Vacation Rental Trends in 2016
Vacation rental managers (VRM’s) are in a uniquely challenging position going into 2016—a position with the potential for great success. An explosive market means VRM’s must scramble to take advantage of increased traveler volume while simultaneously re-evaluating business strategies to stay competitive. All of this sits alongside the need to serve and grow ownership. Understanding trends for the coming year is essential to effectively plan strategies and budgets.
Trend #1 More Demand for VRM’s Than Ever
According to the National Association of Realtors, last year not only were vacation-home sales at their highest level since the organization began keeping records in 2003, increasing 57.4% from 2013 to 2014 (NAR). Further to this, most vacation-home owners live over 100 miles from the property, and as Inman suggests, these owners should surely have “property management options in place before they buy.”
While DIY vacation owners have plenty of access to the Airbnb’s and HomeAway’s of the world, the controversy over taxation and regulation as well as a consolidation of sharing sites and OTA’s (online travel agencies) has made it more challenging. Most serious owners will defer to VRM’s to ensure proper distribution and management in the coming year. In order to compete for these new owners, you should clearly convey the benefits of your particular approach to service, including reservations, housekeeping, maintenance, and front desk, as well as owner-specific offerings.
Trend #2 Traveler Interest Grows
In a TripAdvisor vacation rental report released in March 2015, nearly 60% of respondents reported plans to stay in a vacation rental this year. With so much emphasis lately on “shared space” trends, clarity on the actual volume of interest in proper vacation rentals (as opposed to private accommodations) is harder to suss out. However, all signs point to substantial increases in awareness all well as a desire to book vacation rentals. For instance, recent research found growth in the rental of full homes in the shared accommodations market—from 8% of travelers in 2010 to 22% in 2014 (TravelWeekly).
This means that in order to capture new travelers, especially in light of how many more third-party sites are rushing in to capture vacation rental market share, your marketing strategies must be fine tuned and prioritized according to profitability as well as long-term guest potential. Any activity that ensures that you own the guest and their data greatly increases the likelihood of converting that guest into a lucrative repeat guest.
Trend #3 VRM Service Levels Get a Makeover
Historically, travelers have identified lower rates as one of the reasons they choose a vacation rental over a hotel. The expanding awareness of, and confidence in, vacation rentals is changing this. The days of the value-based vacation rental purchase are slipping away, as travelers adjust their expectations. For instance, MMGY’s Global Portrait of American Travelers suggests that more affluent travelers are turning toward home rental. Among those with a household income over $250,000, 21% used sharing-economy accommodations on at least one vacation during the previous 12 months.
Couple this with the increasing competition among vacation rentals and service will become a deciding factor when travelers go to book. Providing superior service will be key in 2016, as will embracing reputation management. Both should be handled impeccably.
Trend #4 Guest Acquisition Costs Continue to Rise
As vacation rentals are integrated into the traditional online travel agency (OTA) ecosystem, VRM’s are spending more on commissions. Listings site fees, such as those at Flipkey, which increased rates for both online and phone leads late last year, are on the rise, as well. Recent reports suggest that the Billboard Effect, which served to drive direct bookings from third-party sites, no longer exists to balance out those hefty fees (Tnooz).
While many VRM’s still benefit from the marketing power of third-party sites despite the fees, long-term sustainability requires offsetting rising commission costs. To do so, you can shore up reservation sales to ensure the value of every booking is maximized. This includes implementing call tracking and regular coaching plus performance-based incentives to encourage the highest rate of conversions and maximum nightly rate.
Trend #5 Vacation Rental Guests Will Call
Voice reservations traditionally have greater returns than online or third-party bookings. The opportunity to develop a relationship with a potential guest and to personalize the experience from the get-go often leads to a higher return, whether that’s a longer stay or an upgrade. Fortunately, vacation rental guests will continue to pick up the phone in the coming year, and this gives VRM’s an opportunity.
While confidence in vacation rentals has increased markedly, this guest segment is often planning a trip for multiple families and will require a greater level of confidence to make a final booking decision, one they can only get from speaking with an agent. In addition to training and performance incentives, ensure 24/7 call coverage. Travelers of all stripes expect to be able to have questions answered and make a reservation at any hour. It is now a fundamental of service.
The vacation rental market will continue to boom in 2016. The level of shuffling among sharing sites, vacation rental platforms, and traditional OTA’s is simply a side effect of the desire travelers have expressed to have a different experience, and it points toward the potential for thoughtful growth in the vacation rental market. While guest acquisition costs and marketing budgets may overwhelm VRM’s, using what we know about traveler trends, including their increased interest in vacation rentals and where they place value, will set apart the successful ones.