Fewer bookings are coming from Airbnb. Growth for property management companies is coming primarily by adding new inventory. And more property managers want to integrate artificial intelligence.
Those are just three of the salient points outlined in a recent study entitled “2024 Hospitality trends in the vacation rental industry” from property management platform Hostfully.
“Overall, this year’s findings paint a picture of a market adjusting to broader economic headwinds,” Hostfully said in its report.
The study is based on responses from 347 vacation rental operators of varying sizes. Some respondents manage one property while others operate large vacation rental management companies, with the majority located in North America.
“While economic challenges may test the resilience of operators, we anticipate that the strategic adoption of technology, particularly AI, will play a critical role in helping businesses remain competitive,” the report states.
Booking sources evolving
Airbnb, Vrbo and direct bookings are the main channels for reservations for property managers, according to Hostfully, but a shift is happening.
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While Airbnb is still the main source of bookings, fewer hosts are using Airbnb than before as Hostfully tracked a “small but steady decline.” Since 2022, bookings through Airbnb have dropped 8% - 4% each year for survey respondents.
“We suspect this dip is due to a combination of factors,” Hostfully said. “Since the pandemic, operators have been expanding into direct bookings to avoid third-party OTA (online travel agency) fees. It’s also become commonplace for managers to use property management software, which makes multi-channel distribution far easier, thereby increasing diversification.”
In addition, other players are becoming more relevant. Google, for example, has entered the field as a source of bookings Hostfully described as “notable.” The search giant accounted for 5% of bookings as property managers have become visible in Google Travel. The figure puts Google ahead of Expedia, which accounted for 2% of bookings and Marriott Villas, which accounted for 1%.
And generally, operators are diversifying. Twenty-nine alternative listing platforms made up 4% of bookings in total.
Expansion through new listings
As the sector has matured, growth has continued in the form of new listings, according to Hostfully.
The addition of new inventory remains the most prominent growth strategy among property managers though improved marketing is also a growth driver.
High occupancy rates remain a top goal for most operators, with 85% saying they are aiming to boost occupancy.
STR managers look to AI to streamline processes
The majority of STR operators are now using AI, according to the survey results.
Almost three-quarters (73%) of operators have tried external tools such as ChatGPT while 43% of operators have made use of AI capabilities housed within vacation rental software that they use.
And some report that AI is helping to drive revenue. According to Hostfully’s report, the managers who have used AI tools into their PMS are more likely to see a revenue boost than those who are not using the technology — and they’re not as likely to see a “drastic revenue drop” in comparison to 2023. But, Hostfully cautioned, “correlation does not necessarily mean causation.”
As AI continues to evolve, 48% said they expect the technology to have the most impact on guest communications and 28% anticipate changes to marketing tactics as a result. That’s significant, as guest communications ranks high as a pain point with 20% of respondents pointing to it as a technology challenge they face.