agreement. Update it with a new payment plan option that includes the down payment amount, amount and date due of monthly installments and a cancellation policy. Include a contractual provision for your right to cancel the reservation and to recoup a portion of what's paid, should the guest miss a payment.
Karpinski says you can decide to be flexible and allow slow-paying guests to catch up, or you can decide to refund money already paid -- but the contract locks down the terms.
"The contract just lets everyone know up front what to expect, so there are no misunderstandings and no surprises," she says.
• Suggest travel insurance. Some guests do face emergencies and must cancel their vacations. Vacation property owners should be informative and make a strong travel insurance pitch along with any payment plan. The guest buys the insurance, but the property owner can include travel insurance information in early contacts with the guest as well as in the rental agreement.
Travel insurance can be relatively cheap, about 5 to 7 percent of a trip's cost for the "trip cancellation" variety. For example, a $5,000 trip would cost roughly $250 to $350 to insure, according to the Insurance Information Institute.
• Advertise flexibility. Prominently advertise you are in the layaway vacation business and you have some flexibility to let guests determine how to pay. Stating "Require down payment" and "Will work out a payment plan" is a good lure.
"The more you accommodate your guests' wallets, the more likely your vacation home will accommodate their families. It positions you as someone with whom they want to do business. It sets you apart from the competition," Karpinski says.
Karpinski says, change your policy right now and you'll set yourself up for a successful 2010 travel season. Then, if bargain shoppers come sniffing around next summer, you'll feel okay about saying "Thanks but no thanks! We already booked it at full price!"