Editorial by Andrew Martyn, CEO Your.Rentals We want to play a role in the success of every property manager or owner using Your.Rentals, which is why I'd like to share with you some of the fast evolving changes in the vacation rentals industry.

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RichardVRichardV
9 months ago

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RichardVRichardV
9 months ago

A few thoughts on this: Quote It

Our Calendar Fresh Project:

Through this article, I want to explain why at Your.Rentals we strongly encourage Instant Bookable properties, and why we have a policy to not support property managers who run an “open calendar”. Our policy stance is designed to help property managers take advantage of the evolving trends which I will discuss below. I’d like to discuss this in the context of a campaign we are running at the moment to help Your.Rentals property managers and owners keep their availability Calendars up to date.

Coming at this from having been a manager/marketeer and finance company for over 800 properties and now a rental tech business there are some really interesting points in this topic. On the subject of calendars: No dispute that guests find it really irritating to enquire and then see an empty calendar or an incorrect one. This also means "instant book" isn't possible.

However let me explain why some businesses have done this and continue to do it: Once upon time it was relatively inexpensive to list say 100 properties at £100 each. Within a few years this cost rose to over £1000 per property with no proportional rise in margin. If anything this has been reduced further as the industry became more competitive.

Managers listed less properties and many "managed" their calendars and cascaded enquiries, plus in this era enquiries were the norm. The listing sites, now the new OTA's, then changed models and started to insist on full or minimum percentage inventory as they gravitated to the full ecomm model. Removal or downgrading the enquiry button accelerated this change even if the industry as a whole was not ready for it.

Calendar updating and use of a simple iCAL (Rentivo provides them free of charge from a free listing) helps keep them updated. Guests do expect this, but just as importantly regular calendar updates and registered bookings in the OTA system form part of their ranking which is why they want all booking data and administration in their systems!

Don't follow their rules and you can expect to be at the bottom of the eyeball list.

Keeping calendars updated is a key ingredient to trust, BUT it doesn't mean you HAVE to accept all bookings. This industry still means we see direct enquiries and date holds, ongoing discussions with families and more and more routes to a booking appearing daily. OTA's have to share the dangers of increased interest and guests annoyance at raised prices

Vacation rentals are not just vacation rentals any more!

Millenials don't wait, how true! They won't however be millenials for ever and will have families and these come with more needs. They will expect less friction of course, but complex products need complex solutions.

The nomenclature is interesting and with many markets the names change: Vacation rentals is a US term. UK and NZ it was always "self-catering", in central Europe it was often "holiday rentals". The big UK searches include "holiday cottages", but are increasingly more well defined for booking based on accommodation type and needs: such as "dog friendly" or "family yurts" of "Cheap surfing accommodation". Its all about experiences. Airbnb coined a phrase, but how many people have been offered breakfast as part of the deal.

The market is already polarising already into "hosts", owners" and "managers", "short term rentals" and "vacation rentals". Perhaps we should have a clear definition of what a "vacation rental" (VR) is and what a "short term urban rental" is (STUR). Perhaps also attribute a license or necessary authority to rent to qualify the type of accommodation. Certainly an Airbnb available for it's average 28 days and shared room is not a VR. A villa in Thailand that a family spends 2 weeks at, is not a STUR, in US terminology its a "vacation" in UK/EU terms its a holiday and hence the nomenclature

More and more bookings are coming through OTA channels

The new age is here: I don't think we can dispute this, but some interesting figures:

By 2016, this share has grown to 63%, and is forecast to grow to 75% in 2018.

Not sure where these numbers come from, but not the numbers we see! Sure hotels are between 37% and 70+% depending on what part of the world they are. EU vs US chains etc. We don't want to merge the real VR industry stats with hotels.

The OTA's are becoming search dominant for generic terms, but despite their learning curve and still trying to hammer a square peg into a round hole the numbers seem very high

Homeaway quoted a market of over 6m holiday homes. No business really has more than 1 to 1.3m VR properties. Meta search quote 2m+ but they are recycled properties and hence the "meta" angle! There are hotel rooms, serviced apartments, resorts and duplicates across all the platforms aswell.

If 50% of all the bookings on these 1m properties were made it would represent, 8% of the bookings globally, even doubling that is 16%

Supply of vacation rentals is growing quickly, but so is demand:

As mentioned previously, the massive marketing done by Airbnb, HomeAway, Booking.com and others over the past few years has opened up the “alternative accommodation” segment to more and more travellers. Latest estimates show the US market size grow from $23 billion in 2012, to $29 billion in 2015, and is forecast to reach $37 billion in 2018. Phocuswright will publish new data for the European market in the coming months which is expected to show an even larger market size.

Really interesting stats and the global inventory is growing. Booking.com quote 2 million properties. These are alternatives as they contain a significant number of "serviced apartments" and" resort apartments". Its "apples and oranges".

Also demand may be growing but we do wonder whether the inventory and the hotel industry's new push to direct booking, loyalty programs, spas and more amenities is affecting this "alternative market". For example, Devon, where our offices are based has approximately 7000+ holiday homes. Booking.com quote 749 in total of which almost 561 are still free for Easter week, which is very unusual and HomeAway has over 1,500 from a total of 3000. Curiously some local agencies who do not use OTA's at all only have 10% free accommodation fro over 1000 properties!

Supply is not keeping up with demand on more traditional, regional destinations. I suspect these numbers are supported (as seen in the post) mainly by city based accommodation on short breaks, very similar to serviced apartments where the blurring of hotels, apartments, Airbnbers is more intense.

More bookings are made within a month of travel

Another key trend presented is that the share of bookings made close to arrival is growing, presenting you with a challenge but also an opportunity. Due to the increase in supply of instant bookable properties available in OTA channels, guests are able to plan their accommodation later than ever before. In 2012, the percent of trips booked within a month of travel was 12% of total bookings. In 2016, that number has grown to 52%.

Again this is predominantly urban destinations. All record we have, surveys we have done show that the figures for booking "vacations" are predominantly booked (65%) 3 months in advance and less than one month less than 20%. This is supported by Worldpay reports that have graphed this trend using significant volumes of card payments

Last minute bookings

These are more difficult to manage because there is more stress and time pressure both on the guest and the property manager (who is likely already checking in arrivals). However in terms of helping your occupancy rates grow, a focus on last minute bookings is key.

It depends. There is an assumption that all businesses want to make every booking they can. Again this reflects the disparity and differences between inventories. Once a guest has left, the accommodation needs cleaning checking, reporting and if anything needs fixing, it needs sorting. Unless full time professional teams are in play 24/7, 365 days of the year, the dangers of last minute instant book are significant. A guest cannot be given another room and they do get very annoyed if the heating or washing machine is broken. In addition last minite and short breaks is often simply not economically viable.

Average length of stay is decreasing

To grow your share of last minute bookings it is critical to ensure that your availability is up to date and that your pricing and discount strategy presents great deals to guests. The closer to the travel date, the more likely it is that a guest aiwill choose an instantly bookable property.

This is true for sure over 10 years we have seen stays average from 7.1 nights to 6.1 nights. This would almost certainly be lower except the mechanics of managing volume of properties with infinite flexibility across a greater geographic region is not possible where seasonal business is 90%+ of all bookings. More importantly the 24 hour syndrome is in play and the OTA's are forcing instant book due to time pressure pyschology.

Many owners, hosts managers, use OTA's as fillers. The trouble is OTA's want the low hanging fruit too!

Local service is still the major part of the product

Absolutely true of course and has always been the fundamental basis of this industry.

OTA Channels

When your share of online instant bookings via OTA channels grows, and you have confidence in your calendar accuracy, you’ll be able to spend more time on ensuring your product and service is a step ahead of the competition.

True except the "take" will be higher and probably increase further, which makes re-investment harder

Our Summary

The world is changing but the OTA's should only form part of the entire marketing mix. If you are going to use them, you will need to follow all their rules. Hotels have been working hard to change the status quo and rentals should heed their words, their history is our future, but the accommodation needs defining and guests need to be educated when booking as their expectations are not often aligned with the supply.*

A very simple rule is "do not put all your rentals eggs in the OTA basket"

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