Not all renovations are created equal for vacation rentals. Some improvements pay for themselves quickly through higher rates and occupancy. Others cost more than they ever return. Understanding renovation ROI helps you invest wisely.
This guide covers which improvements generate returns and which to skip.
The Vacation Rental Renovation Mindset
Different Than Personal Home
What matters for STR renovations:
| STR Priority | Personal Home Priority |
|---|---|
| Photography impact | Personal taste |
| Guest experience | Daily livability |
| Durability | Aesthetic preferences |
| Maintenance ease | One-time cost |
| Broad appeal | Specific needs |
The ROI Question
For every renovation, ask:
- Will this increase nightly rate?
- Will this increase occupancy?
- Will this reduce operating costs?
- How long until payback?
The Compound Effect
Good renovations often provide:
- Higher rates
- Better occupancy
- Stronger reviews
- More repeat bookings
- Reduced maintenance
High-ROI Renovations
Kitchen Updates
Why they matter:
- Second most photographed space
- Guest expectations high
- Functional necessity
- Modern kitchens command premiums
High-impact updates:
| Update | Cost Range | Potential Rate Increase |
|---|---|---|
| Cabinet painting | $500-$1,500 | 3-5% |
| New countertops | $1,500-$5,000 | 5-10% |
| Updated appliances | $2,000-$5,000 | 5-8% |
| New fixtures | $200-$500 | 2-3% |
| Backsplash | $500-$2,000 | 3-5% |
ROI timeline: 12-24 months typical payback
Avoid over-investing:
- Commercial-grade unnecessary
- Extremely high-end finishes
- Complex custom features
- Expensive trend-driven choices
Bathroom Renovations
Why they matter:
- Cleanliness perception critical
- Dated bathrooms hurt reviews
- Relatively small investment
- High visual impact
High-impact updates:
| Update | Cost Range | Potential Rate Increase |
|---|---|---|
| New vanity | $300-$1,000 | 3-5% |
| Tile refresh | $500-$2,000 | 5-8% |
| Fixtures update | $200-$500 | 2-4% |
| Mirror upgrade | $100-$300 | 1-2% |
| Shower door | $300-$800 | 3-5% |
ROI timeline: 12-18 months typical payback
Outdoor Living Spaces
Why they matter:
- Differentiating feature
- Experience-focused travelers
- Photographs exceptionally well
- Extends usable space
High-impact additions:
| Addition | Cost Range | Potential Rate Increase |
|---|---|---|
| Deck/patio | $3,000-$15,000 | 10-20% |
| Hot tub | $5,000-$15,000 | 15-25% |
| Fire pit | $500-$2,000 | 5-10% |
| Outdoor kitchen | $5,000-$20,000 | 10-15% |
| Quality furniture | $1,000-$5,000 | 5-10% |
ROI timeline: 18-36 months typical payback
Paint and Flooring
Why they matter:
- Foundation of visual appeal
- Affects every photo
- Relatively affordable
- Immediately noticeable
Investment guidance:
| Update | Cost Range | Impact |
|---|---|---|
| Interior paint | $2,000-$5,000 | High |
| LVP flooring | $3-$8/sq ft | High |
| Carpet replacement | $2-$5/sq ft | Medium |
| Exterior paint | $3,000-$8,000 | Medium |
ROI timeline: 6-18 months typical payback
Bedding and Sleep Experience
Why they matter:
- Directly affects reviews
- Comfort is primary expectation
- Relatively low cost
- Easy to upgrade
Investment guidance:
| Update | Cost Range | Impact |
|---|---|---|
| Quality mattress | $500-$1,500 | Very High |
| Premium bedding | $200-$500 per bed | High |
| Pillows | $50-$150 per bed | Medium |
| Blackout curtains | $100-$300 per room | Medium |
ROI timeline: 3-12 months typical payback
Moderate-ROI Renovations
Smart Home Features
Considerations:
- Convenience valued
- Operational benefits
- Some guests don’t care
- Technology can fail
Worth considering:
| Feature | Cost Range | Benefit |
|---|---|---|
| Smart locks | $200-$400 | Operational |
| Smart thermostat | $200-$300 | Cost savings |
| Smart TV | $300-$600 | Guest satisfaction |
| Noise monitoring | $150-$300 | Risk reduction |
ROI timeline: 12-24 months typical payback
Lighting Upgrades
Why it matters:
- Affects photography significantly
- Creates ambiance
- Often overlooked
- Relatively affordable
High-impact updates:
- Dimmer switches
- Statement fixtures
- Under-cabinet lighting
- Outdoor string lights
- Lamp upgrades
ROI timeline: 12-18 months typical payback
HVAC Improvements
Why it matters:
- Comfort is expected
- System failure is emergency
- Efficiency saves money
- Quiet operation valued
When to invest:
- System over 15 years old
- Frequent repairs
- Efficiency very poor
- Guest complaints about comfort
ROI timeline: 24-48 months (cost savings + reliability)
Low-ROI Renovations
Extreme Luxury Finishes
Why returns are limited:
- Market has rate ceiling
- Guests expect “nice,” not “extreme”
- Maintenance costs increase
- Damage risk higher
Examples to avoid:
- Marble countertops in moderate markets
- Designer fixtures in budget areas
- Custom millwork
- Extremely high-end appliances
Over-Personalized Design
Why returns are limited:
- Appeals to narrow audience
- May alienate more than attract
- Trend-dependent value
- Harder to maintain/replace
Examples to avoid:
- Highly themed rooms
- Very bold color choices
- Niche design styles
- Personal taste over market appeal
Garage Conversions
Why returns are limited:
- Parking often more valuable
- May violate codes
- Reduces flexibility
- Often poor execution
Pool Additions (Some Markets)
When pools don’t pay:
- Cold climates
- High liability costs
- Significant maintenance
- Market doesn’t value them
- Lot constraints
When pools do pay:
- Warm climate year-round
- Family market
- Differentiating feature
- Adequate lot size
Calculating Renovation ROI
The Basic Formula
Annual ROI:
Additional Annual Revenue ÷ Renovation Cost × 100 = ROI %Example Calculation
Hot tub addition:
- Cost: $8,000
- Additional nightly revenue: $25
- Nights booked annually: 200
- Additional revenue: $5,000
- First year ROI: 62.5%
- Payback: ~19 months
Factors to Include
Revenue side:
- Nightly rate increase
- Occupancy improvement
- Reduced discounting
- Booking lead time
Cost side:
- Installation cost
- Ongoing maintenance
- Insurance impact
- Utility costs
- Replacement timeline
Prioritizing Renovations
Assessment Framework
Evaluate each potential renovation:
- Current condition - How bad is it now?
- Guest impact - Will guests notice/care?
- Photo impact - Will it improve listing?
- Competitive position - Do competitors have this?
- Cost vs. return - What’s the likely payback?
Priority Matrix
| Urgency | High Impact | Low Impact |
|---|---|---|
| Immediate Need | Do first | Do soon |
| Would Be Nice | Plan and budget | Skip or delay |
Suggested Priority Order
- Safety issues - Always first
- Functional problems - Systems that don’t work
- Visual impact - Paint, flooring, lighting
- Guest experience - Beds, bathrooms, kitchen
- Differentiators - Outdoor spaces, amenities
- Efficiency - Long-term cost savings
Renovation Timing
When to Renovate
Best timing:
- Slow season
- Between major bookings
- Before photography session
- Before peak season
Worst timing:
- During high season
- Without booking buffer
- When contractor availability limited
- Without clear plan
Phased Approach
Benefits of phasing:
- Spread costs
- Learn from results
- Maintain some revenue
- Adjust based on feedback
Example phase plan:
- Phase 1: Paint, flooring, lighting
- Phase 2: Kitchen updates
- Phase 3: Bathroom refresh
- Phase 4: Outdoor improvements
Hiring for Renovations
When to DIY
Appropriate for:
- Painting
- Simple fixture swaps
- Decor and staging
- Light landscaping
- Simple assembly
When to Hire
Professional needed for:
- Electrical work
- Plumbing changes
- Structural modifications
- Tile installation
- Major systems
Finding Good Contractors
Tips:
- Get multiple quotes
- Check references
- Verify licensing/insurance
- Clear written scope
- Realistic timelines
- Payment milestones
Post-Renovation Steps
Update Your Listing
- New professional photos
- Updated description
- Highlight improvements
- Adjust pricing
Track Results
- Monitor booking rates
- Track rate changes
- Note guest feedback
- Calculate actual ROI
Smart renovations maximize your property’s potential. Contact us to discuss which improvements might benefit your vacation rental.
