Hostfully attended the Vacation Rental Management Association’s (VRMA) 2021 conference in San Antonio in early October. We had so much fun! Aside from getting out and network with fantastic vacation rental professionals again, we also learned a lot about industry trends, and what to expect post-pandemic in the coming years.
Over 1000 vacation rental attendees came together in San Antonio, and the people we met and the education sessions we attended were invigorating. Here are our top takeaways from VRMA’s 2021 international conference:
Venture capitalist and institutional investor acquisitions
Dozens of new North American vacation rental markets are seeing increased venture capitalist and institutional investor acquisitions. After the ups and downs of 2020-2021, the offers put on the table are complex for tired vacation rental managers to turn away. Industry experts aren’t using the word “bubble” yet.
Returns are expected from these significant investments, and the quickest savings will likely come from cuts in guest experience departments. However, we’ve heard multiple observers warn of a potential adverse effect of this trend. Will this have unintended consequences on our industry’s reputation for delivering hospitality with a personal touch?
Pressure on vacation rental managers increasing
Cheap money fuelled by low-interest rates made it easier for families to buy a second home for their vacations. However, this also caused real estate prices in many vacation rental markets to skyrocket.
Speaking with vacation rental managers offline, we learnt that many are feeling more pressure than ever from new owners to deliver high revenue to offset the costs of their expensive home purchase. Throughout the conference, we heard many experts push vacation rental managers to be quicker to drop demanding clients.
There are more potential clients, but acquiring them is riskier
More second homes being purchased (see above) means that new potential owners can also be recruited. Many managers took the opportunity to onboard new properties, with some culling their under performers. However, there was increased owner pressure on managers coming from newly-minted second homeowners.
Industry experts noted that new property owners sometimes come in with unrealistic expectations relating to financial performance, and how often they felt inquiring to their managers as appropriate. This led to increased stress on the management teams. On that last point, a few managers indicated that they were more likely to drop new owners if they assessed them to be difficult.
However, dropping them could lead to reputation damage via poor reviews. That is why SOPs and training for guest experience and client specialists in your businesses is now more critical than ever.
Overall revenue is up, but so are labor costs
2021’s Great Labor Reshuffle impacted the vacation rental industry in a profound way. Vacation rental managers either had to onboard new staff, or increase wages to existing ones to prevent departures. Many vacation rental managers indicated that labor shortages affected cleaning and maintenance the most.
Steve Milo: Your software matters
- Select software based on the ability to grow and scale, not just the price.
- Integrations are so tough in our industry, and getting them right can be quite difficult. Vacation rental operators should choose a software provider that excels in integrations.
- Don’t just look at software features, do your due diligence on the founding team as a company’s leadership and culture matter.
Not necessarily related to software, but Steve spoke about short-term rental legislation. Steve had this to say, “Stop making excuses and donate to advocacy groups, be proactive, it’s only going to get harder for VRMCs.”
Everyone is talking about wifi
In many presentations, we heard over and over how important it is to provide reliable wifi. Some vacation rental managers told us that pre-booking guest questions regarding wifi speed and coverage was now their most frequently asked question. In an excellent training session, industry expert and guest experience specialist Douglas Kennedy (President of Kennedy Training Network) noted just how important was to guests. They need it for work, to stream videos or television or stay connected. Here we thought the point of a vacation was to “disconnect”. Many other industry experts, as well as Airbnb, noted that it was now marketing best-practice to include wifi speed in the listing description.
With bleisure being the new trend (and showing no signs of slowing down), experts added that it was also important to list that the rentals had spaces suitable for remote work.
Vacation rental management companies see more competition
Individuals took note of the 2021 surge in demand for domestic travel and became overnight single-property hosts.
Vacation rental managers noted the flood of new properties on the market. However, professionalization and experience in the field gave managers the competitive edge which allowed them to maintain higher average daily rates.
The conference was highlighted by an excellent panel on revenue management with a number of industry insiders including, David Jacoby from Hostfully, Ryan Saylor from Beyond, Anurag Verma from PriceLabs, Andrew Kitchell from Wheelhouse, Simon Lehmann from AJL Atelier, and Andrew McConnell from Rented.com.
Here are some of the key points from this session:
- Length of Stay (LoS) is increasing across the board, so managers who can help fulfill the demand for medium term stays will succeed more.
- Revenue management is not just pricing, but understanding your operational costs is the second half of the battle that is largely ignored when thinking about your revenue.
- What’s your lifetime value (LTV) of each guest? Local and repeat vs singular booking from international? Knowing this matters in how you manage and market your properties.
- Merchandising also matters. At the end of they day we are first and foremost selling your photos. That is the first thing customers see. So, change them up based on seasons—fire in winter and pool in summer for example. Kitchens matter, because hotels don’t have them. Put your kitchen photo near the top of picture list.