When we started Breezeway in 2016, few companies in the vacation rental ecosystem were talking about property care and operations. Managers were focused on maximizing bookings and acquiring owners as they were rightfully swept up in the rapid growth of the industry. “Property operations” wasn’t a well-known concept, which became clear to us from our conversations at industry conferences.
The growth of the short-term rental category over the past five years is well documented—not only with respect to the number of rentable homes and management companies, but also the identity of the operator and the pain points and priorities that come with them. The pandemic accelerated the importance of property operations (now a ubiquitous term and distinct category within the business), changing processes and restructuring the daily lives of most vacation rental professionals.
This was the impetus for hosting ELEVATE, the industry’s first-ever conference dedicated to property preparation that Breezeway held in March. Our mission for the summit was to strengthen the dialogue about operations, so we brought a variety of leading voices under one roof—voices from local housekeeping supervisors to leaders of multinational brands. Some 800 registrants listened as those experts shared insights and experiences about numerous topics that included the convergence of rental supply, new technology trends, and coping with more work and less time to do it.
In this article, I share my perspective on where vacation rentals are headed. I’ll discuss how the current expectations of guests, owners, and regulators are creating new challenges and opportunities for professional managers, and why navigating the demands of each persona is critical for the industry’s future.
Expectations for Industry Growth
Short-term rentals are no longer perceived as “alternative accommodations.” Instead, they are a preferred lodging category. The industry has been building toward this state for decades, and now travelers are embracing it. According to Key Data, bookings per rental have more than doubled since 2019, and occupancy rates in such vacation-rental-dominated markets as the Outer Banks and Cape Cod have risen more than 20 percent.
Although attributes such as more privacy, ample space, and family-friendly amenities have positioned vacation rentals well amidst the pandemic, the expectation for elevated quality will be key to the industry’s sustained growth. “As companies build their brands, and are known for more quality, then we’ll reach new markets,” said Merliee Karr, founder and CEO of UnderTheDoormat. “There are new customers coming into our market, and whether we like it or not, we are going to be competing with hotels. Eleven percent of consumers are more likely to book a short-term rental coming out of COVID than they were going into it. This is our opportunity.”
For Consumers, It’s All About the Experience
Travelers continue to demand more personalized and premium vacation rental experiences. Lingering sensitivity about safety and cleanliness are steering consumers toward rentals that deliver professionalism, a sentiment that 71 percent of operators believe will remain indefinitely, according to Breezeway’s 2021 Operations Survey. At the same time, millennials and younger generations are projected to account for 75 percent of travelers by 2025, a cohort of consumers that, according to Airbnb Report, holds higher standards for service and convenience.
Operators are taking this “experience first” approach for their guests, from booking all the way through checkout, in innovative ways that have much more of a “hospitality” feel.
ALTIDO, for example, has implemented new services to deliver a more predictable and concierge-like experience. “We’ve started to offer guests a virtual tour of the property with a walk-in experience that gives them a great indication of how the property will look and feel,” said Anthony Lee, head of operations in London. “Expectations are as high as ever, and it’s all about convenience and experience. We offer pre-check as well as grocery delivery so that the fridge is stocked up upon arrival.”
The challenge extends beyond property preparation and doesn’t end after the guest checks in to the property. Expectations for in-stay experiences, such as mid-stay cleaning, late checkout, and surrounding amenities and recommendations, have stretched managers by increasing both the scope and depth of their work. Purposeful communication has become a core tenet of the job, a necessary means of facilitating VIP guest experiences so they can enjoy the property to its fullest extent.
For Ashley Kubiszyn, CEO of River Ridge Rentals, the key to resolving issues and delivering service in a timely matter is tying property operations and guest communication programs together: “As soon as our team is on the way [to fix the issue], we mark the task as in process, and the guest gets that update. Then, we close the loop with an ‘it’s been completed’ text, as this is so important.”
“Managing Up” to Homeowner Clients
There are competing macroeconomic factors that have shifted the supply and demand of property management services. First, the low-interest-rate environment has catalyzed purchases of second homes, increasing the number of available vacation rentals for managers to compete for. But the number of homeowners interested in management services has leveled because the software ecosystem offers platforms and tools that have lowered the barrier for self-management, and that has increased the variance in the quality of vacation rentals. The playing field for marketing also has leveled, driving acquisition costs higher.
Simply put, owner relations—both fostering existing relationships for higher retention as well as efficiently acquiring inventory—remains a challenge for vacation rental managers. Owners expect more visibility into how their assets are (and will be) managed. Such companies as Berkshire Hathaway Homeservices in Vail, Colorado, are addressing this challenge upfront by showcasing their process to prospective clients. “When I meet with new owners, I put technology forward and show them our operations platform,” says vice president and general manager Jon Eskin. “More than anything, owners want to see how you run your operations, so we show them how we do inspections, and they love that.”
Detailed attention to and communication with homeowners shouldn’t be a one-time thing. Providing consistent visibility into asset management programs leads to healthier owner relationships that, in turn, drives higher retention, glowing testimonials, and word-of-mouth referrals. Each owner and property is unique, and many professional managers customize their method and frequency of communication to the personality and preference of each homeowner. Doing so creates a heavier operational burden, but the coming years should prove that managers are up to the task to monetize more service and deliver more client value.
Embracing property services is a huge growth opportunity for managers, but it can be a double-edged sword because it challenges operators to cope with more work and less time. The intersection between property operations and owner relations might just be the key to unlocking internal efficiency and controlling the narrative with owner clients.
“We use technology to update owner liaisons whenever there’s a maintenance issue, and within minutes we can notify the owner and deal with it internally,” said Eskin.
Taking good care of a rental is one thing but, without communication, owners won’t know the full value you provide. Sharing property data and service interactions with owners will help highlight your professionalism and assure your clients that their home is in good hands.
What About Regulation?
The growth in vacation rentals has caught the eye of municipal policymakers, increasing scrutiny and restrictive policies. But, according to Philip Minardi, head of public affairs at Expedia, the pandemic has altered the trend in regulation. Last year underscored the economic value that vacation rentals bring to the table, creating a unique opportunity for operators and cities to further the conversation about fair and effective policies.
“Consumer demand is driving the dialogue forward, and the industry recognizes the importance of putting our best foot forward, being proactive, and engaging in these discussions before they get vitriolic,” said Minardi.
As an industry, we need to come together to promote responsible hosting practices and minimize disturbances within our communities. A clear and cost-efficient way to achieve this aim is to use best-in-breed technology that delivers travelers more predictable and higher-quality experiences. If recovery continues to unify regulators and operators, then regulation shouldn’t hamper growth but, rather, elevate the professionalism of the entire industry.