Booking.com claims to have 14.4 million hotel rooms, 1.8 million vacation rental rooms, and 4.8 million rooms in an “other” category of private accommodations. On a volume basis this means that Booking.com has outpaced Airbnb in private accommodations. But, as Skift questions, is this an apples-to-apples comparison; can we really draw a direct correlation between these two channels with vastly different histories but merging trajectories?
Airbnb is integrating vacation rentals into what was once its “sharing model,” Booking.com is integrating private accommodations into its traditional hotel and vacation rental inventory, and, adding to the complexity, HomeAway and Expedia will merge in early 2016 to become, purportedly, the largest provider of all types of inventory. What is clear is that when third-party channels are at the table, an apples-to-apples comparison is complicated, perhaps even made impossible, by the varied and constantly shifting inventory. This can absolutely effect your vacation rental revenue.
Such is also the case when property management companies (PMC’s) consider their competitive set. Because a channel is a channel doesn’t necessarily mean that the comparison is valuable, and similarly, comparing two vacation rentals may or may not be a fruitful. Otherwise put, two vacation rentals on the same street can be completely irrelevant to one another.
It is essential to understand that the main ingredients for travelers are rate, location, and service-level. Once travelers have determined what they need, the comparison of a hotel vs. vacation rental, especially when they all intermingle across multiple channels, has become less relevant. The full spectrum of opportunities are available to travelers, and the only way for PMC’s to create profitable rate strategies, and increase vacation rental revenue, is to consider the full spectrum of competitive possibilities.
The competitive landscape in the vacation rental market varies based on the destination, the market, the neighborhood, and the accommodation type. A vacation rental six blocks away in a mostly residential area may not be the most productive comp for a downtown condominium. A nearby hotel, though not the same experience, may serve a similar audience as the condominium depending on amenities and services. A building with one- and two-bedroom condominiums could have two separate competitive sets for each unit type. The one-bedrooms may have a combined hotel and one-bedroom vacation rental set, while the two-bedrooms may compare more accurately to larger condominiums and homes. Isolating this level of true competition is a product of analysis and technology, and vacation rental revenue relies heavily on how PM’s understand their immediate comp set.
Maintaining the highest level of profitability in a volatile market relies heavily on both understanding true competition and keeping constant tabs on their rate adjustments. When travelers figure out their apples-to-apples choices, likely some combination of vacation rentals and hotels with an occasional privately-owned property thrown in, rate will be the deciding factor. When rates are automated, as they can be in MarketSpan, adjustments that allow a PMC to stay directly in line with or slightly under the competition happen without even the touch of a button.
Along with Booking.com’s growth in what they call apartment inventory, the booking engine has publicized that private accommodations will be instantly bookable, unlike any other competitor in the space. Booking.com has turned its attention to a service-level improvement to step ahead of the pack in a competitive space. When PMC’s implement the efficiency and intelligence of competitive rate adjustments, they too can tend to the business of ensuring service offerings exceed those of their true competitive set.