Although it’s by no means a new phenomenon, travelers are choosing vacation rentals over hotels more frequently than ever. And thanks to the rise of platforms like Airbnb and Vrbo, one might assume that hosting these travelers is easy and profitable as well.
Vacation rental revenue is set to exceed $81 billion in 2022, and with significant supply constraints, there is a lot of money — big money — trying to get a piece of this pie.
Vacation rentals may be the sexiest sector of travel, but spend more than a few days peeling the layers back and you’ll find an operationally complex craft almost anywhere as exciting as it sounds (think – flushing toilets).
What triggered the demand for vacation rentals?
The pandemic has accelerated travelers’ search for space, privacy, and value. But to really understand vacation rentals, look at one specific force: personality or, as Phocuswright’s Madeline List calls it, personality.
- Every vacation rental property is different: quirky, charming, private.
- Every vacation owner is unique, with visitors sharing their passion for a destination.
This character is what travelers (specifically younger travelers) are looking for (and posting on Instagram), feeding the home industry of homeowner managers – what I call “homerunners” – who see an opportunity to present the character professionally.
The International Conference of the Vacation Rental Management Association (VRMA) at Caesar’s Palace in Las Vegas this year will break attendance records with an attendance of 3,000 people. The conference exhibition hall will look no different than some of the world’s largest trade conventions.
Collectively, these professional managers serve character to the masses. but how?
Unique, by design
I have spent the greater part of the past decade studying these works and in order to best explain their secret conflation, I have developed the “limited edition” theory.
Inspired by the world of antiques and collectibles, the Limited Edition concludes that items limited in supply and steeped in character can command top bucks with loyal collectors – merchandise markets that step aside and create value on entirely new terms.
Most vacation rental professionals (whether they know the name for it or not) practice a limited edition by multiplying four basic differentiators:
- family owned (or managed)
- locally (not based elsewhere)
- Specialist in property type or region
- Surprise in delightful ways (like some of the best boutique hotels)
(Note: These differentials—if you like acronyms—demonstrate FLoSS, and it’s a good reminder to repeat them regularly for best results.)
The focus on the limited edition gives the property owner the opportunity to compete alongside (and even collaborate with) the best in the market, which has proven its strength in adjacent sectors such as craft breweries, where mother and pop breweries work together to capitalize on strength in numbers on important matters. Like regulation and standards.
The limited edition appeals to travelers’ preferences to support sustainable small businesses. The Limited Edition builds the customization and confidence needed for any repeat booking campaign. And even the limited edition attracts homeowners, many of whom prefer relationships over transactions when it comes to the company that runs the family home.
Is it a “limited edition” scale?
The Limited Edition, almost by definition, doesn’t scale. But that doesn’t stop many players from overstepping the bounds.
According to Goldman Sachs, more than $17 billion in funding has been invested across “multiple companies with limited track records and relatively small asset portfolios.” It all rests on one unavoidable fact: technology is powering a generation of limited-edition owner-managers to reach extraordinary new heights.
Activities that used to be redundant such as reservations and key exchange are now automated using reservation software and smart locks. Solutions that didn’t exist before like guest screening and dynamic pricing are now part of the everyday technology suite. This technology unlocks the time and energy needed to double the limited edition activities that the “runners” can do best: as a compliment to the hospitality, not as a substitute for it.
Instead of trying to scale the limited edition, the best vacation rental companies realize their limitations – and then use technology to consistently spread the standards they deliver over time.
Uninteresting truth? This challenge is difficult but worth it. I share my tips on how to achieve this as well as case studies of leaders who are currently doing so in the VRMB Weekly Newsletter.
What makes this race different?
It’s an $81 billion race to scale a unique – what can go wrong?
As opposed to disruptive factors in transportation or retail, the factors that disrupt vacation rentals can be seen, heard, touched and sleep. This makes the race for first mover niche all about more than just market share. The winners of this race will have profound implications for the communities in which we live.
And their work is improved, they serve as economic engines and pillars of community leadership. If done in an unprofessional manner, it could negatively affect a block or neighborhood for decades.
There is a lot of riding in the vacation rental category, so what does it mean to be entitled? HomeAway co-founder Carl Shepherd argued in his latest article that property owners and managers should do a better job—if for no other reason than to save themselves from outright ban. Carl explains that these owners and managers have a lot to lose: The onus is on them.
But I think the accountability crisis goes a step deeper: all stakeholders, including (read: in particular) those with the most to gain must do their part, too. As with any healthy community, this means showing up to be part of the conversation, uniting behind standards, and realizing a system that supports us but can fall apart if we don’t strike a balance. Self-interest is great, just run the consequences of your actions a little further into the next fiscal quarter.
So excited about this movement, I’m producing a behind-the-scenes documentary series called “Homerunners” exploring some of the most daring attempts to scale vacation rentals without losing the little things that make us great. Please enjoy the trailers from the first two episodes.
Homerunners by Matt Landau Episode 1 with English Subtitles VTrips
Homerunners for Matt Landau Episode 2 Trailer Presented by Casago