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Read TurnKey’s take on Phocuswright’s preeminent study. This study presents an analysis of nearly a quarter of a million online rental listings in vacation rental markets across the country and aims to understand key trends across the online rental marketplace.
At TurnKey, we are capitalizing on these trends with our innovative business practices, and homeowners should too. Here are 5 key takeaways from the study that homeowners should know.
1. U.S. Travel industry is growing modestly, and the rate of vacation rental use is growing even faster as vacation rentals become more mainstream.
The amount of money spent on travel has steadily increased since 2012. Over the past 5 years, U.S. dollars spent on travel have increased 30% with a rate of growth of 5% for the past 2 years.
Part of the growth of U.S. travel can be attributed to an increase in travelers using vacation rentals. Less than 10% of U.S. travelers had used a vacation rental in 2010. Usage increased to 34% in 2015, and, judging from the trendline, more people will continue to try vacation rentals for the first time.
While the rate of growth for the total travel market has remained steady at 6%, the use of private accommodation, a.k.a. vacation rentals, has witnessed a growth rate up to 2X the total travel market.
What this means for vacation rental homeowners: It’s a great time to own a vacation rental since more travelers are choosing private accommodations. As the percentage of U.S. travelers using vacation rentals increases, there are more opportunities for homeowners to generate revenue. This industry isn’t going away anytime soon.
2. Booking behavior is undergoing massive shifts including shorter trips, tighter booking windows, and increased online booking.
The average length of stay is getting shorter: 25% of trips were 3 nights or less in 2012 versus 38% of trips in 2016.
In 2012, 17% percent of vacation rental travelers booked less than 1 month ahead of their stay and that percentage increased to 52% in 2016.
Over the past 4 years, the percentage of customers booking online has increased from 53% to 77%.
What this means for vacation rental homeowners: Since online booking habits of vacation rental travelers more closely resemble that of hotel users, you can generate more bookings and revenue by keeping your availability calendar updated, accepting online bookings and payments, and reducing minimum night stay requirements. You may also need to adjust your pricing strategy because of the tighter booking windows. For example, you may not be booked 45 days in advance, but that’s not necessarily an indication that you should reduce your rates.
3. The travel industry is experiencing the rise of the “New-Gen PM” which leverages technology to deliver services that consumers want.
TurnKey is at the forefront of “New Gen PMs”. Here are a few things we do that epitomize this trend:
We list our homeowners’ properties on over 20 of the most popular listing sites to reach 90% of travel customers.
We’ve embraced cutting-edge technology such as secure digital locks, noise monitors, and guest screening to help secure and protect our homes.
We deliver full-service property management for an industry-low 18% commission. Our processes are transparent, and information about each home is available to the respective homeowner at any time through our Owner Portal.
We provide a consistent, hotel-like experience by delivering easy check-in, easy online booking, exceptional housekeeping, and 24/7 guest support at high-end accommodations. 98% of all guests rate their experience with TurnKey as 4-5 stars.
What this means for vacation rental homeowners: If you’re managing your own property, providing New-Gen PM service is going to require more time and the use of more technology. Marketing and pricing properties are getting more complicated and competitive. Plus, providing guests with the experience they want requires a lot of changes.
If you’re working with a property manager, make sure they’re capable of effectively marketing and managing your property and providing guests with the experience they’re demanding.
4. Travelers will choose to use a vacation rental if the value and consistency are comparable to those of a hotel.
Price Competitiveness. 51% of travelers would consider using a vacation rental if the price was similar to that of a comparable hotel. Make sure you’re property is well priced. Use dynamic pricing to capture last minute demand and raise your rates during peak events.
Hotel-like Consistency. 33% of guests want to know exactly what to expect from a vacation rental as they would for a hotel. 29% would consider a vacation rental if booking and payment were online like those of a hotel, and 27% require hotel-like amenities.
Unique Aspects of Rental. 29% of travelers want to be able to travel with family or friends and stay together, which is difficult when booking multiple hotel rooms. 31% of travelers will choose to stay in a vacation rental rather than a hotel because of the location relative to price.
What this means for vacation rental homeowners: Work toward being competitive with price by using dynamic pricing measures to capture peak demand prices and last-minute bookings. Ensure your rental delivers consistency like a hotel: guests want to know what to expect including whether or not there is free Wi-Fi, online booking, and 24/7 guest support. Highlight what makes your vacation rental unique, such as plenty of space and prime location.
5. Travelers who use Airbnb vs. HomeAway have different behaviors, motivations, and attributes.
Most HomeAway customers travel in larger groups whereas Airbnb has 61% of its bookings coming from single travelers or those traveling as a couple.
33% of Airbnb customers travel to visit attractions versus 12% of HomeAway customers. Conversely, 49% HomeAway travelers travel to spend time with friends and family.
While 50% of travelers who book with HomeAway are 35-54, 58% of travelers who book with Airbnb are 18-34.
What this means for vacation rental homeowners: Consider listing your property on both websites to maximize your consumer reach. Understanding these differences in the type of traveler and their behavior can help you provide a unique, personalized experience for them that they will enjoy.
Overall, the vacation rental industry is growing fast and changing rapidly. By using technology and offering what consumers want, vacation rentals are no longer considered “alternative accommodations” but more directly compete with hotels. It’s crucial that homeowners and property managers keep ahead of these trends and changes.