This is part of an ongoing VRMA series of quarterly reviews of the top trends in the vacation rental industry. For those new to the series, you can find earlier posts under my
This series' intent is to synthesize major trends and developments within the vacation rental industry over the period, not just to summarize them all. My hope is to stimulate discussion and debate, and as such I strongly encourage use of the comments section at the bottom. I would like especially to hear what trends you think I have missed and what vacation rental managers (VRMs) can do to benefit from positive trends while limiting the detriment caused by negative trends.
In , we saw a convergence of major players, a change in hotels’ understanding of the vacation rental space from threat to opportunity, and an increase in regulation in the vacation rental space. While increased regulation may have seemed like a burden and potential threat to the vacation rental industry, this quarter we’ve seen unhindered growth. As we approach the end of 2015, here are the trends that will impact your business:
Buying a Second Home First
The New York Times released this quarter on the growing trend of homeowners opting to skip the first rung of the typical homeownership ladder. Rather than investing in the more expensive urban markets, city-dwellers are opting to purchase country houses and vacation homes. With historically high prices in the city, suburban and vacation markets provide a space that is more affordable while providing owners with potential rental income.
Statistics from the likewise supported The New York Times’ analysis of the rental market; with vacation home sales , the pie continues to grow as more inventory becomes available to managers. Along with an increase in supply, we’ve likewise seen an increase in demand for vacation rental homes. While in 2007 only 10% of the US population had stayed in a vacation rental, this year we saw that number soar to 50%.
With this increase in both supply and demand, it becomes even more important to attend to consumer demand and preferences. In today’s multiscreen world, mobile is becoming an increasingly important component in determining consumer decisions. Before making travel purchasing decisions, consumers are easily navigating multiple channels and expecting content to likewise inhabit multiple platforms. With having more than three devices, the mobile experience is becoming an essential component of successfully engaging with a brand.
are realizing the importance of this trend, and the vacation rental industry is recognizing it as well. With . booked by people 18-34 years of age, an emphasis on mobile in the vacation rental space becomes intuitive. Over 17,000 travel apps currently saturate the marketplace, revealing the perceived importance of mobile integration, and
While mobile is proliferating as a profitable and necessary avenue for travel booking, hotels have also received backlash for “ .” ’s Rafat Ali coined the term earlier this quarter, criticizing travel brands, airlines, and fee-happy hotels for sacrificing user experience in favor of over-aggressive selling, excessively limiting restrictions, and false senses of urgency. With running into unexpected fees when traveling, Ali criticizes upselling tactics for shaming travelers into spending more.
While the vacation rental industry was not mentioned in Ali’s articles, the industry has not been immune to criticism regarding hate-selling. criticized the “dreaded fees” that are making an appearance in the vacation rental space, but not everyone in the industry was as quick to likewise condemn fees. Instead, many argued for the . Fees no doubt remain an essential component for many vacation rental managers’ businesses. That being said, the backlash against hotels and airlines should serve as a warning - additional fees without a perceived increase in value will not sit well with most consumers. When done correctly, they can help margins. When implemented incorrectly they can alienate your guests and harm your reputation.
While supply is increasing and the availability of mobile bookings are supporting this growing supply, the human element of travel remains key. All of the ingredients are there for the best vacation rental managers to take advantage of these tailwinds in growing their business. However, in doing so we should all keep in mind the “total” user experience of vacation rental guests, and be thoughtful about how and where to deliver, and extract, additional value. recently search engine, , after the app received $2 million in funding the year before.