Short-term rentals fared better than most travel businesses during the COVID-19 pandemic. And the sector has continued to profit from the surge in demand that has benefited the entire industry.
While the threat of overly restrictive government regulation has always blotted the sector’s outlook, a panel of experts spoke recently about their reasons for optimism in that regard.
Speaking at Phocuswright Europe 2023 in Barcelona last month, representatives from Sonder, Awaze and Interhome said the years of thriving short-term rental business have helped them establish their worth – not only to travelers and hosts, but to the larger community and its economy.
Leda Zanlungo, the general manager for Iberia at Sonder, said she wanted to get away from the perception that short-term rentals are a blight on communities. “I believe, if you do it well, you do bring value to the neighborhood, to the community,” she said.
Henrik Kjellberg, a group CEO for Awaze, agreed that short-term rentals demonstrated benefits to local economies could help check restrictions put in place by local governments.
“I would say a thing that concerns us is regulation. There’s a lot of initiatives from the [European Union] coming and a couple of countries – which is fine,” he said. “But … I do think the governments need to be careful and transparent in how they look at that.”
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This is especially true in more remote areas, he noted.
“We operate almost exclusively in rural areas. Without us, there is no electrician, there is no restaurant, there is no plumber in that village,” he said. “That’s the type of data we try to bring to the authorities to say, ‘Look, this not over tourism.’ On the west coast of Denmark, those villages are gone without the German tourists.”
“As an industry we play an important part in some countries, in some regions for the economy,” added Sylvia Epaillard, co-CEO at Interhome. “There’s ways to do [regulations] correctly and ways to do it less correct. Let’s make sure that on the global platforms we can transmit the message of how we are doing our job, and I think this nowadays is not yet done.”
Part of the problem for short-term rentals, Kjellberg said, is that the hotel industry has been lobbying governments for a longer time and with a more united voice.
“We as an industry, we’re kind of gearing up on the lobbying efforts,” he said. “That’s work we have to do now as we are growing up as an industry. We need to participate more in lobbying and inform the legislators of the wonderful things we do.”
Zanlungo agreed on the importance of getting out the sector’s message, but she was reluctant to see a conflict between short-term rentals and hotels. From a guest perspective, decisions about where to say are often dependent on the nature of the trip and the services, location and price.
“I think we need to stop looking at hotels versus apartments,” she said. “In the end, guests are king. And guests … decide where they want to go, what asset to choose. … Us against them isn’t helping.”
The discussion, moderated by Lorraine Sileo, a senior analyst and founder of Phocuswright research, also covered the different trip types that appeal more to hotel stays or short-term rentals and reasons for optimism in the sector. One point that might be a drag on the economy overall could prove beneficial to short-term rentals, Kjellberg said.
“The interest rates going up, we see that as a good thing because people’s mortgages are no longer free,” he said, pointing out that it could boost supply for the sector. “When you have to pay more for your mortgage, monetizing your second home becomes more important. We are seeing that trend coming.”
Zanlungo and Epaillard also saw reasons to expect growing a supply of short-term rentals.
“There are a lot of opportunities to professionalize the sector much more, taking over the supply that’s already there that is not professionally managed,” Zanlungo said.
Epaillard agreed.
“What we have seen, especially during pandemic times, many have been going into the idea of renting out their homes, and many have been going into the idea of investing in secondary homes,” she said. “I think what they realized … is that it’s hard, it’s a business, it’s a full-time job to do. So they are more and more seeking professionals to help them actually do the job.”
The growing supply amid surging prices elsewhere in travel bodes well for short-term rentals, Kjellberg concluded.
“Air prices are through the roof [and] the air prices are going to remain high,” he said. “We still offer the best, as a category, the best value for a vacation. If the economy turns a bit, even on the guest side, I think we’re very well positioned as an industry.”
Watch the full discussion below.
Executive Panel: Big and Getting Bigger: What's Next for Short-Term Rentals