Beyond Nightly Rates: Diversifying Income Through Upsells in Vacation Rentals
Relying solely on nightly rental income is a bit like putting all your eggs in one basket. Many short-term rental hosts and managers focus on maximizing occupancy and nightly rates, which is important – but it’s not the only way to boost your revenue. In fact, for most vacation rental businesses, nearly 100% of revenue comes from the booking itself (nightly rates). This means if bookings slow down or price competition increases, your income takes an immediate hit.
To build a more resilient and profitable rental business, it’s wise to diversify your income streams. Hotels have long done this with restaurants, spa services, and tour desks. Airbnb hosts can adopt a similar mindset on a smaller scale by introducing upsells, fees, and add-on services beyond the nightly stay. Additional revenue streams can help offset slow seasons, cushion the impact of price wars, and ultimately increase your profitability per guest.
The Pressure on Nightly Rates
Current market trends in the short-term rental space underscore why diversification is crucial. The market is getting crowded – 76% of professional hosts surveyed said competition has heightened in 2024. In many areas, there are more listings vying for the same guests, which can drive nightly prices down. At the same time, regulations and higher costs (cleaning, utilities, etc.) are squeezing margins. Simply raising your nightly rate isn’t always feasible; guests will just book the cheaper place down the street. As a result, savvy hosts are turning to upsells and additional fees as a way to boost revenue without solely depending on raising base prices.
Think of it this way: once you’ve attracted a booking (often at a market-competitive rate), upsells allow you to increase the total value of that booking. Instead of only earning, say, $500 for a 5-night stay, perhaps you can earn $650 from that booking by providing extra services that the guest is happy to pay for. That’s an extra $150 that doesn’t rely on getting more nights booked or more properties – it’s income derived from the stay you’ve already secured.
Upsells: A Win-Win Revenue Stream
We often frame upsells in terms of guest experience (and indeed, great upsells do enhance the stay), but from a business perspective, they’re also a smart financial strategy. Even modest upsells can add up significantly over time:
Single-Property Hosts: If you only manage one rental, you might think upsell income would be trivial. But consider a simple add-on like charging for early check-in or late check-out. An analysis by Enso Connect found that even small operational upsells can generate an extra $500–$1,500 per year per property. That may not sound huge, but it could cover your annual smart lock subscription, a new appliance, or boost your ROI notably. It’s essentially “free” money after minimal setup.
Managers of Dozens of Rentals: For those with a portfolio of 10, 20, or 50 properties, upsells become even more impactful. Offering a mix of operational and experiential upsells across your units could add $25,000–$75,000 of revenue per year for a 50-property portfolio. That’s equivalent to the income of several extra bookings per property, achieved without acquiring new listings. It goes straight to improving your gross margins.
Scaling to Large Portfolios: If you’re a larger operator (100+ units), upselling isn’t just a nice-to-have – it’s practically a necessity for competitive advantage. Projections suggest that a 250-unit short-term rental company could pull in over $125,000 – $375,000 in additional revenue annually through effective upsell strategies. When you think about it, that could be the difference that keeps your business profitable in a tough year or allows you to invest in growth (like hiring staff or buying more properties).
What’s encouraging is that upsell revenue is largely incremental and high-margin. You typically don’t pay large commissions to OTAs on it, and many upsells (like a late check-out or an extra cleaning) have healthy profit margins once priced appropriately. It truly is a win-win: guests get more out of their stay, and you increase revenue without having to increase your nightly rate.
Types of Additional Revenue Streams for Hosts
When we talk about diversifying income via upsells, what exactly can hosts offer? There’s a wide spectrum, and you can choose what fits your property and bandwidth:
Convenience Fees: These include things like pet fees, extra guest fees, or parking fees. Many hosts charge these by default (especially pet fees), but if you don’t currently, consider implementing them where reasonable. Travelers with pets expect to pay a little extra for the privilege, for example. Such fees can be viewed as upsells when offered as optional (e.g., “Yes, you can bring your dog for a $50 pet cleaning fee – we’ll even provide a dog bed and bowl.”).
In-Stay Services: These are operational upsells like mid-stay cleaning, linen changes, or firewood delivery. Guests on longer trips might gladly pay for a freshen-up cleaning mid-way. If your area is cold and you offer a fireplace, selling bundles of firewood for a markup is another example. These services don’t require you to be a tour guide or expert – they’re extensions of hospitality.
Experience and Activity Bookings: Partner with local tour companies or use platforms to sell experiences. For instance, you might upsell a guided kayaking tour, museum tickets, or a food tasting event. With tools like Frontdesk or others, you can present these as curated options in your digital guidebook. Guests pay through you (or your platform), and you either take a commission or simply facilitate it for a fee. As noted in travel trend reports, 21% of travelers are actively looking for unique, memorable experiences when they travel. By offering an experience upsell, you tap into that demand and differentiate your rental.
Food & Beverage Add-ons: Short-term rentals don’t have on-site restaurants, of course, but you can still offer F&B upsells. Common ones are grocery stocking prior to arrival (for a fee plus cost of groceries), breakfast baskets, or partnering with a local chef to provide a meal. If you have the ability, offering a simple breakfast (even if it’s just local pastries delivered in the morning for $15) can surprise and delight guests while bringing in a bit extra.
Extended Stay Options: Charging by the hour for late check-outs or early check-ins falls here. Additionally, if a guest wants to extend their stay an extra night at the last minute, consider offering a slightly discounted nightly rate direct to them (since you’d save on platform fees) – it’s not an “upsell” in the traditional sense, but it is additional revenue you wouldn’t have had otherwise. Some hosts also offer an “upgrade” to a larger unit if they have multiple listings, for a negotiated extra cost.
The key is choosing upsells that align with your property and your capacity to deliver. You don’t have to offer every possible add-on. Start with one or two that are easy for you to manage and that complement your guest profile (for example, a ski cabin host might focus on gear rentals and guided ski tours, while an urban apartment host might offer airport pickup and fridge stocking).
Making It Easy: Tools to Manage Upsells
One reason some hosts hesitate to diversify into upsells is the perceived hassle – how do you promote them, take payment, and fulfill these extras without complicating your workflow? Thankfully, technology has stepped in to streamline this. Digital guidebook platforms like Frontdesk provide an all-in-one solution: you can list your available add-ons in a “storefront” that guests access through the guidebook, they can request or purchase services with a click, and you get notified to approve/arrange it. Frontdesk describes it as a “full-stack e-commerce solution for selling to guests on-stay” – effectively turning your Airbnb into a mini-hotel with a concierge desk, but one that’s automated.
Property management systems and channel managers are also increasingly adding upsell modules or integrations. The idea is to integrate upsell offers into the guest’s journey naturally (such as in the confirmation email or a pre-stay message) and handle it systematically. This way, diversifying your revenue doesn’t mean multiplying your workload. The upfront effort is in setting up your offerings; after that, much of it can run on autopilot.
Future-Proofing Your Rental Business
Diversifying income isn’t just about squeezing out more dollars – it’s about future-proofing. The travel industry can be volatile. We’ve seen how a sudden event (like a pandemic or new city regulation) can upend bookings. Having multiple revenue streams helps stabilize your business during rocky times. For example, if travel demand dips, you might lower nightly rates to attract bookings, but still make strong profit on upsells for the guests you do get. Or if a city caps how many nights you can rent, maybe you pivot to offering more local experiences for the fewer guests you host to maintain income.
Additionally, offering a richer array of services can position you better against competition. It’s a way of differentiation. If two similar houses are on Airbnb for the same price, but one host offers a bunch of extras (airport pickup, stocked fridge, local tours), some guests will gravitate to that one even if they don’t opt for the extras – they appreciate the possibility. It signals a higher level of hospitality. And if they do opt in, you’ve just increased your revenue without acquiring a new guest.
In summary, depending only on nightly rental fees is a limiting approach in today’s short-term rental market. By embracing upsells and additional services, you unlock new revenue potential from each guest who walks through your door. It’s about working smarter, not just harder: you’ve already done the hard work of securing the booking, now maximize its value. Platforms like Frontdesk make it easier than ever to implement this strategy at scale. So brainstorm those upsell ideas, test a few that make sense for you, and watch your average revenue per guest climb. You’ll be building a more robust business that can thrive in any market conditions – and your guests will likely love the enhanced experience along the way.