The Short-Term Rental Industry is Now Mainstream
The U.S. short-term rental market has pulled up its bootstraps and is now mainstream.
An industry’s early beginnings of owners leasing their second homes by the beach have matured into a viable, professional experience that rivals – and in some cases surpass – traditional hotel and lodging stays.
A recent study, “Here To Stay: U.S. Short-Term Rentals Move Mainstream,” looks beyond a significant downturn in business caused by COVID-19 and notes there is a reason for optimism because the industry is growing up.
“The category is quickly professionalizing, moving toward a more reliable, consistent, higher quality experience, as property managers now account for a majority of supply in the market,” said the study, which was authored by Phocuswright analysts Cathy Walsh and Michael Coletta.
The study, published by Phocuswright, is based on a combination of traveler, homeowner, and property manager surveys, along with executive interviews and proprietary market sizing work. The report, based on feedback from more than 2,000 respondents, traces the continued evolution of the dynamic U.S. short-term rental segment.
The report was released at a time when the industry started getting back on its feet from dramatic drops in bookings attributed to the shuttering of the U.S. economy in March and April.
Among the key findings:
- Property managers will increasingly command more of the total market than rental by owner units as travelers demand higher quality rentals. As a result, more homeowners are handing the keys to property managers.
- The growth of urban rentals has reshaped the short-term rental market. In 2019, 39 percent of rented properties were located in a city setting compared to 13 percent in 2012.
- Airbnb is, by a wide margin, the most-used website/app to book rentals.
- Nearly two-thirds of Property managers use a channel manager, and around half use revenue management and rate monitoring. In addition, 46 percent have implemented smart technology.
- Property managers have increased their adoption of technology overall, but the usage of property management systems declined slightly, primarily among smaller property managers.
The study also notes that the vast majority of property managers offer a website with online booking, as well as supporting mobile website booking. Also, rental listing websites generated the largest share of bookings for property managers, up since 2016.
More than one-third of property manager bookings come from rental listing websites. Property managers are much more likely to list on Airbnb than in years past, and Airbnb is the single largest booking contributor.
Supporting the ‘experience’ of vacation, short-term rentals
Since the U.S. began reopening in May, the industry has already experienced an uptick in bookings. While not as high as pre-pandemic levels, the bookings are confirming that the industry has staying power just by the path it has been following.
The Phocuswright study, “Travel Activities: Planning and Booking Go Digital,” notes that travelers have a thirst for making an experience out of their vacation and away time. When travel opportunities safely return, travelers will be “hungrier than ever for experiences like tours, activities, and attractions typically offered at “well-known, large-scale establishments,” notes the study.
The theme follows suit with one of the vacation and short-term rental industry’s key differentiators: travelers want to experience something more than the four walls of traditional accommodations.
Professionally managed, personalized, unique, and inviting overnight stays in homes or cottages coupled with memorable destination experiences are a calling card for the vacation and short-term rental industry.
Stepping up the industry’s game with better talent
And while vacation and short-term rentals have suffered significant fallout from COVID-19, some silver linings are beginning to emerge.
Steve Trover, the co-founder of the Orlando-based Laveer & Co., a consulting and recruiting firm, believes now is the time for the industry to bolster its appeal by shoring up its workforce with top-level talent.
High employment prior to the coronavirus pandemic hindered the industry in consistently attracting premier talent but much has changed, notes Trover in an article published by VRM Intel. The return of rental demand and what he dubs the “Great Talent Shift” will open up a significant opportunity for businesses and individuals.
“This presents an incredible opportunity for vacation rental companies to identify and hire the best talent using the right strategy and plan of action,” he wrote.
And continue the cadence that is defining vacation and short-term rentals.
To view the full Phocuswright report, visit https://www.phocuswright.com/Travel-Research/Consumer-Trends/Here-To-Stay-US-Short-Term-Rentals-Move-Mainstream.