Although most businesses dream of having a market all to themselves, studies and history show us that more players in the market can be a good thing. Competition is the key driver of performance and inspires the adoption of innovation as companies adapt and new ideas emerge in the industry. Today’s property management companies (PMCs) face more aggressive competition than ever before with the sector’s growing popularity attracting new entrants with both traditional and new business models. PMCs also report that property owners may become their toughest competition! What do all of these new competitors have in common? They are new entrants, unencumbered with traditional business models, and as such, can leverage the benefits of new technology and new distribution channels with little to no barrier to entry. Let’s examine the two new types of competitors: Virtual PMCs and owners, and how PMCs can effectively compete with each.
Virtual PMCs are taking advantage of new technology platforms to reduce the amount of staff needed and to maximize RevPAR for owners through the aggressive use of new distribution channels. These two perks allow the new players to expand across multiple regions to gain additional scale benefits and enable them to make very aggressive marketing promises that attract new owners. Competing with these new business models requires PMCs to adopt distribution best practices and to invest in technology that can reduce operating costs. Fortunately, the market is responding with multiple service providers focused on the unique needs of the vacation rental industry. These point solutions can help PMCs on many levels. This includes increasing profitable bookings through efficient utilization of third party distribution channels, reducing costs through keyless locks and remote utility controls, and maximize RevPAR through effective pricing strategies. The most successful PMCs have already adopted these tools to grow their business.
Property managers are also facing increased competition from owners. Does this mean that owners are firing their PMCs? Not exactly. While some are, the property management market is still flourishing, and there is a healthy supply of owners looking for professional managers. What is more troubling for many PMCs is that their existing owners are starting to divert inventory out of rental pools through increasing use of “owner weeks” that they sell on their own. We refer to this as the “Dozen Aunts and Uncles Problem.” Property managers know that “Uncle Bob” is often not actually a relative, but a guest that the owner contracted through a site such as Airbnb or HomeAway. Unfortunately, the PMC still has to provide hospitality services to Uncle Bob during his stay, while not sharing in any of the rental revenue. This raises expenses and reduces income. Not a good combination! Once again, the enabler of this “aunts and uncles problem” is the implementation of new distribution channels by the competition, which, in this case, is the owner himself. Why is this happening? In most cases, it is far less effort for a property owner to manage his individual home on a channel like Airbnb than it is for the property manager to list and update 100 units on that same channel.
To level the playing field, property managers need to embrace technology and tools that automate the distribution of their inventory through channel managers, like LeisureLink, onto popular sites like HomeAway and Airbnb. To improve efficiency, PMCs should look for a trusted service provider that offers additional capabilities like optimizing price and consolidating accounting and collections. When the property manager is listing the owner’s home on all of the best distribution channels, there is less opportunity or incentive for owners to attempt it themselves. When the owner is confident that his PMC is maximizing his annual RevPAR, he can go back to enjoying the vacation home as originally intended, as a place for relaxation and escape, not another part-time job!
So in the end, competition and innovation in the vacation rental industry fuels growth and benefits for everyone. The exciting new tools and technologies available enable you to thrive by delivering a greater variety of services and value to your owners, and of course, their guests.
To learn more or request a live demo of the LeisureLink solution, please visit http://hubs.ly/H02-dKq0 or call 1-800-976-4925.