Play to Your Strengths as a Local Vacation Rental Brand
Like virtually all industries these days, the vacation rental (VR) business is experiencing a period of extreme disruption. For so many years, this lodging industry niche was overlooked by large corporations and travel distribution companies. I remember when I spoke at my first VRMA conference in 1996 when I was expanding my hotel training company into the VR space. Back then, the hotel industry was suddenly being severely disrupted by a number of factors, such as the emergence of hotel mega-brands, new pricing, revenue-management data (STR Reports), and a tidal wave of new distribution models, now known as OTAs.
Yet the VR space seemed immune to these changes and remained a relatively simple business for many more years. Attempts at creating the first large national brand (ResortQuest) fell short. Revenue trend-reporting companies like STR showed no interest in the VR space, probably because they saw the complexities of aggregating the data (too many nonstandardized unit types and attributes and far more PMS systems than the hotel side). Most VR companies continued to thrive as locally owned “mom-and-pop” business models, a large percentage of which were truly owned by a mom and a pop!
During this time, there was a change in the VRMA board leadership, and I took a break from a 10-year run as a conference speaker, skipping five straight years, and instead focused on training in the traditional hotel and resort industry. When I returned to VRMA as a speaker in 2015, I was absolutely amazed at how much had changed. Now it seemed the VR industry was suddenly facing a level and pace of disruption even beyond what I had seen happen to traditional hotels.
These changes included the following:
- Emergence of enabling technologies for “by owner” rentals
- Established national brands (hotels and others) entering the VR market
- OTAs promise to create new demand
- OTAs promise to expose new clients to the concept of vacation rentals, but they charge significant fees to do so, possibly inserting themselves between the company and its existing direct-booking repeat guests.
- Data and revenue management
- Tech companies are offering data and systems for dynamic pricing and better revenue management.
Yet when I speak with our numerous KTN vacation rental training clients, it seems that by far the biggest disruptor of all is the proliferation of national (and international) VR focused mega-brands entering the market, backed by seemingly unlimited private equity venture capitalist funding. These companies are buying up local brands and syphoning off inventory by offering guaranteed rents and seemingly lower commissions while cutting operational costs by pushing guests to use apps and by outsourcing operations.
Certainly, these companies will continue to experience some degree of success, just as the mega-brands have in the hotel space. However, there is plenty of market space open for local brands in the VR space, just as the independent “boutique” and “lifestyle” niche lodging has continued to thrive. (In fact, in recent years independent hotels have shown a significantly higher growth in ADR and RevPAR than branded hotels.)
Since the vacation rental business is by definition about vacations, which are very personalized travel experiences, local brands can be especially successful if they play to their strengths when selling and servicing guests. Similarly, most owners of VR homes have a personal connection to their place. Therefore, if local brands find new and better ways to engage with owners, they can also out-service the mega brands to protect inventory.
In summary, here’s my message to the locally owned vacation rental leaders: rather than trying to fight the latest disruptors by playing their game, beat the disruptors by playing your game really well! Here are some suggestions:
Encourage human interactions with guests
Be accessible when they need you the most. Mega VR brands seem to be doing everything possible to push guests away. Perhaps it is because they buy in to what I call the “millennial tech myth” and truly believe guests prefer full automation, but I also suspect it is to reduce labor costs. Instead, go the opposite direction and take advantage of having in-house, on-site experts.
- Post your phone number prominently on your website, especially on your mobile website.
- Add text next to the number that says something like “Call our local area experts” or “Call our in-house vacation planners.”
- Provide online click-to-chat, but train your staff to offer to call the guest right away if the exchange gets complicated. If the guest is asking for opinions on which property to book, or if their words start to indicate frustration or dissatisfaction, click a note that says, “May I call you right now to better assist?”
- Post after-hours numbers prominently in the rental accommodations so that guests can reach someone with a quick question at a critical moment.
Empower your frontline staff
Guests are more likely to experience problems and quandaries during a stay in a VR home than in a hotel room for many reasons. The accommodations are larger and have more moving parts. Larger and more diverse age-group parties stay as guests, and guests spend more hours of the day in their accommodation than they would at a hotel. Being local and having actual employees on the ground, as opposed to VR brands who have to rely on less-loyal contractors, allows for empowerment of the frontline staff.
Push decision-making power down the organizational chart to your company’s “first responders,” who are closest to the guests. Responding promptly and reacting with creative solutions can generate goodwill out of what would otherwise result in a stinging review. Similarly, empowered colleagues who go above and beyond for guests’ special needs can turn indifferent guests into social media promoters.
Put names and faces on your local brand, literally!
Buy business cards for all guest contact staff, including maintenance and housekeeping supervisors. Include head shots in email signatures. Post pictures of support staff, such as a group picture on the “about us” company page and photos of key players who service owners. Make sure your website tells the story of your company’s founders or owners. Today’s guests crave local, authentic experiences and want a “feel good factor” when spending their discretionary funds with small businesses. If your company owners are up for it, make them as visible as possible. Otherwise, promote a key leader as the local face of the company.
Train your staff to proactively offer local insider’s tips and to volunteer information beyond what is asked for
Encourage your rental sales staff to sell vacation experiences and your on-site operations people to volunteer helpful ideas during conversations. This might require you to conduct a bit of local area familiarization training to bring your staff up to date on local attractions and events, as locals often are too busy to do what tourists do.
Embrace both high-tech and “high-touch” business practices
Find ways to use tech to increase a sense of “touch!” (People of all ages and cultures appreciate this!) Reservations agents should use screen sharing to walk guests through online images instead of sending them links or directing them back online. They should also send camera phone pictures when guests have specific questions. If you ask me, the biggest opportunity right now is to use personalized, individual video email to engage prospective guests, connect with in-house guests, and personalize communications with homeowners. For two years now I have been sharing this concept in my VRMA conference presentations and private on-site trainings, yet the adoption rate has been very low. If you are interested in this, just shoot me an email (email@example.com), and I will respond with a sample message. I recommend a particular app that can be used on any smartphone to quickly and easily send personalized messages such as the following:
- Personal video welcome messages (at least for those booking higher-priced homes, multiple units, or longer stays). This takes less than two minutes, so not having enough time is no excuse.
- Sending all in-house guests a welcome message of the week with insider’s tips provided by staff.
- Video messages to homeowners and prospective homeowners still in the funnel.
This is a concept that I do not see mega-branded VR companies ever embracing, and, even if they tried, it would be difficult to personalize from a remote location. Your staff, on the other hand, can easily work this into their day-to-day business practices because it takes even less time than sending a guest a personalized email or text.
In summary, the vacation rental industry is at a fork in the road. Mega companies are headed in one direction, which is to rent out units as if they were a commodity like an airline seat. They will end up homogenizing the VR business to some extent, just as mega hotel brands have done. Today, if you book a room at a full-service Hilton, Marriott, or Intercontinental hotel, your room will be essentially the same. A Hilton Garden Inn feels identical to a Courtyard Marriott or Holiday Inn Express, and they all serve the same free breakfast. Yet boutique and lifestyle hotels reflect a fast-growing niche, where rooms command a higher ADR. Surely, national VR brands will succeed at what they do best, and some guests and owners will give them a try. However, if local brands do what they do well and do it with pride and passion, they can continue as viable businesses for many years to come.
Makes absolute sense to me 🙂
Thank you for sharing.
Thanks SO much Adam Johnson! I am happy you found it relevant.
Great perspective. Thanks for sharing.