It is a difficult time to be a vacation property owner. The industry is rapidly changing without a clear road map for Property Managers or Vacation home owners to follow. Changes made by VRBO / HomeAway last year has knocked the wind out of the sails for many owners. Guests and owners alike had a strong reaction to the additional guest fees. The trends below may provide insight on the direction to follow in the future to maximize the performance of your rental property.
The popularity of sites like Airbnb have really grown over the past few years. While Airbnb has served the urban market, the lines between the urban market and vacation rental market are increasingly becoming blurred.
Booking.com and Airbnb have adopted instant booking and VRBO is pressuring owners to enable the feature. Flights and hotels have had this feature for a long while.
Without instant booking, guest can quickly get frustrated putting in over 10 inquiries before locating a property available for booking.
It can be more convenient for both guests and owners to enable instant booking and to keep the calendar updated. Instant booking should also reduce complaints due to discrimination that have recently cropped up.
An on-site Airbnb host is more like a hotelier than a remote vacation home property owner. They are on site and able to address noise complaints, too large of an event or over occupancy before the consequences become more severe. With more rentals in neighborhoods, the effect of short term rentals on reducing available housing stock, noise complaints and inappropriate behavior is increasing the amount of regulation from towns and municipalities.
The Outer Banks is a family friendly place. Most vacation home owners do not want their property rented out to a group of college age students for the next mega party. In the past, guest could be screened over the phone or by email to reduce this risk. Instant booking eliminate owner’s ability to check before the reservation is made. Owners who choose not to enable instant booking are penalized by falling lower in the search results and this has lowered the reservations received through the channel and angered many property owners.
HomeAway / VRBO recently changed the site organization so the owner contact information is not available until the inquiry or booking confirmation pages of a listing. Some see this as a way to keep the booking and owner/guest interaction with the platform and to make sure booking does not occur directly with the owner.
One way to reduce the risk is to prominently post the property rules for the property so the guest will self-select. The lease signed by the guest should also prominently show the rules. Most Outer Banks vacation homes requires the leasee to be 25 or older. Homes used for events, like weddings, typically limit the number of guests and duration for the event. A follow-up phone call or email after the inquiry can reinforce these rules and make both parties more comfortable.
Most remote property owners have service providers, like Xpert Home Services, that handle the cleaning, maintenance and emergency needs for the home in their absence. These providers are the owners’ eyes on the ground for any issues that may arise.
OTA (Online Travel Agents) Channels
The changes at VRBO have severely affected many vacation property owners who saw their reservations decrease due to additional guest fees and lower rankings in the search results. Owners who only listed on this one channel “had all their eggs in one basket”. However, owners who list on multiple channels, have a dedicated website and a centrally managed calendar are able to continue to book and are not as impacted by changes on one platform.
In 2012, OTA channels accounted for about 35% of online bookings. At this time, the majority of bookings were made directly with property managers or owners. In 2016, the OTA channels account for 63% and is forecast to grow to 75% by 2018.
While the players and platforms may change, they are not going to go away and will play a major role in the future. The sooner you get on board and adjust your strategy, the better off you will be to prosper in the long run.
Supply & Demand
The good news is the market is growing. More consumers are aware of vacation home rentals as an option to hotels; thanks to the marketing done by the major players, Airbnb, HomeAway and Booking.com.
In 2012, the US Market for “alternative accommodations” was $23 Billion. In 2015, the market grew to $29 Billion and is forecast to reach $37 Billion by 2018.
Anecdotal reports in the Outer Banks suggests guest are booking later and closer to arrival. Gone are the days where owners’ calendars were booked for the season by March. Industry data supports that this is indeed a trend. This can challenge property owners’ ability to manage the property and to properly manage rates. It also suggests using instant booking to be able to accommodate guests who are looking for a smooth booking experience and quick confirmation. Dynamic pricing and an attractive property will secure these last minute reservations while still maximizing revenue.
In 2012 bookings within a month of arrival was 12% of the total bookings. In 2016, it accounts for 52%. If the trend continues, properties without instant booking will get a smaller share of reservations.
Length of Stay
Industry trends suggest length of stay is decreasing. While the week long family vacation may not be extinct, increasingly travelers are spontaneously traveling for a weekend, perhaps several times a year.
The Outer Banks vacation rental home market has traditionally rented for 7 day stays for the summer months. In the past, this was not a problem as bookings for the summer were typically in place by spring. Many owners still have 100% occupancy in the summer even if the bookings occur later and require some discount or incentive.
Vacation home owners who have more flexible booking rules for partial weeks, either at the last minute (1 week before arrival) or for the off season will take advantage of both the short plan and length of stay trends to maximize revenue. The Outer Banks fringe season (fall and spring) are filled with events, activities and attractions to draw travelers who never considered the area before.
The guest experience is key to attracting them to return. The quality of your rental home, the amenities and the local service provided must all work together to delight the guest and show appreciation to them.
Xpert Home Services is a Hosting Company you can count on. While you manage the revenues and reservations; we provide the automation, check-in, cleaning, maintenance and emergency services for your home to create a seamless and polished guest experience. Learn more about our flat fee services.
Your past guests are an asset. Continuing the relationship with them over time will reduce your reliance on OTA channels while building your own internal portfolio.
Xpert Home Services provides vacation hosting services to VRBO and Airbnb owners; local contact, guest check in, house cleaning, linens, maintenance repair services, and more! Provide your guests with the services they expect from the Xperts!