The private accommodations market – which includes traditional vacation rentals, the renting of second homes, and primary residences on a short-term basis – will reach $36.6 billion by 2018, estimates Phocuswright. The market is exploding year over year. In 2015, nearly one in three U.S. travelers stayed in a privately owned short-term rental which is a 24 percent increase from 2010.
“Vacation rentals are a hot trend,” notes trends expert and public speaker Daniel Levine, “Not a flash-in-the-pan fad, but a long-term trend that will get hotter in the next few years.”
One of the top reasons for this boom in the vacation rental market lies in the experience that awaits guests. “In general, vacation rentals offer visitors a breadth of choice that far exceeds that offered by traditional hotels,” explains Levine. “People want authentic experiences of ‘living’ somewhere, and not just visiting.”
Now more than ever before it’s easier for vacation rental homeowners to provide an authentic, local experience that guests crave.
A Changing Landscape: Short-Term Vacation Rentals Meets Property Management
In past years, most small property management companies consisted of a single person who rented out places as a side job.
Today, nearly 60 percent of owners who manage their property themselves do it full-time and almost half consider it their primary source of income, notes Phocuswright.
The use of vacation rental property management companies are growing due to increased occupancy, higher rental rates, growing revenue due to demand, and an increase in the number of units being managed by a single owner. Marketing and managing a property as well as guests is a lot of responsibility when done well.
Those who are looking to have their property managed have more options than ever: in the current landscape, homeowners can choose to rent their place on their own or have the place overseen by a property manager or less robust service provider. There’s not just one type of property manager, often clients can find a type that fits them. Some companies help with only booking and marketing, leaving you to coordinate vendors or do it yourself, while some of full-service property management, allowing you to be hands-off.
Many of these choices are available due to advances in technology which make remote management feasible. In the 80s and 90s, very little technology was used in the property management sector, notes Denise Supplee, co-founder of SparkRental.com. “Now virtually everything is done online, which really saves time.”
A New Set of Offerings
Traditionally, vacation rentals have been linked to families who want to stay in a place with the comforts of home for a long period of time. Yet today, two in three property managers allow short-term stays of one to three days, per Phocuswright.
And travelers can enjoy few conveniences and services at these short stays. Property managers provide fresh linens, toiletries, cleaning services, and even local guides and recommendations just like a hotel would.
Guests appreciate the option to stay together, enjoy the property privately, and explore the neighborhood. Vacation rentals can be located in residential neighborhoods giving the opportunity to be outside of tourism districts or be situated in the middle of the action near all the highlights.
“Vacation homes offer a much richer experience,” notes Jeff Rohde, author of “How to Find and Keep Great Tenants”, who works with Condo.capital.
A Smarter Vacation Rental Property
Nearly all property managers ensure rentals include wi-fi connections. Guests often work during their stay and expect to have internet access.
“An increasing number of business travelers are opting out of hotels and into vacation homes as well,” points out Rohde. “Well-equipped vacation rentals have all of the things that their place back home does and offer a much more comfortable visit at the same or lower price than would a hotel.”
Keyless entry doors have also made a significant influence on how property managers operate today. “Back in the day, you had to hang around waiting for the guests to arrive for the key hand off, or deal with the security risk of hiding a key under a rock or in the mailbox,” points out Brian Gow, president of Scheel Window & Door.
With keyless entry doors a specific code can be set for each guest and then disabled when the stay ends. This technology not only makes it easier for guests and managers – it also is more secure. “With wi-fi enabled door locks, you can even reset the codes from anywhere in the world – a total game changer,” adds Gow. Gone are the days of coordinating key exchanges with guests.
Better Pricing Methods
Three in four property management companies offer live online bookings, notes Phocuswright.
Furthermore, sophisticated revenue management makes it possible to set a price that will maximize revenue by learning and adjusting to market changes.
“The three most important factors that affect demand and price for a vacation rental are seasonality, the day of the week, and local events,” explains Sergey Mann, growth and customer success manager at Beyond Pricing.
These factors can vary greatly in different markets. Occupancy on the weekends tends to spike in places like Lake Tahoe, as there is much more demand for weekends. In San Francisco, however, weekends and weekdays are nearly the same when it comes to demand since the city gets a large influx of business travelers.
For one-time events such as the Super Bowl, dynamic pricing will adjust when a higher number of guests booking for those particular dates.
Sophisticated revenue management will increase the rent price when the demand rises which means more money in the owner’s pocket. “Many owners know that demand is higher over Christmas in Lake Tahoe, for instance,” explains Mann. “However, they don’t always know how much they could be increasing prices.” While they might guess and increase the rate by 80 percent, an algorithm may be able to identify that the price can be increased 300 percent.
Technology will play an important role in the coming years for property owners, managers, and guests. As more guests shop, book, and review online, we’re going to see the industry move even further in the new-gen direction.