The fall issue of VRM Intel Magazine is here. In 2015, when I started this magazine, Doug Macnaught, a close friend and mentor asked me, “Do you think you can come up with enough to write about this industry in a quarterly magazine?”
I hesitated and replied, “I think so.”
In July 2015, things were changing rapidly, to be sure. But Expedia had not yet purchased HomeAway. Booking.com was just emerging as a viable channel with its launch of Villas.com, and Airbnb had just begun to promote and seek out professionally managed rentals in non-urban markets. Multi-destination managers were only beginning to pick up noteworthy market share. Since then, professional vacation rental managers have been on quite a roller coaster ride; however, in spite of margin compression, a whole new world of technology, industry consolidation, and ever-increasing customer expectations, the overall industry is thriving. That being said, not all individual destinations experienced the record-breaking year they hoped for. In the article “Economic Indicators and Changing Consumer Behavior,” we look at some summer results, the use of predictive economic indicators, and shifts in generational travel.
There is a definite trend toward increased professionalism in property management. Best practices are being established, formal educational resources are emerging, and multiple multi-destination business models are being tested. There are rumors of further consolidation in vacation rental technology companies, and, soon, we may have news of a private-equity-funded rollup of tech providers.
In addition, one of the most interesting changes we are seeing is that several large, market-leading vacation rental management companies have decided to no longer list their homes on OTAs. Although some destinations and new companies are necessarily reliant on these channels for bookings, established brands with identifiable drive-to markets are finding more success by redirecting marketing funds to core feeder markets instead of being lost in OTA listing algorithms and beholden to the terms and conditions of channels and channel managers. For these companies, the pushback from guest fees, merchant of record requirements, refund policies, inability to adequately set guest expectations, high cancellation rates, and inability to properly vet guests contributed to their decision. Most notably, these companies are not reporting a decrease in bookings as a result. Although becoming OTA-independent is not for every vacation rental manager, some companies are finding success by shifting marketing funds and efforts toward targeted geographic and demographic audiences.
For property managers listing their homes alongside hotels on large OTAs, merchandising and providing hotel-like accommodations and service is another challenge. In this issue, Jeremiah Gall discusses how hotel convergence is affecting vacation rentals, and Alex Nigg talks about the need for a rating system. In contrast, Matt Landau’s has an article about how commoditization is not necessary and that identifying limited edition qualities can help set your company and properties apart.
I believe the real story of our industry right now is being told on two fronts: global and local.
For those looking at the vacation rental industry from a global perspective, the influences of external funding, OTAs, multi-destination managers, hotelier interest, scalability, and sector growth are driving discussions and decisions. For local property management companies, owner relations and communication, regulations, property care, workforce development, brand awareness, changing consumer behavior, and marketing management are the factors moving the needle toward higher profitability. A business decision that is right for a company trying to raise funds or look for a buyer could be catastrophic for a company trying to operate in a profitable and sustainable way for years to come.
My hope is that, whether your view is global or local, you will find useful and actionable information and insight in this issue. Oh, and please consider attending the first-ever Vacation Rental Women’s Summit on February 19–20 at the Ritz-Carlton in New Orleans.