VRMA

    Powered By:

    Uncovering Vacation Rental Trends Abroad

    Hear more from Properly's Alex Nigg on the differences between vacation rental management in North America and abroad.

    VRMA: In your experience, in what ways do European property managers approach the market
    differently than those in North America?

    Alex: Europe is very much organized by source market, and since source markets are quite
    different, it’s less about selling a Spanish villa and more about selling a Spanish villa to a Belgian family
    vs an English family versus a German family. That’s quite different from selling a Florida vacation rental to a family from Atlanta versus New Jersey. There are five major European source markets and 29 destination markets — and that makes a complex matrix to manage. Even though this leads to fragmentation, the various European markets taken together are substantially larger than the US market. Germans take pride in taking their six weeks of vacations; Americans are embarrassed taking the full two weeks. Europe is also a much more mature market — this means there are more enterprise-scale players, but also that hotel/private accommodation convergence creates less upside. But Europe is also full of urban and iconic destinations that will benefit from the two key drivers growth: millennials, and Chinese travelers. Therefore, in the medium term I’d be more excited about Gatlinburg's prospects than the Costa Brava’s or the Danish coast, but much more excited about Capri and Tuscany and Santorini than about Gatlinburg. Smart property managers on both sides of the Atlantic pick their inventory very carefully, and a small percentage of properties makes most of the money.


    VRMA: Please talk about the rise of unbundling property management services and what
    property managers should keep in mind about this trend moving forward.

    Alex: Unbundling is both scary and necessary. Why sell just the dessert if you can sell a five-course meal? Because the genie is out of the bottle and unbundling is happening. It’s driven in equal measure by competitive threats and by opportunity. The opportunity is that as an industry we are supply constrained. We have to ask ourselves the question “What do the millions of owners that are not renting their holiday houses want that we should offer?” The threat is that as a vacation rental industry we are providing a little less of the value created each year, as much of the marketing effort shifts to the global listing platforms, and that’s particularly true for the high growth Chinese and millennial audience. So, we can stick our head in the sand and pretend it’s not happening, or take action. Action starts with adapting to a shifting environment. We have a local advantage, on-the-ground advantage and operational advantage. So let’s seize it: get our properties premium rates because they are professionally managed. Let Airbnb and Booking.com send us new high growth demographics, but then win on selling local experiences. Unbundle the old, re-bundle the new.

    VRMA: Given the constantly shifting environment, what is the best way to stay nimble and
    adapt to change?

    Alex: First, focus on the things we are very good at. David didn’t win against Goliath in a
    fist fight. Second, look at the opportunities rather than fretting over the threats. Travel patterns are
    changing, technology allows us to serve larger markets more efficiently, we can reach source markets
    previously outside of our reach, and we can deliver new, high-value services.

    VRMA: How should property managers approach new technology investment?

    Alex: I think even the largest property managers will have to focus their efforts on integration rather than in-house development. We are seeing this trend across the board. The technology stack is fragmenting and getting more complex, and there is increasing specialization among vendors, as opposed to monolithic, one-size-fits-all solutions.

    The tech-enabled property manager is primarily a savvy integrator (and a great marketing ploy to access investments, but that may become a short-lived phenomenon). The listing platforms will increasingly provide technology and property managers will have to carefully assess the pros and cons of increased dependence.

    With every vendor, property managers need to carefully assess interoperability — is there a roadmap with APIs that give the property managers room of integrating different solutions flexibly and own the data? The two areas I’d focus technology investments on are operations and property care, as this will increasingly become a competitive strength of the PM, and guest that allows the PM to recapture (and monetize) the guest relationship.

    VRMA:  What is the biggest trend that you think will shape this market in 2018?

    Alex: I think there will be more consolidation in the next six to 12 months; followed by disappointment that some of the efficiencies didn’t quite materialize. There will be major surprises. There is capital pushing into this industry, and the second shoe has yet to drop. The listing platforms will continue to both drive market growth, but will also squeeze PM margins. The listing platforms will build brands both at the OTA level and at the unit level — Airbnb Plus, Collections and Beyond are just the beginning. This will provide an opportunity for nimble PMs that want to surf this wave and are operationally sophisticated but also be a major threat to those that are trying to build brands in the middle. Traditional drive-to markets won’t see much growth in Europe but do better in the US where the industry is less mature. Iconic destinations with the international appeal will see strong growth as they appeal to the audiences that will drive overall growth. Voice, artificial intelligence and same-day delivery will become important elements to deliver a new guest experience. The smartest operators will find ways to engage their guests year-round, and not just during the annual holiday. New loyalty plans will become an important element in this effort. However, the biggest trend will be the ongoing and rapid professionalization of the supporting services ecosystem. These emerging services networks will prove a major competitive advantage for PMs, owners and listing platforms alike that know how to leverage them for local advantage.


     

    Want to hear more from Alex? He will be moderating the closing plenary session at the VRMA European Conference. He will be joined by Eric Breon, Vacasa; Javier Cedillio Espin, OneFineStay/Accor; Steve Milo,VTrips; and Tobias Wann, @Leisure. The discussion will focus on the industry’s most disruptive trends, how leading European and North American property managers approach the market differently, the rise of unbundling property management services, and how to market a property management company in the face of a shifting environment.

    For more information, and to register, click here

    Recent Stories
    LA City Council Approves Law Requiring STR Hosts to Get Police Permits

    Maui Mayor Proposes Bill Amendment to Make STRS Available for Displaced Wildfire Survivors

    Officials and Residents Discuss Future of Short-Term Rental Policy in Ithaca