The vacation rental industry is expecting stellar growth in the next few years. To give you an idea, in 2021 the global vacation rental market size was valued at just over $91 billion. According to data shared by Allied Market Research, this number is expected to more than triple in 10 years to reach $315 billion in 2031.
Now, to be able to enjoy your slice of the delicious pie and maximize your vacation rental income, it’s key that your vacation rental property remains relevant. To do this, you’ll need to stay up to speed with the news and developments in the vacation rental industry. From longer stays to a preference for booking directly, here are some of the most exciting trends that hosts and property managers can expect in 2023 and the foreseeable future and easy-to-implement tips to adjust their pricing accordingly.
Before diving into exciting seasonal trends and practical tips for pricing, here are 10 interesting stats shared by iPropertyManagement to help you get up to speed with the vacation rental sector. You can use these stats to benchmark your own performance quickly and possibly identify opportunities for growth.
Perhaps you can afford to increase your budget for PropTech tools? Maybe it’s time to design your own business website where you can accept direct bookings?
After the pandemic hit, travelers started to look differently at the amenities on offer when booking accommodation. One feature that they started valuing more was privacy. It’s also a major reason why the vacation rental industry fared better than hotels during the height of the pandemic.
Privacy is one of the unique selling propositions of short-term vacation rentals. The idea of visiting a busy, crowded resort area is for many travelers no longer the perfect holiday. Instead, they prefer to have more space (even better if it includes an outdoor space) and a fully equipped kitchen where they can cook their own meals.
Taking advantage of this change in traveler behavior can help you to appeal to a guest segment that hotels can no longer reach. What’s more, according to American Express Global Business Travel (Amex GBT), hotel chains are also expected to increase their rates significantly in 2023. Hosts can use this to their advantage further by ensuring that their nightly rate is competitively priced (more about that later).
The past few years were rough to say the least. If you study the data shared by leading travel publications, travelers are picking destinations where they can relax. Relaxing destinations like France, Portugal, and the desert landscapes of New Mexico are among some of the top destinations in 2023.
Travelers are also craving to return back to the basics. Not only for relaxation purposes, but also in order to be more sustainable. Off-the-grid experiences and eco-friendly spaces are growing in popularity, especially among younger travelers.
If you specifically want to attract more Generation X and millennial travelers, find ways to reduce your carbon footprint, yet still make it easy for them to remain connected to the online world. If you can find a way to create a property that offers peace and quiet without forcing your guests to disconnect from their mobile devices, you’ll be rewarded with an increase in vacation rental bookings moving forward.
Long-term stays are on the increase thanks to increasingly more working professionals being given the flexibility to work remotely. Hosts can use this exciting travel trend easily to their advantage by ensuring that their property caters to this “new” group of travelers. This is one more reason why prioritizing privacy is a good idea. In addition to privacy, you’ll need to provide:
If you want to leverage this trend to its full potential, seriously consider opening your property to furry friends too. As increasingly more travelers are booking stays of 28+ days, they’re searching for pet-friendly accommodation. Being separated from your best friend is hard enough for a weekend. For travelers planning a longer trip, leaving their dog or cat at home is out of the question. After all, for many, they’re office colleagues too.
Not only will allowing pets help you to appeal to a growing niche market, but it can also present an upselling opportunity. Pet owners are willing to pay good money for the ability to let their pet tag along.
Each year, more travelers opt to book directly as opposed to using an online travel agency. One of the reasons for the growth in direct bookings is cost. According to another statistic shared by iPropertyManagement, the majority of travelers (67%) feel that it’s more cost-effective to book a property by means of a brand’s own website as opposed to third-party websites like Airbnb, Booking.com, and Vrbo.
If you haven’t taken the time to create your own business website yet, add it to your to-do list in 2023 (preferably somewhere at the top). Not only will it help you to appeal to a growing percentage of travelers, but you can also look forward to benefits like:
What’s more, you don’t necessarily need to hire a website design agency. There are a number of vacation rental software solutions that include a vacation rental website builder. You can, for example, try out iGMS. In addition to offering a website builder, it also offers several other features to help you manage all your new direct bookings such as:
It doesn’t matter whether you sell a product, service, or experience, pricing will always be a deal-breaker. Though, if you’re operating in the vacation rental industry, pricing your listings is more challenging as there are various moving parts that you need to consider. Here are some practical tips to help you get the math right and maximize your vacation rental income further.
Doing thorough market research is critical. You need to understand your property’s location, target audience, and competitors.
For example, if your rental property is situated in a small town or rural area that experiences a significant drop in demand during certain months, you’ll need to change your pricing more often. On the other hand, if your vacation rental is located in a town that attracts all-year demand. You can safely set your nightly rate at the maximum for most months of the year. Knowing which are the best states in the US to reside in, and other factors like local amenities, population density and economic outlook, will help you to make this decision.
In addition to knowing the demand that your area generates, you also need to understand your target market. If you plan on creating a luxury Airbnb, you can afford to charge more per night. However, if your ideal guests are families or students, your pricing needs to be more affordable.
Then, once you’ve determined at which end of the spectrum your nightly rate can be, research similar vacation rental properties in your area too. You want to stay competitive, while at the same time offer more value.
To help you with the research process, there are a number of analytics software solutions that you can use. Tools like Transparent and AirDNA make it much easier to identify a growing trend that you can capitalize on.
Then, to ensure that all the hours that you’ve invested in completing a vacation rental market analysis won’t be in vain, it’s highly recommended that you add a dynamic pricing tool to your PropTech stack too. In short, these types of software solutions will automate your pricing. Using market fluctuations, it can change your nightly rate in real time automatically. To do this manually with the same level of accuracy would simply be impossible.
Some of the leading tools that you can check out include:
Considering that increasingly more travelers are booking longer stays, it can also be a good idea to offer discounts to these types of bookings specifically. As a matter of fact, according to Airbnb, fewer than 50% of hosts offer a weekly or monthly discount. However, those that do are usually rewarded with more long-stay bookings.
In addition to length-of-stay discounts, you can also experiment with the following types of discounts and promotions:
Any business that wants to attract new customers needs to keep up with the times. The vacation rental industry is no different. To run a successful vacation rental business, you need more than a vacation home in the right location.
While location and amenities matter, you also need to pay attention to changes in traveler behavior. Identify what’s currently trending and see how you can adapt your listing and pricing to accommodate their new needs during their next trip. It might be as simple as welcoming pets at your vacation home.
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