Budget Breakdown for High Performing Vacation Rentals
What Does It Cost to Furnish and Launch a High Performing Vacation Rental?
Most investors believe that majority of their investment into getting a vacation rental property furnished for guests goes into major furniture. But the truth is that only about 40% of the total project budget goes into large furniture pieces like beds, tables and chairs.
The rest is spread across 7 other budget categories that many investors miss, and this oversight can lead to expensive mistakes and missed launch dates.
But before we break down what the budget looks like for launching a high performing vacation rental property, it's important to know that you have two options when it comes to your vacation rental: Barebones Furnishing or High Performance Furnishing.
Barebones Furnishing
Barebones Furnishing is when you put just enough into your vacation rental to get it listed. These properties have a tendency to blend in with other properties on the market, so their owners have to lower prices to stand out. They also tend to get rented less often and produce fewer positive reviews, rebookings, and referrals.
Barebones Furnishing can work as an approach in markets where demand exceeds supply and might be the right move if you're tight on cash or in a rush, but usually as a temporary measure that often ends up costing more long-term after you eventually refresh the property.
See our case study for the Arcadia Hideaway for a real-life example of this.
The downside of Barebones Furnishing is that it adds risk to your investment in markets where demand and supply don't strongly favor you, and even when demand for vacation rentals is strong relative to supply, these properties still leave money on the table as a result of lower daily rates and occupancy.
Our role is to reduce risk for our clients' investments using interior design. That's why, as a rule, we don't accept jobs with budgets that require us to use this strategy.
High Performance Furnishing
High Performance Furnishing is when you design your vacation rental to consistently cash flow at its potential.
This involves designing it around the guests you want to attract and the experience you want them to have. The goal is to give those guests a reason to choose your property over the alternatives, without having to compete on price alone.
A high performing property has to work at three key moments in the guest journey: when someone sees it in a list of search results, when they decide whether it's worth booking, and when they actually stay there.
When you nail all three steps, all of your rental investment metrics improve: you get more clicks, more bookings, and more rebookings, referrals, and 5 star reviews.
For a large-group property, that means more than buying attractive beds and sofas. To stop the scroll, the property's listing photos need memorable visual moments—a compelling main gathering space, distinctive bedrooms, and a cohesive look that sets it apart from nearby listings.
Guests need enough dining and lounge seating for the group, spaces that work for gathering, quality mattresses and bedding, a complete kitchen, and furnishings that can withstand frequent use. Lighting, rugs, art, window treatments, and the finishing details also help the property feel like a place worth visiting rather than a house that was simply filled with furniture.
Our Vacation Rental Performance Kit™ has more details on how to design for better rental investment metrics.
When you implement a High Performance Furnishing strategy, it's especially important to spend your budget wisely. It means investing where the money impacts your rental investment metrics and choosing quality where a cheap replacement would cost more over time.
To do that, you need a realistic budget based on real projects for high performing properties on the market now.
The Anatomy of a High Performing Vacation Rental Budget
We analyzed 5 of our vacation rental projects in the Southern Utah market so you can see exactly how a realistic budget breaks down for a high performing vacation rental.
Obviously, a project's total depends on the home's size, layout, and guest capacity. But the patterns we saw in our analysis are consistent across large-group vacation rentals of various sizes.
Each project's budget categories were normalized to its own total, then the five mixes were averaged equally to create a representative 'budget profile' for this class of vacation rentals.
Budget Breakdown of a High Performing Vacation Rental
Five large-group short-term vacation-rental properties in Southern Utah · equal-weighted average · each bar totals 100%
Services
One of the most overlooked aspects of launching a vacation rental is the cost of services. The more free time and expertise you have in interior design for vacation rentals, the more you can influence the service side of your budget.
The less free time you have, the more you'll need to invest in these services. At 1584 Design, we fall in the lower middle of the national average of $5-$17 per square foot for our combined fees as designers, so the breakdown above should give you a rough sense of what to expect if you decide to hire a design firm.
For more information on that process, see our guide for How to Choose an Interior Design Firm for Your Vacation Rental.
The services you can expect to need - whether you provide them yourself or hire for them - fall into the following categories:
Design Planning
Developing the design direction, making the key layout and furnishing selections, and delivering complete design boards with item selections for the property.
Procurement
Sourcing and ordering the approved furniture, furnishings and materials, then coordinating vendors and tracking orders and delivery timing.
Installation
Putting the design into place at the property through room setup, furniture placement, styling and final details. Separately billed movers, assembly or installation labor are included under Other Services.
Other Services
Project-specific services beyond Design Planning, Procurement and Installation, including storage, receiving, delivery or freight, movers, additional assembly and installation labor, and related setup coordination.
Fee Offsetting
Our trade relationships, trade discounts, and deal hunting significantly reduce what clients spend on furnishings. Those savings can offset most of our design fee, and sometimes all of it.
Our goal with every project is to save you so much that our services are effectively free.
To give you a sense of how close we get to that, estimated furnishing savings currently average 92.4% of our design fee.
Source Data
The 5 projects we used for our analysis, normalized by budget category percentage.
Source and method: anonymized 1584 Design project records. The sample is limited to five large-group short-term vacation-rental properties in Southern Utah; it is not an industry benchmark.