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    The Vacation Rental Market Is Growing. Is Your Business?

    Arrival spoke with three growth experts from within the vacation rental industry to understand how they see growth. Each shared how they’ve grown and tips for how other vacation rental managers can grow into the future.

    All signs point to huge growth in the vacation rental market. Grand View Research reports that the market, which was $74.64 billion in 2021, will grow 5.3 percent each year through 2030. Beyond vacation rentals, all tourism seems poised for growth. IBISWorld reports that all the top-five fastest-growing industries across the globe are related to tourism—hotels and resorts came in at No. 2, meaning there’s a growing market of vacationers.

    While growth abounds across the travel and hospitality space, the fate of each vacation rental business depends on its leaders. Each leader must ask: Is my company ready to grow alongside, perhaps even outpace, the rest of the industry? Or is it on the path of stagnation? Arrival spoke with three growth experts from within the vacation rental industry to understand how they see growth. Each shared how they’ve grown and tips for how other vacation rental managers (VRMs) can grow into the future.

    Simple Data Can Inspire Travel

    Some things are in our control, such as our pursuits and desires. Other things—such as our reputation and what other people think of us—aren’t in our control. This is one of the key principles of Stoic philosophy, which Andrew McConnell knows well in theory and practice. McConnell founded his vacation rental revenue management company Rented.com and has also released a book this year called Get Out of My Head - Creating Modern Clarity with Stoic Wisdom.

    In the book, McConnell highlights how professionals can use Stoic philosophy to take ownership of their mind and thus improve their business.

    McConnell believes that vacation rental property managers who find more levers of control can foster huge growth. One way to take more control of
    growth is by asking a simple question: What can we do to get people to book who weren’t even thinking about traveling?

    “What about your marketing list?” McConnell asks. “Who has booked last-minute before? How can we run campaigns to them? Don’t just be reactive when people already know they want to take a trip. Think: How can you create inspirational travel?” The best first step to inspire travel, McConnell says, is focusing on data.

    To start collecting data, managers can first obtain contact information from guests at each visit. This will especially be a revelation for those who rent out properties on big platforms like Airbnb and Vrbo, who often miss out on the deep data collected by the platform. These managers will need to form a relationship with first-time visitors, asking them for contact information and sending them messages with the intention of turning them into repeat customers.

    Although data can be an essential lever of control, McConnell advises starting small. Collect email addresses first, sending your guests automated messages through platforms like MailChimp. “That’s the first step: Get all that information, then start communicating with guests,” McConnell says. “Start building a relationship through those communications. Why did they stay with you? Think of that when you’re communicating with them.” But even the smallest list and campaign, when kept up consistently visit after visit, can turn into a list of thousands of people. That means more control over inspiring travel and growing your business.

    Communicating with people on a marketing list doesn’t have be time consuming. A monthly or quarterly newsletter, one filled with information of what’s happening in the area and special deals, can be enough to inspire travel. McConnell has even seen companies successfully create their own local events that inspired people to book a trip.

    Sometimes, people are simply looking for an excuse to escape home for a few days. “Don’t let perfect be the enemy of good on this,” McConnell says. “To start with, ask yourself: How would you sell what you have available to people who aren’t necessarily proactively looking to book? How can you inspire them to travel? It could be the weather; it could be a special play. You’re going to know your area and what’s worth reaching out to people about.”

    Once a vacation rental manager is messaging their list, they can try split-testing their messaging. This means sending variations of a message to different groups of guests to see what version receives the best response. Marketers often find surprises while testing—something that didn’t seem like it would work that inspires visitors to book. When investing in marketing software, McConnell says that smaller vacation rental managers should keep it simple.

    But if that company’s inventory and the customer base start growing, it may be time to work with a third-party provider, an agency, or a consultant to help with marketing and data collection at scale. The biggest mistake vacation rental property managers make, McConnell says, is inaction—not collecting any data at all. The word “data” feels big and scary, as does the idea of huge growth, so many managers stick with what they know.

    Often, this means sloppy data management and no communication with guests. This is a mistake, McConnell says, and will lead to stagnation rather than growth. Data is easier to collect and use than most believe, McConnell says. Data can be a phone number, an email address, a piece of information you can use to know more, thereby gaining slightly more control.

    “You don’t have to passively wait for people to come to you; you can create the reasons for them to come to you,” McConnell says. “It’s about how you get that message to them and who you send the message to. Outreach—whether you have auto-text campaigns, email campaigns, or direct mail—will create more opportunities in real life.”

    10 Tips to Grow Your Inventory

    In 2007, Brooke Pfautz founded his first vacation rental business, Vantage Resort Realty. He quickly found that he was good at growth; his business ballooned from zero properties to 500 before he sold it in 2013. After that, Pfautz worked as a chief business development officer for a large management company, helping it expand into multiple markets. But he realized that his talents could help soothe the biggest pain point of VRMs: Everyone wants to grow their inventory, but few had the time.

    Pfautz founded Vintory, a digital platform that helps VRMs recruit new homeowners and add new properties. He also wanted to put good information out to the public, so he released a book this year, titled From 0 to 500 Properties in Five Years: A Playbook on How to Grow Your Short-Term Vacation Rental Inventory.

    Forming a growth mindset is often difficult for busy vacation rental managers, Pfautz says. But, he says, even the busiest leader must decide: “Do you want to grow? You have to make that mental decision.”

    Here are 10 tips for growth that Pfautz has learned throughout his career.

    1. Have good messaging

    Good messaging is the first step to building inventory, Pfautz says. Good messaging includes marketing staples like a unique selling proposition, a compelling offer, social proof, and a call to action. “If you do these things, you can use the messaging in all your owner acquisition, on your landing page, in your direct mail, or when you’re talking to a new owner,” he says. “You can set it up as a template. It all starts with good messaging.

    2. Hire a full-time business development representative

    “It makes sense to hire a full-time business development rep,” Pfautz says. “They can go out there and find new inventory. If you do the math on the value of inventory, reps are super valuable. The key is that you have to get the right person for the job.”

    3. Update landing pages

    “The simplest and quickest win is to update your landing page on your website,” Pfautz says. “You already have this existing traffic coming to it. And most management companies have horrendous landing pages. They’re not designed well and don’t use good messaging.”

    4. Use clean data

    Data is misunderstood, Pfautz says, as many people simply collect data without ensuring that it’s accurate. But having a good, clean data set is critically important, he says. A good first step: Get tax records from a list broker. He also suggests finding lists of vacation permit data in areas where managers want to grow. Often, the key to finding this data is filing a Freedom of Information Act request with the local government.

    5. Market on multiple channels

    “We recommend an omnichannel approach,” Pfautz says. This means that instead of simply sending direct mail pieces or email lists to guests, companies can try expanding their marketing efforts to include retargeting, pay-per-click, and search engine optimization to win business.

    6. Respond quickly

    When an inquiry from a homeowner comes in, Pfautz says that the No. 1 most important factor is speed. For those who want to grow, it’s important to have automated email responses, hot-call transfers, and employees who call people back.

    “If you call back a lead within two minutes, you’re 10 times more likely to close than if you wait an hour,” he says. “And you’re 10,000 times more likely to close it than if you wait one day.” Pfautz says that Vintory has done secret shopping with vacation rental management companies by calling as potential homeowners. They found that only 34 percent of managers answer the phone when called by potential leads. After leaving a message, Vintory’s secret shoppers only received a call back 57 percent of the time. “Just answer the frickin’ phone,” Pfautz says.

    7. Adopt CRM software

    Having a customer relationship management (CRM) system allows companies to digitally track leads. Most VRMs still use pen and paper to track customers, Pfaufz says, but that won’t be good enough to grow. “It’s critically important to have a CRM that has marketing automation, where it’s doing that automatic drip [of emails to your list] for you,” he says.

    8. Find efficient tools

    What are some tools that can make you more efficient and effective? Pfautz calls these tools leverage effects. Some of his favorites include call-tracking software CallRail, sales and marketing software HubSpot, and scheduling platform Calendly.

    9. Practice inbound marketing

    Inbound marketing means creating content and experiences that attract customers in the long-term. “This probably has the best long-term outlook for ROI,” Pfautz says. The problem: Building a good collection of content takes time and consistency. For most VRMs, Pfautz recommends the “quick-hit version of inbound marketing,” or interactive content. This could include creating ROI calculators, infographics, or surveys and polls.

    10. Attract realtors

    “Realtors get dozens of deals per year, and that’s consistent,” Pfautz says. “Rather than targeting a homeowner, who is only going to send you one deal probably every five years, you should target realtors. A realtor might give you a dozen deals every year. Make a concerted effort to go after realtors and build a referral network.”

    Innovate to Grow

    Before founding vacation rental platform AvantStay, Sean Breuner noticed that the vacation rental industry was fragmented. The short-term rental market is about a third of the size of the hotel market, but he saw that there was no recognizable brand across the country. It was also inconsistent—people love renting houses, he knew, but they often left their vacation rentals feeling disappointed.

    Breuner wanted to fix these issues with AvantStay and forged a goal: Build a world-class hospitality brand that delivers an elevated experience for both guests and homeowners.

    To do this, he’d have to innovate. And innovate is what Breuner believes every growth-minded vacation rental property manager must do to grow. “Innovation is very important in our space,” Breuner says. “It’s been neglected for many years. A lot of companies continue to do things the same way—dated furniture, unsophisticated technology, and value-added services that aren’t consistent or accessible. What you find is a budget experience that doesn’t meet the customer’s demands.”

    At AvantStay, innovating has meant building a platform where guests can book a property and know what kind of experience they’ll have. They know what kind of technology will be on property, what amenities and services will be offered, and what kind of quality they can expect from the properties, he says.

    Innovation will look very different for every vacation rental manager. The first goal for each, Breuner says, is focusing on what innovation may look like for your own company and the customers it serves.

    “Innovation is about understanding that there’s an expectation from customers that didn’t exist 10 to 15 years ago,” he says. “There’s demand for this product that we’ve never seen. And if you meet those demands and meet those standards, you can build a true national or global hospitality company. What you don’t want to do is just compete on price—you want to compete on experience.”

    When deciding what innovation may look like, Breuner suggests creating a roadmap for the years ahead. This roadmap serves as a plan to stay focused and disciplined in adopting new innovations without getting overwhelmed, nor swaying from the mindset of innovation and growth.

    Breuner first built AvantStay’s innovation roadmap from his experiences staying across multiple vacation rental properties. Some experiences were great, others a letdown, but all gave him inspiration for building a consistent experience. At his properties, Breuner mandated updated furniture, high-end linens, useful technology, and stocking utensils and cups that visitors would actually want to use. Later, once in-home innovation paid off, Breuner wanted digital innovation for AvantStay.

    For the past four years, AvantStay has been building operating systems, mobile apps, vendor portals, housekeeping portals, and owner portals to create an embedded experience for all the company’s stakeholders. Breuner specifically wanted to include homeowners, as he says that they’re an essential part of the business but often left out of the innovation considerations of vacation rental managers. He didn’t want to make that mistake.

    For small or mid-sized VRMs, building new technological infrastructure may not be the answer. Innovating technology, especially if it’s built for a company, can create exponential growth, but Breuner says that it also has many initial pain points. For many companies, innovation may be as simple as giving guests across properties the option to get groceries delivered, hire a chef to come cook, or call an on-demand concierge.

    One mistake vacation rental property managers make, Breuner says, is focusing on maximizing profits for themselves. This could mean cutting costs at the expense of the guest’s experience, or as large as not being involved with local government officials and regulatory boards. Instead, he believes leaders should maximize profits for all stakeholders—guests, but also homeowners and employees.

    By widening their focus, Breuer says that vacation rental managers can set themselves up for years of exponential growth. All innovation is about thinking long-term rather than short-term, Breuner says.

    Those running a business must carry the mindset that the rental industry will keep growing and that their business can keep growing with it. Those who don’t innovate are bound to get left behind, he says. “If you’re not innovating, you will create short-term profits, but you’re not creating enterprise value,” Breuner says. “Your guests and your homeowners are going to move over to a company that’s innovative.” 

    Hal Conick is a Chicago-based writer.

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