A lot of things changed in the world of vacation rentals in 2019, but here are my top ten trends that will continue in 2020.
Margin Compression is coming from Turnkey & Vacasa
Smart Home Automation is here and can be financed in various ways.
Google is coming to VR, but most property managers didn’t seem to care.
6 months is a long time to get a new home on board for a 1-year contract
Regulation is growing & needs to be handled by pragmatic industry groups
HOA’s need education & new solutions to help owners & renters coexist.
There are few solutions to help pm’s attract homeowners besides real estate agent referrals & direct mail.
One of the best ways to yield is with rate rules NOT price.
Big PM’s are able to generate a lot more direct business than small pm’s but likely after years of gaining repeat customers
New Private Distribution Channels are here through VacayHome & HVN
Turnkey & Vacasa
Vacasa & Turnkey have been busy raising capital to expand into more markets & compete with property managers. Property managers are feeling the competition and the pressure on their commissions from HomeOwners with more options.
Vacasa has acquired Wyndham Vacation Rentals & raised an additional $319 million in Venture.
Turnkey also raised $48 million in Venture funding & now has 5,000 homes with up to $400 million in Gross Booking’s and is targetting traditional vacation rental destinations. They are trying to compete with traditional property managers with better revenue management, scale, & smart home technologies. More info here.
Smart Home Technology
I was shocked by the VRMA study that showed 40% of property managers were already using smart home technology compared to what seemed like nobody a couple of years ago.
I also thought it was interesting that Steve Milo of Vtrips purchases smart locks for all of his property owner’s then charges them for it on future reservations.
This likely allows him to provide efficiency in his operation, improve the guest experience, provide value to homeowners, & capitalize the expense for his business. An interesting win-win for everyone.
I think it will be fascinating to see how Google continues to enter into the vacation rental market as well as provide price transparency as they merge OTA’s & property manager’s own websites.
Once OTAs see that property managers are undercutting their prices on their own websites it will be interesting to see how they respond or penalize those out of parity.
More info here: https://www.phocuswire.com/google-vacation-rentals-whats-next
6 Month Payback for New HomeOwner’s
Property Manager’s claimed that it took them 6 months to get a new homeowner onboarded & fully implemented, which seems like a crazy long time for homeowners that only sign a 1-year contract.
Steve Milo stressed the importance of trying to get longer contracts to protect your investment in new homeowners.
Regulation is Growing
You’re either ordering or your on the menu when it comes to state politics – Property Manager on Regulations
Property Managers from around the country expressed concerns about growing regulation & bans from counties, cities, states, & Homeowner Associations.
Large property managers urged the importance of coming together & participating in the political process to ensure common-sense regulation and to highlight the benefit of tax revenue renters provide to their communities
HOA’s Need a Different Approach
Homeowner Associations are increasingly pushing back on owners renting units by banning them or limiting rentals to monthly stays.
This provides an opportunity for property managers to come into help associations create common-sense rules & commission splits that balance the needs of owners that want to rent and those that don’t.
Attracting New HomeOwners
I was shocked to hear that most property managers had no plans in place to acquire new homeowners & those that did mainly used direct mail.
The most successful pm’s used a combination of direct mail & real estate agent referrals
Yielding isn’t Just About Price
Many said that just changing your price is not enough to secure new bookings. While there are many new tools to help you change your price these can be useless if you don’t understand your min length of stay and check-in rules, especially in shoulder & low season.
Big PM’s Drive More Direct Business
Large property managers (Over 100 properties) were able to drive 60%-70% of bookings through their website directly.
Small property managers (Less than 100 properties) had to rely more on OTA’s generating only around a third of their bookings from their own website.
The good news is that large pm’s acknowledged most of their direct booking is repeat visitors or word of mouth from guests that originally booked through an OTA.
New Distribution Channels are Here
Vacation Rentals are increasingly being offered to new types of travelers, for instance, HVN is bringing vacation rentals to the corporate travel market. VacayHome Connect is also offering vacation rental to loyalty & membership clubs including timeshare & credit card points platforms.
These channels tend to offer high transaction value & far out bookings with the added benefit of low cancellations due to guests using points instead of cash.
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