While not by any means a new phenomenon, travelers are
choosing vacation rentals over hotels more frequently than ever before. And
thanks to the rise of platforms like Airbnb and Vrbo, one might assume being
host to these travelers is easy and profitable too.
Vacation rental revenue is set to cross $81 billion in 2022,
and with major constraints on supply, there’s plenty of money – big money –
trying to get a piece of this pie.
Vacation rentals may be the sexiest sector in travel, but
spend more than a few days peeling back the layers and you find an
operationally complex craft nowhere nearly as sexy as it seems (think –
What’s sparking vacation rental demand?
The pandemic accelerated travelers’ search for space,
privacy and value. But to really understand vacation rentals look at one
defining strength: personality or as Phocuswright’s Madeline List calls it,
- Each vacation rental property is
different: quirky, charming, special.
- Each vacation rental owner is
unique, sharing their passion for a destination with visitors.
This character is what travelers (specifically younger
travelers) are increasingly seeking (and posting to Instagram), which fuels a
cottage industry of property owner-managers – what I call “homerunners” -who
see opportunity in delivering character professionally.
The Vacation Rental Management Association’s (VRMA)
International Conference at Caesar’s Palace in Las Vegas this year will break
attendance records with 3,000 attendees. The conference’s showroom floor will
look not unlike some of the biggest trade conventions in the world.
Collectively, these professional managers are serving
character to the masses. But how?
One-of-a-kind, by design
I’ve spent the better part of the last decade studying these
businesses and to best explain their secret sauce I developed the theory of “Limited
Inspired by the world of antiques and collectibles, Limited
Edition concludes that objects limited in supply and steeped in personality can
command top dollar with loyal collectors – side-stepping commodity marketplaces
and creating value on entirely new terms.
Most vacation rental professionals (whether they knew the
name for it or not) practice Limited Edition by doubling-down on four core
- Family-owned (or operated)
- Locally-based (not headquartered
- Specialized in a property type or
- Surprising in delightful ways (like
some of the best boutique hotels)
(Note: These differentiators - if you like acronyms - spell
out FLoSS, which is a good reminder to repeat them regularly for optimal
Focusing on Limited Edition give property owner-manager the
chance to compete alongside (and even collaborate with) the best in their
market, which has proven powerful in adjacent sectors such as craft beer, where
mom and pop breweries work together to wield strength in numbers on important
matters like regulation and standards.
Limited Edition appeals to traveler preferences to support
small sustainable businesses. Limited Edition creates the personalization and
trust needed for any repeat booking campaign. And Limited Edition even appeals
to homeowners, many of whom prefer relationships over transactions when it
comes to the company managing their family home.
Does “Limited Edition” scale?
Limited Edition, almost by definition, does not scale. But
that’s not stopping plenty of players from pushing the limits.
According to Goldman Sachs, more than $17 billion in funding
has been invested across “multiple companies with limited track records and
relatively small portfolios of assets.” All of it based on one unavoidable
truth: that technology is powering a generation of Limited Edition property
owner-managers to extraordinary new heights.
Activities that used to be redundant like reservations and
key replacements are now automated with reservations software and smart locks.
Solutions that didn’t previously exist like guest vetting and dynamic pricing
are now part of the everyday tech stack. This technology unlocks the time and
energy needed to double-down on the Limited Edition activities that “homerunners”
can do best: serving as a compliment to hospitality, not a replacer of it.
Instead of trying to scale Limited Edition, the best
vacation rental companies are recognizing its limits – then using technology to
roll-out standards that deliver it consistently over time.
The unsexy truth? This challenge is difficult but
worthwhile. I share my tips on how to achieve it as well as case studies of the
leaders currently doing it in VRMB’s Weekly Newsletter.
What makes this race different?
It’s an $81 billion race to scale one-of-a-kind - what could
Unlike disruptors in transportation or retail, vacation
rental disruptors can be seen, heard, touched and slept-in. This makes the race
to first-mover status about more than just market share. The winners of this
race will have profound effects on the communities in which we live.
Done well, they serve as economic engines and pillars of
community leadership. Done unprofessionally, they can negatively affect a block
or a neighborhood for decades.
There’s a lot riding on the vacation rental category, so
what does it mean to be vested? In his latest
op-ed Carl Shepherd, co-founder of HomeAway, argued that property owners
and managers must do a better job – if for no other reason than to save
themselves from being banned outright. These owners and managers, Carl
explains, have the most to lose: the onus is on them.
But I believe the accountability crisis cuts one step
deeper: all stakeholders, including (read: especially) those who have the most
to gain must also do their part. Like with any healthy community, this means
showing up to be part of the conversation, uniting behind standards, and being
aware of the system that sustains us but could crumble if we don’t find
balance. Self-interest is great, just play the consequences of your actions out
a bit further than the next fiscal quarter.
I am so passionate about this movement, I am producing a
docuseries called “Homerunners” that goes behind the scenes to explore some of
the boldest attempts to scale vacation rentals without losing the little things
that make us great. Please enjoy trailers from our first two episodes.
Matt Landau's Homerunners Episode 1 Trailer ft. VTrips
Matt Landau's Homerunners Episode 2 Trailer ft. Casago