“I predict what I call the Revenge of the Property Manager,” said Carl Shepherd, co-founder at HomeAway, in an interview with VRM Intel last September. “Over the next few years, we will see property managers, as we say in Texas, in the cat-bird seat.”
Did Shepherd have a crystal ball?
“Screening guests, managing credit card payments, arranging for housekeeping, differentiating properties…all the related tasks and services that travelers expect are getting harder and harder to manage for individual homeowners, right at the same time that new and progressive property managers are looking to re-invent the PM business model,” continued Shepherd.
In addition, 2016 had a few more surprises in store for the professional vacation rental manager:
- HomeAway’s Best Match algorithm and their addition of the service fee sent homeowners reeling.
- Google’s changes to search engine results pages took OTA marketers to the mat.
- Regulations and tax compliance measures in multiple markets forced individual owners and “hosts” into unfamiliar territory.
- Increasing awareness of vacation rentals as a lodging option brought new hotel customers to the vacation rental market…with hotel expectations.
- Airbnb recognized the advantages of adding professionally managed inventory and launched integrations with property management software systems.
It’s Been a Long Time Coming
The professionally managed vacation rental industry has been waiting over a decade for the pendulum to swing back in their direction.
Before technology and communications allowed for remote management, vacation home owners were heavily reliant on VRMs to manage their properties. The full service approach was beneficial for property managers, homeowners and guests which made the relationship a win-win-win for all.
And then came VRBO.com.
As internet usage increased, VRBO.com, the listing site which allowed individual vacation home owners to effectively market their own properties, truly disrupted the vacation rental industry.
Learning to navigate a distribution strategy related to VRBO.com was faced by VRMs with varying levels of success and angst. Many chose to place their own professionally managed properties alongside for-rent-by-owner properties on VRBO.com, causing a consequential expansion of the source of competition.
Piggybacking on the success of VRBO.com, Christine Karpinski made Amazon’s Best Seller List with her book How to Rent Vacation Properties by Owner, which supplied owners with rental policy and confirmation templates, marketing strategies and instructions on maintenance and housekeeping.
When the real estate market collapsed, along with easy access to online marketing outlets and a how-to guide, the number of rent-by-owner properties grew exponentially, and with double digit industry growth, the investment community got on board. Consequently, Airbnb advanced on the scene, and media outlets latched on to the growth and success of the owner-managed sharing economy while professional managers struggled to differentiate their offerings.
But conditions are shifting.
With the rising cost of self-management, sky-rocketing marketing costs, more regulations, higher customer expectations and changing technology, professional VRMs are finding themselves, as Shepherd predicted, in the cat-bird seat.
Capitalizing on Market Conditions to Build Long Term Success
While things are finally looking up for professional vacation rental managers, success is never guaranteed. In order to leverage the changes in the marketplace, action is needed.
In the article “Winning with Google,” VRMs will find steps to take to jump ahead of OTAs in organic search results. In addition, here are suggestions to take advantage of current market conditions.
Optimize Listings on Channels and OTAs
In eCommerce, it has been widely proven that consumers would rather buy direct unless a third party channel provides significant advantages (i.e., Amazon Prime). As a VRM, there are several ways you can use channels to lead travelers directly your company. Besides using signage in photos, text can be added to photo captions and descriptions with verbiage like “Rest assured that when you rent with XYZ Vacation Rentals, you will have 24/7 service” or “Go straight to your rental with XYZ Vacation Rentals Keyless Locks”. There are many creative ways to add bread crumbs to your listings to steer travelers to your company.
The addition of traveler/service fees offers VRMs another advantage. Rate parity does not currently exist in a meaningful way in the vacation rental space, so you are able to offer Best Rate Guarantees to encourage guests to book directly with you.
Also, consider enhancing the descriptions on your own website with local information and extra content. Why should your best content be duplicated on channels and OTAs? Besides SEO advantages, by enriching your proprietary content, you can establish your company as a trusted thought leader.
Reach Out to New Homeowners
The owner managed vacation rental community is struggling with recent changes in the industry. A quick look at the HomeAway Community Forum or the many VRBO hate groups that have sprouted on social media will offer your team valuable insight into their angst.
Now is a great time to revamp your owner acquisition strategy. Rewrite marketing materials to reflect current market conditions and invest in a creative outreach initiative. New multi-destination companies, such as Vacasa, TurnKey, InvitedHome, and Evolve, are primarily acquiring inventory from homeowners who are self-managing and owners who are new to renting, instead of owners who are working with other PMs. Taking a fresh look at messaging and marketing programs for new inventory can help get a running start over your competition as FRBOs begin to move back under professional management.
Reinvent Customer Expectations
The increase in awareness of short term rentals has brought many first-time vacation rental guests into the market. These travelers approach vacation rentals with hotel expectations.
While individual owners and “hosts” are struggling to meet these expectations, VRMs are in a great position to convert these first timers into repeat vacation rental guests. From the time travelers click on your website or contact your call center to the time they check out of one of your rentals, you have many opportunities to convert new guests into repeat guests.
One of the most under-utilized opportunities is through education. By asking the simple question, “Is this your first time staying in a vacation home?” you can take several key steps that will remove anxiety from the booking process and create a long-lasting relationship with the guest. By utilizing pre-stay communications letting guests know what to expect – and that you are available to them 24/7 – you can reform their expectations.
Proactively Work with City, County and State Officials
If you are not already doing so, it should be a top priority in the coming months to take proactive steps towards working to preserve rental rights and develop regulations that are community-friendly, promote safety and provide revenue streams for the destination.
As we approach election season, take time to get to know the candidates. As a business owner, your opinion is valuable to people seeking city, county and state positions. Consider taking time to set up meetings to share information, such as the number of jobs you have created, the amount of tax revenue you generate, and your company’s contributions to the community.
Use Media Interest in the Industry to Your Advantage
The subject of vacation rentals and the shared economy is red hot in the media right now, providing your company an opportunity to promote your services and differentiate professionally managed vacation rentals.
Consider creating press releases and story pitches about regulations, new service fees, and the importance of renting through a professional. For example, Nomadness Rentals in Mammoth Lakes recently issued a noteworthy press release outlining the struggles hundreds of professional vacation rental management companies have been experiencing as a result of Airbnb’s reckless push into the regulatory environment in cities and destinations around the world.
If you are a member of an association, ask about ways to combine resources to create articles, solicit interviews and pitch stories that differentiate professionally managed vacation rentals.
While it is a huge relief to see favorable market conditions, as an industry, we need to capitalize on these changes to use channels to attract direct bookings, differentiate our services, deliver a better customer experience and work with government officials. We don’t know how long this will last, so now is the time to seize the comeback of the property manager.
By Amy Hinote