The young vacation rental industry is expanding quickly and becoming more sophisticated. To build a sustainable and competitive business in an evolving space, it’s vital to understand what factors are at play and how to respond.
Simon Lehmann is a pillar in the industry and is playing a guiding role in its development. This Spring at VRMA Europe, Lehmann spoke about trends that are shaping the vacation rental landscape, with a focus on professionalization, commoditization and consolidation.
Here are some major themes he shared:
Rental stays are becoming more like hotels
The divide between the search for a hotel and a rental home is narrowing. Increasingly, guests are simply looking for an accommodation—and they expect the same level of service and comfort from both. Price and location are the key differentiators in the decision to book for the first time or make a repeat booking.
At the same time, rental stays are becoming much more like hotel stays. The advance purchase period is shorter, trips are shorter, and the overall hospitality experience is comparable or even superior to that of a hotel. Branding plays a vital role in communicating an outstanding guest experience, along with a standardization of service across properties.
Opportunity abounds for owners
Given the rapid pace of change, there is great opportunity for owners in the vacation rental industry to advance professionally. Two in three owners have started renting in just the last three years, and nearly four in five rent their primary residence. These individuals are bridging the gaps between property managers and hotels through their amenities, connections and local recommendations that drive guest satisfaction.
Additionally, the availability of inventory is key in the industry. Supply will continue to be a threat, and it's important to consider potential availability and how to maximize resources. France, Spain and Italy lead in inventory, and there are massive opportunities in these regions.
Distribution is key to future growth
In 2016, online intermediaries accounted for 45% of total private accommodation gross bookings. Their share of total online gross bookings is expected to increase from 31% in 2010 to 72% by 2020, according to PhocusWright. It’s important to understand the complexities of the booking channels you are using and create a strong channel management strategy to reach guests on each one.
Lehmann also pointed out fragmentation in the industry, with many small operators and only a few large brands. To scale in the industry, consolidation is key.
Learn how to thrive in an evolving industry and take your vacation rental business to the next level. Get a free demo of Kigo today!