The vacation and short-term rental industry is an exciting place for startups right now. There’s been plenty of investment flowing in, with lots of growth, which has created momentum.
Over the past few years, thanks in part to the emergence of Airbnb and its role in growing the profile of private accommodation as a lodging option, there has been a collective move towards the professionalization of the vacation rental market.
Alongside this professionalization, we’ve seen a boom in the number, and an increase in the quality, of travel tech startups helping vacation rental industry professionals to both better reach and better service guests by addressing the pain points that property managers face.
What’s also perhaps unique about the vacation rental industry is that there are many, many operators (there are an estimated 115,000 property managers worldwide) servicing the market. These operators vary from single list hosts and small to medium multi-property managers (with from five to 500 listings) to large hotel 2.0-type brands.
Further complicating a property manager’s value proposition is the fact that every manager also has two customers. The guest and the owner.
One of the challenges that property managers face is the increasing hospitality demands from guests. This is in part due to new guests being converted from hotel stays, and so they expect more hotel-like products and services.
This increase in expectation creates a huge opportunity for startups to fill the gap, solve the problem and bring to market solutions that encompass all parts of the management process such as cleaning, marketing, maintenance, guest services, accounting and home automation.
Solving pain points
There are many pain points that vacation rental startups are looking to solve for property managers. For seamless booking across listing sites and platforms we have our company, Rentals United (formed when four European rental agencies needed a solution to the growth of online travel agencies).
For competitive pricing and yield management that can match hotels, Beyond Pricing and now Price Labs have entered the market.
In the area of home automation, Roomonitor and Slickspaces, among others, have come up with a solution for smart locks, noise monitoring and AC controllers that turn on and off dependent on whether guests are in or out of the property.
This past year, we’ve also seen a number of startups that are addressing the issue of, in the absence of a hotel concierge, where guests can store their luggage when check-out times don’t match their travel schedule.
To help property managers address the area of raising the consistency of housekeeping standards when outsourced cleaners are often used, and for helping property managers find the right staff, we’ve seen DoInn and Properly look to solve this problem.
In-stay concierge services are solved by Hello Here, and another digital guest welcome book we have seen enter the market is Touch Stay. Wishbox is a guest relations app that helps managers increase revenue and upsell experiences.
Data, or lack of it, has also been an issue for the vacation rental industry. Both Transparent and AirDna are attempting to solve this by providing managers with data sources in order to make good decisions.
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Another element of why there is momentum in vacation rental tech today is that unlike the hotel industry, there’s still a lot of room for startups to gain market traction. "Legacy softwares" are few, so new entrants have the opportunity to try out softwares at a reasonable price. We’ve seen cloud-based PMS systems enter the market over the past few years and be awarded funding rounds this year including Lodgify ($5 million) and Guesty ($20 million).
A trend we are seeing, and which I believe is the way we will see the ecosystem going, is the move towards more partnerships being created with a marketplace of solution softwares: open software that allow API connections to other solutions in order to make the lives of vacation rental professionals easier and better.
The challenges for vacation rental tech startups to succeed are perhaps no different from startups in other industries that are moving quickly. Unless a startup really knows and understands its customers, is open to market forces and is able to pivot quickly, its ability to survive is in jeopardy. The fragmentation of the vacation rental market can be seen as both a curse and an opportunity.
In order to provide a space for vacation rental tech startups to meet, I founded the "roving" VRTech events. These informal meetups encourage startups to learn from each other and from their client base.
So far, we’ve had many startups and potential startups meet in Madrid, Rome, London, Edinburgh, Barcelona and Paris. It allows a meeting point for property managers to share with startups what their real (as opposed to imagined) pain points are that create the opportunity for startups to find solutions that match. There is still a lot of opportunity for forward-thinking startups to create those solutions.