Owning a vacation rental is a fantastic way to bring in extra income on a monthly basis or even diversify your property investment portfolio. Whether you rent a home in a long-established vacation spot or you've just listed a second home on Airbnb, increasing your property's value will likely always be top of mind. What can you do to bring in more guests and justify a price increase? One thing is to install a hot tub.
If you go about it smart, your hot tub will quickly pay for itself. Here's a guide to the benefits and costs of owning a hot tub on your vacation rental property.
BENEFITS OF OWNING A HOT TUB ON YOUR VACATION RENTAL PROPERTY
The ultimate goal of owning a rental property is to improve your financial situation. Owning a hot tub can help you do so, in two main ways:
- It can bring in more guests
- It allows you to raise your rental rate
A hot tub can separate your rental property from others in the area. It's novel for guests who don't own their own home spa, and familiar and welcome to guests who use their own hot tub as part of their daily wellness routine. If you have the only hot tub in a well-visited vacation spot, guests will be more attracted to your location and may be willing to pay a higher price. Conversely, if other rentals include a hot tub and your property doesn't, guests may pass you over for the competition or demand a lower rate.
HOW A HOT TUB BRINGS MORE GUESTS TO RENTAL PROPERTIES
In colder, northern climates, especially in areas near ski slopes, a hot tub can seduce guests to your property. They'll love returning to your rental after skiing, hiking, or snowmobiling for a warm, relaxing soak as the sun sets. Even guests who spend a lot of time indoors on vacation will be enticed by your hot tub as a luxurious way to spend their downtime.
A spa is also a draw in vacation spots during the summer and shoulder seasons. Cool mornings and brisk twilight are when vacationers will be at your property, not out visiting area attractions. They'll welcome the chance to relax and spend time in the hot tub with the family members and friends joining them on vacation.
Guests spending hot summer days at your rental property will especially love a hot tub with CoolZone™ technology. CoolZone, available only from Watkins Wellness®, will allow your guests to chill their water to as low as 60 degrees Fahrenheit for a refreshing afternoon dip, and then heat it back up again for a hot soak before bed.
HOW A HOT TUB HELPS YOU INCREASE RENTAL RATES
If you're already booking as many guests as you'd like, you can increase your rental revenue by raising your rates. Finding the right rate is a balancing act. Setting a rate that's too low will limit your income; setting it too high will limit the number of bookings. Remember, people will only be willing to pay prices that are reasonable for the area and that are warranted by the amenities your offer. Having a hot tub is a great way to justify a rental rate increase and quickly pay off your hot tub investment.
COSTS VS. BENEFITS OF OWNING A HOT TUB ON YOUR VACATION RENTAL PROPERTY
In addition to the initial cost of a rental property spa, you'll also have to pay to keep it clean, running, and in good repair. When deciding whether or not a hot tub is a good investment, consider the amount of money you'll make as a result of decreased vacancies and increased rates. Then, compare it to the total initial and ongoing costs of owning a hot tub.
QUANTIFYING HOT TUB BENEFITS
Nobody knows your rental property and the area's vacation market like you do. So, only you can determine whether adding a hot tub is a good investment. Start by reviewing your vacancy percentage, your rental rates, and new spa prices and maintenance costs in your area.
The lower your vacancy percentage, the more you stand to benefit from bringing in more guests with a hot tub. If you currently book at or near 100% annually, your vacancy percentage is zero and you don't need to bring in any more guests. But if your vacancy rate is 50-75%, investing in a hot tub could take you from two to three booked weekends per month to three to four. Booking guests for even one additional weekend per month can significantly increase your revenue.
If you're already at or near capacity, you can increase revenue by raising your rates. The amount by which you increase your rates will depend on the rental rates in your market. If the market warrants, an increase of $40 per weekend night during a six-month `high season,' for example, will net an additional $1,920. If you also increase your weekday rental rate by just $20 per night during those same six months, you'll see an additional $2600. Seemingly small increases can add up over the course of a year.
UNDERSTANDING HOT TUB COSTS
A new hot tub will require both initial and ongoing payments. The total costs of owning a hot tub are:
- Initial Price. Quality hot tubs can cost anywhere between $4,000 and $13,000+. Most hot tub dealers offer financing plans, with repayment periods between 36 and 60 months. Hot tub prices increase based on quality, performance, size, and design. Keep in mind that it's well worth it to pay more upfront for a spa that will be used by a lot of guests at a vacation home. There are some downsides to buying an inexpensive spa, including that you'll have to replace it more often since it won't withstand the elements. Additionally, low-quality parts will wear out quickly. While it can take 3-5 years to pay off a hot tub, it will last a decade or more if well maintained.
- Energy Usage. Running a hot tub will increase your monthly utility bill. The new amount will depend on location, hot tub size, energy prices, and other factors. Purchasing a quality hot tub with good insulation will help keep utility costs low.
- Cleaning and Maintenance. The amount of time and money it will take to keep your spa water clean depends on the water care system you choose. High-tech systems such as the FreshWater® salt system can greatly reduce your maintenance needs and ongoing costs. If you're not always on-site at your rental property, consider investing in a service plan from your local dealer. These plans can roughly cost between $125 and $260 per month, though actual charges will depend on the dealer. A service plan guarantees your spa will always be well-maintained and in ideal condition for your guests.
- Repairs. Even with the best service plan, sometimes wear and tear will require repair or replacement of hot tub components. Spa repair costs depend on the seriousness of the issue, naturally, but low-cost repairs are more common than high-priced repairs. Since a major factor affecting the cost of hot tub repairs is the level of your warranty coverage, it's critical to purchase a spa with great coverage. If you buy your spa from a reputable manufacturer, the different components will each come with warranty coverage for varying lengths of time. Keeping a close eye on a hot tub at a rental property can greatly reduce repair costs. With a remote spa monitoring system like Connextion™ from Hot Spring, you can track your hot tub's temperature, usage, and maintenance needs from your tablet or mobile device. The system also notifies both you and your dealer of any spa issues, so they can be handled immediately.
- Liability and Insurance. As a vacation property owner, you already have rental liability insurance. Depending on your state and insurer, a new hot tub might or might not be covered under this policy as a standard amenity. If not, you'll need to extend your coverage, which will likely mean a higher rate. Talk to your insurer to learn more about your specific liability coverage options.
Once you compare the costs of a hot tub against the return you can expect from an increase in rental bookings and rates over the lifetime of the spa, you'll likely discover that the cost is well worth it. Plus, when your property isn't booked, you can take advantage of all the health benefits your new hot tub provides.
Hot Spring Spas knows that you don't want just any hot tub—you want a quality spa. That's why we build durable, energy-efficient, and simple-to-maintain hot tubs. Whether you put your spa on a rental property or in your home's backyard, you can depend on your Hot Spring hot tub to provide stress-free soaks, day after day and year after year. To inquire about price, request a quote.