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STR or short-term rental owners have a lot to look forward to this 2025. Although many changes are happening in the private rental market (e.g. new bills and regulations), the STR industry is set to break records as demand continues to surge.
Statistics revealed that between July 2023 to June 2024, guests spent 85.2 million nights in short-term rentals in the UK. This figure is expected to grow as the London government is very vocal about its vision to attract more than 40 million visitors per year by 2025. All these visitors will be looking for temporary accommodations – that means staying in either hotels or short-term rentals.
The influx of guests will bring greater competition in the short-term rental market. Not only that, it will also bring a multitude of guest expectations. Short-term rental owners should take advantage of these by focusing on growth strategies to improve the performance of STR properties.
In this article, you’ll get 5 growth strategies that would work well amidst the current conditions of the London rental market. Find out how you can take advantage of the changes in market trends and demands so you can position your STRs to maximise occupancy and revenue potential.
Key Focus Areas of STR Owners and Operators in 2025
A survey was done to analyse the short-term rental industry – specifically what STR operators and owners are planning to do this 2025. The research intends to reveal the growth strategies that would shape the short-term rental industry in London.
Industry experts revealed that a lot of STR operators struggled with the increasing competition brought about by market saturation. Given this concern, STR operators and owners are focusing on improving their competitive advantage this year – with the plans differing based on the number of properties being managed.
For those managing 20 properties or less, their top 3 focus will be on amenities, pricing and accommodation design. Those with less than 200 properties but more than 20 plan to focus on pricing, services and amenities. Those with more than 200 properties will focus on services, tech-enabled experience and pricing.
5 STR Growth Strategies to Improve Profitability in 2025
When it comes to growing an STR business, operators and owners shared their top 5 strategies.
- Adding new properties to expand their portfolio.
- Focusing on marketing initiatives to attract more guests and increase direct bookings.
- Optimising nightly rates to maximise revenue.
- Increasing occupancy rates to reduce vacancies.
- Offering upsells to enhance the guest experience and generate additional income.
Given these ideas, short-term rental owners like you could get clues on how to expand your own STR business.
Scale smartly through new properties
Expanding your portfolio goes beyond just buying more properties. You have to be smart in choosing the right properties and operating them efficiently.
Start by identifying the high-demand locations in London. Research occupancy trends and guest demands in the location you want to buy. Don’t forget to consider seasonality as well. Some places enjoy high tourism or event-driven demand. These are ideal locations to invest in.
As you explore new properties, consider your capabilities to manage on a bigger scale. If you have an in-house team for guest services, cleaning and maintenance, it would be easier for you to scale your operations to accommodate the new properties.
In case your finances aren’t ready to buy more properties, you can always consider managing other rental properties on behalf of other owners. This will allow you to earn more without having to increase your capital investment.
Maximise revenue through dynamic pricing strategies
Dynamic pricing allows you to maximise your revenue. It takes into consideration current events and market demand to get the best rate for every booking.
Find pricing tools that will adjust rates automatically. There are AI-powered tools that even consider real-time traffic conditions, scheduled events, competitor pricing, etc. Consider using these to maximise your property’s earning potential.
You should also think about balancing occupancy and profit – especially during the low season. Lower your prices to ensure bookings. After all, a lower profit is better than nothing. Another strategy you can use is to offer discounts for longer stays. Not only will this deal with your occupancy rates, but it also ensures a steady income.
Increase bookings and rates through premium amenities and services
One way to increase bookings is to provide premium amenities and services. Sometimes, guests look at the amenities offered by a property before they decide to book a stay. If a property offers something the guest specifically needs, they’d be willing to spend more for that.
For instance, a pet-lover bringing their furry friends along would prefer staying in a pet-friendly STR. In fact, 8 out of 10 leisure travellers believe pet-friendly policies are important. By providing specific amenities for pets, you can attract more bookings and even justify higher rates.
To guarantee better bookings, understand your target guest market and find out what amenities and services they prefer.
You can also upgrade the essentials in your STR, like high-quality linens, modern kitchens and luxury toiletries. Start investing in technology to impress your guests. Offer keyless entry (great for self-check-ins), fast WiFi and smart thermostats.
Consider offering unique experiences as well. Partner with local businesses and get discounts for your guests.
Optimise occupancy through improved marketing and guest experience
You can also fill your calendar with bookings by focusing on your marketing initiatives and creating better guest experiences.
Start by enhancing your listing. Review your property listings now and then to see what you can update. You might want to improve the photos – especially if you recently made upgrades on the property. You can also write more compelling descriptions to highlight the changes you’ve made.
Pay attention to your social media as well. Keep your socials updated and post reviews about your property. If past guests gave you raving reviews, you want to post that so people will know.
Finally, personalise the guest experience. Again, this is possible by understanding who your guest market is. What are their preferences? Adding personal touches like writing a note on their welcome basket can also elevate the guest experience.
Boost profit through upsells and add-on services
A popular strategy to boost revenue is by upselling. For short-term rentals, you can add services like offering cooked meals, airport transfers, etc.
Think about what would elevate the guest experience. You can offer an option for early check-ins and late check-outs. Some people would pay extra for that. You can also offer to stock the fridge and kitchen with whatever the guest prefers – for a price, of course.
These efforts will increase your revenue and impress the guests with the personal service you’re providing.
Aim for Long-Term STR Success in 2025
Short-term rental owners have a lot of work to do if they want to stay competitive in London. With the right growth strategies, you can take advantage of the changes in the market to improve your property’s profitability.
Consider your specific portfolio goals and financial resources so you’ll know what strategies fit your circumstances. Whether it’s expanding portfolios, changing your pricing strategies, investing in premium amenities and service or elevating the guest experience, you need to approach everything with a plan.
Review your STR business strategy and come up with an actionable plan. If you want to make 2025 the most profitable year, you have to take action now.
Would you like to know more about growing your short-term rental property? Contact City Relay. We offer end-to-end property management services. We’ll take care of the daily operations so you can focus on implementing your growth strategies.
