In the pre-Internet era, vacation rentals were a largely mom-and-pop industry. Today, this cottage industry has blown up. The success of HomeAway and Airbnb attracted some of the biggest names in travel to the emergent vacation rental industry, now believed to be worth $100 billion. Choice Hotels, for example, is getting into the vacation rental business, and Priceline recently said alternative accommodations would be a promising source of growth. The category already accounts for almost half of Priceline’s property roster thanks in large part to Villas.com, which Priceline’s Booking.com business launched in 2014.
Yet, the vacation rental industry has been seen as one of the last uncultivated frontiers for online travel. Consider that as recently as 2012, with many travelers long accustomed to Internet booking, three-quarters of vacation rentals were still not being transacted online.
Consolidation, as well as convergence, are two key trends on the horizon. Convergence meaning a blurring of traditional distinctions between lodging categories. More OTA’s are adding vacation rental listings, and travelers are not differentiating between a “sharing economy” lodging versus a vacation rental.
Convergence is one factor driving a professionalization of the industry. It was not long ago that many vacation rental properties did not provide the usual amenities that most travelers were used to getting from a hotel. Now most top property managers are offering guests everything from linens to WiFi in order to stay competitive.
As the sector matures and as the lines blur between traditional categories of lodging, modernization by way of technology is becoming essential to keeping up with peers and the wider hospitality industry. Meanwhile, travelers increasingly expect frictionless experiences, instant answers and extensive information, lots of quality photos and property details at their fingertips. It is no longer acceptable for owners and managers to require guests to call to determine availability, or to write every email response from scratch.
Technology has been revolutionizing the industry at a multitude of touchpoints, as outlined in a Skift report on the vacation rental technology ecosystem. Third parties are offering listing management— enabling owners to update availability, rates and property descriptions across distribution channels from one dashboard — as well as price optimization and data mining tools. Smart home technology like Bluetooth locks and Nest thermostats are also important, enabling owners and managers to do more from afar. Listing with online distributors can open up access to tools like mobile booking and advanced search optimization. New tools are helping this sector catch up with the rest of the industry very quickly, leveraging technology, integration, and automation are the keys to success.
If properties can meet expectations, demand is likely to rise, given that the 18-44 demographic accounts for the strongest growth in the sector, according to a recent Phocuswright study of private accommodations. HomeAway believes vacation rentals are under-penetrated for the core target of families and groups. Moreover, as most experts agree, this is just the tip of the iceberg as the industry is expected to keep up the rapid growth over the next decade.
However, times of industry growth do not come without challenges. Some small business owners are content to maintain a small operation they can run themselves, in return for a decent, but limited, income. Others, however, are driven by the challenge of growing their business into a high-profit venture with a larger market share. Luckily, companies like LeisureLink have the tools and experts on staff that make it easy for vacation rental suppliers to take the next step and grow their business, as well as, make sure they’re maintaining consistent bottom-line profits for years to come.