If Americans have proven one thing during the pandemic, it’s that they don’t like to be cooped up for very long. After varying amounts of quarantining, depending on where they lived, Americans started to leave their homes for new accommodations and a change of scenery.
In many parts of the country, a “staycation” was not possible from April through June, since restaurants and attractions were closed, so people sought alternative accommodations away from home to lead their socially distant lifestyles.
At the beginning of the pandemic, many hotels were still establishing their safety protocols, and consumers were seeking amenities such as larger units, kitchens and rural destinations, to get away from the chaos that the pandemic had created. According to Airbnb, hosts in rural areas of the U.S. earned over $200 million in June 2020 — an increase of more than 25% from the previous June.
This shift in consumer travel behavior has made alternative accommodations a clear beneficiary. A recent report by the hotel benchmarking firm STR, and the short-term rental analysts AirDNA, shows that home rentals have outperformed hotels in 27 global markets since the beginning of COVID-19. These markets include major cities such as Chicago, San Francisco, Rome and Dublin, as well as destination markets including Las Vegas, Myrtle Beach, Gold Coast (Australia) and Honolulu.
While the vacation rental and alternative accommodation markets have flourished recently, property owners and technology intermediaries can learn from their counterparts in the hotel space to keep this momentum going.
From passive distribution to demand generation
With vacation rentals and alternative accommodations taking market share fast - now is the time to expand past simply being a passive recipient of bookings to marketing at scale.
Metasearch, sponsored placements and programmatic media, all services that are common practice among today’s hotel brands and properties throughout the world, are not widely utilized by vacation rental or alternative accommodation suppliers. This is largely due to glitchy technology that can’t accurately show a property’s inventory or it may appear on different sites at different prices or with inconsistent availability.
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Within the current travel and economic landscape, the priority is securing reservations, and the resulting revenue. In that context, any and every dollar spent on marketing must act towards a reservation. Spending money on marketing without large brand awareness, not unlike what is seen with independent hotel owners, creates its own set of challenges for efficiently investing in driving incremental bookings and revenue.
Very often these properties are second homes for consumers and for the most part, they are not part of any trade or regional interest group that will have advertising purchasing power. As a result of the fragmented nature of the market, marketing budgets fall to the property owner.
So, what can vacation rental owners and intermediaries do to act on this moment?
How to take action
These owners often have similar priorities from large and even midsize hotel brands. However, intermediaries have reached a point of scale where they’ve centralized a large amount of alternative accommodation supply. This centralization combined with more regional accommodation groups forming could be just the right mix to help suppliers reach travelers on channels where OTAs are dominating today. A few options for the vacation rental supplier industry:
- Join or create property interest groups
While several groups like this (Vacation Rental Pros) already exist, if several hundred properties can get together they could have enough buying power to work with a digital agency that can help them scale into metasearch, programmatic and sponsored placements. - Intermediaries add to their stack
Intermediaries and technology companies like Vacasa are in the best position to supply marketing tools to owners that help them reach in-market travelers. These technology companies also have the negotiating power and distribution technology to list properties and promote on up-and-coming vacation rental metasearch sites.
By utilizing advanced solutions such as metasearch and programmatic media, owners can have their properties visible across multiple sites, all working together to find the right customers at the right time. With the right strategy in place, owners can reach travelers only when they have open dates to fill, maximizing the efficiency of the buy.
Technology models are starting to take shape for this growing market and the industry should be ready to embrace what could be viewed as an intimidating proposition. At one point this space could have been viewed as an up-and-comer, but that can’t be said anymore. It is mature and it should start taking advantage of every marketing and advertising resource available.
No matter if we are battling a pandemic, or revert back to the status quo, vacation rentals will remain popular, but it will take some work to keep that growth going.