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COVID‐19 and Vacation Rental Payment Risk: THE BIG PICTURE

By
Ascent Processing Staff
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3

ASCENT has been helping merchants take credit card payments in the Vacation Rental (VR) industry for more than 20 years. We are, therefore, uniquely positioned to provide some perspective on what is happening in the payments industry during the COVID‐19 pandemic. The VR Industry will get through this crisis, but not without some potentially serious introspection and infrastructure changes in some areas to create a more solid financial foundation. If you are in this space for the long haul, read on.

Credit Card Processors, OTA’s, and Payment Facilitators are holding funds at an unprecedented rate at a time when cash flow is desperately needed by many short‐term and medium‐term rental property managers. Within days of the stock market plunge, reports surfaced of large processors putting an immediate hold on all travel‐related monetary distributions, including valid credit card transactions. Well known OTA’s in the Short‐Term Rental (STR) space made unprecedented policy changes to refund rental payments to guests who had not yet completed their stays, while others chose to discontinue their “early payout” programs. To understand why these decisions were made, and how the players in the VR space are being affected, let’s take a look at how the banks that process credit cards look at risk and the impact of consumer’s rights in the U.S throughout the payment system.

 

How Acquiring Banks Calculate Vacation Rental (VR) Risk

The credit card companies (card brands) and acquirers (processing banks) tend to lump VR under a generic “T&E” (travel and entertainment) category, along with airlines, cruise lines, and hotels. Scrutiny of these businesses is extremely high, especially at this time. The federal government is working on getting bailout funds to the airlines due to how hard they’ve been hit by the coronavirus causing halts on air travel. Every airline has an acquiring bank behind them who processes their credit card payments and is responsible for covering the millions and millions in risk. Acquirers look at VR in a similar light.

Acquirers underwriting a vacation rental property management company must have knowledge regarding both the VR ecosystem in general and how the management company operates in specific. From a processing bank’s perspective, the farther in advance a property manager takes rental deposits, the longer they need to count on the PM to stay in business, stay fiscally sound, and to continue to provide the service at the level the guests expect. The more volume a PM processes on credit cards, and the longer in advance before providing the guest with the exact experience they expected, the higher the processor’s risk grows.

The risk is held at the acquirer/processor level because if anything goes wrong with the PM or the service they are providing, the processing bank is required to step in on the PM’s behalf and make it right for the cardholder. What can go wrong?

  • the house doesn’t look like the photos the guest saw online
  • the house is no longer available to rent
  • natural disaster wipes out access or homes themselves
  • PM goes out of business

In these situations, the guest can exercise their legal right to dispute the transaction in the form of a chargeback. Chargebacks are an annoyance when they come in one at a time to a healthy PM, but when they come in by the hundreds (or thousands) due to a serious issue, risk mitigation quickly becomes a high priority. Processing banks take on millions of dollars of risk with each approval of large property managers. A quick and dirty calculation of how much risk the bank is taking on YOUR account is to take your monthly credit card volume and multiply it by how many months in advance you accept rental deposits. What happens if you don’t have enough funds in the bank to cover all those advanced payment refunds in a crisis? The processing bank is required to cover it on your behalf.

All merchant processors, whether Payment Facilitator, MSP (Merchant Service Provider), or local bank, have risk policies designed to monitor and identify potential losses before they occur (or sometimes, as they are occurring). In one monitoring process, the acquirer will conduct a periodic account review (often annually, in normal times). They will analyze the processing history of the account, including refunds and chargebacks, and ask for updated financial information for the business to verify the business’ liquidity and financial stability.

Acquirers also have systems in place to analyze processing on a transaction by transaction basis. If there are any changes or anomalies, the transactions will be flagged and often investigated. One example of this would be abnormally large sales and/or refunds: if a donut bakery ran a $100,000 sale, they might reasonably pull that transaction aside and check in with the bakery before sending the transaction through the financial settlement system. Was it an employee error, a fraudulent charge, or a valid sale to a Simpson’s convention? (mmmmm donuts…)

Acquirers also look at unusual refund and chargeback velocity. Refunds with no previous offsetting sale can be a fraudulent way for crooks to steal money. With high refunds occurring due to the COVID‐19 cancellations, the acquirers are also needing to verify that merchants have the funds to cover the refunds they are processing. Which brings us to one of the biggest factors in risk and business health within the vacation rental ecosystem.

In the STR industry, it can be difficult during normal times for a processor with millions of dollars at risk with each merchant account to know which merchants are going under and which are financially sound. In the middle of a global pandemic, it is even harder. One of the strongest indicators is whether the property manager holds the advanced deposit funds until the stay occurs. Those who do, have strong reserves to meet unanticipated demands. Those who don’t, or those who feel the need to “borrow from escrow” to pay operational expenses likely do not have the liquidity to make it through a crisis. Regardless of what your own state’s real‐estate regulations require, thinking of your guests’ rental deposits as your GUEST’S money – and therefore untouchable until the promised services have been delivered – is not only wise, it’s the only way vacation rental property managers are going to make it through this crisis.

ALL payments providers in this space – whether OTAs, payment facilitators, banks, or processors – are looking at the travel merchants right now and trying to determine how to best limit billions of dollars in potential losses. Property Managers should expect to hear from their payments provider and should be prepared to provide financial documentation that can support cash on hand relative to current exposure based on the payments they’ve accepted for bookings that haven’t happened yet. It’s important now, more than ever, to have a payments partner that can advocate for you, tell your story, and help keep your cash flow flowing. The property managers that are utilizing trust/escrow accounts are going to be the ones that get through the crisis we’re facing today and will be prepared for whatever the next one is.

 

How Consumer Rights affect VR Risk

Years ago, consumer rights were governed by Federal Regulation Z (Truth in Lending), which provided consumers the right to a full refund on transactions they claimed they were “not satisfied” with. Today, similar consumer rights are governed at the U.S. federal level under the Fair Credit Billing Act, as detailed here: https://www.consumer.ftc.gov/articles/0219‐disputing‐credit‐card‐charges .

The card brands (Visa, MasterCard, American Express, Discover) further regulate the process as it pertains their payment method. Each company has hundreds of pages outlining what a consumer/cardholder must do in order to invoke these rights after paying with a credit card, and what a merchant must do in order to prove that the payment is valid and should be honored.

Given the cardholder’s federally mandated rights, and because the card brands maintain that they are not a collection service but instead a payment method with which to transfer funds between two willing parties, the responsibility ultimately falls on the merchant’s shoulders to prove:

  • the cardholder authorized the payment
  • the cardholder read and agreed to all relevant policies
  • the services were provided on time and match what the cardholder expected

In the VR industry, where payments are taken in advance and generally not in person, proving these things can be complicated.

 

How to Protect Yourself

1. Proactively communicate with your guests
2. Have your documentation in order:

  • We recommend that each guest who is paying is required to physically sign the lease agreement or a receipt and return it to your office.
  • Guest signature and/or initials should be within one inch of the cardholder agreement, the total due, and any policies you want to protect – especially your cancellation policy.
  • If the guest did stay, you’ll need to provide the date services were completed and prove that the customer acknowledged receipt. Consider having guests sign a document when they arrive and depart.

3. Process refunds due in a timely manner

  • If you receive a chargeback where you agree that a credit is due, and you have already issued a refund, provide proof that the refund was issued, along with a brief explanation and timeline of the transaction to avoid refunding the guest twice.
  • If you received a chargeback where you agree that a credit is due but you did not yet issue a refund, we recommend you accept the chargeback because the cardholder has already been credited.

4. Make sure you are the Merchant of Record (MOR)

    • Payment Facilitators (like Stripe and Yapstone) and Channel Managers (like Expedia and Airbnb) bundle your transactions together with your competitor’s transactions to submit them through the processing system. They receive your funding from the card‐ issuing banks and place them in accounts that are not necessarily FDIC insured before they send the funds to your financial institution. Payment accounts through Payment Facilitators (Payfacs) and channel managers often require you to sign over control to them in areas such as cancellation policies and dispute negotiations. It’s difficult to advocate for your own best practices when someone else has control of your money, your terms, and your policies.
    • Processors and Merchant Service Providers provide individual merchant relationships directly with the acquirers and, instead of making up their own rules about your money, are required to enforce card brand regulations as they apply to risk, chargebacks, and security. The card brand regulations rely on clear documentation from individual merchants to help them enforce the payment of transactions and rental terms. If a Property Manager with an MOR account has a rental agreement that says no refunds, and the PM got the (actual) cardholder’s signature or initials next to that policy, the card brands, the processor, and the MSP will help support that agreement throughout the chargeback system. The MOR always has the latitude to give a refund or a partial refund as they see fit, but that decision will not be made for them as long as they supply the correct documentation within the chargeback cycle.

A note about the (actual) cardholder signature mentioned above: In cases of fraud, including someone using a stolen credit card number or a spouse “borrowing” a card number, different rules apply. And it is in these cases, as well as the cases where the cardholder claims the property is not what they expected (dirty, broken hot tub, etc.), that being the MOR is not enough. Here you need a Processor/MSP who is not only experienced in applying chargeback regulations in general, but also in the vacation rental space in particular.

5. Ensure you have the Consultative Support you need

There are over 120 different chargeback reason codes, and each reason code applies differently to each industry type. Make sure you choose a processor who knows how to interpret the 869 page Visa chargeback regulations and how to apply those requirements to the VR space, who can offer guidance on the verbiage to use in your rental agreement that best protects your business, and who will take the time to provide personal analysis and counsel for each dispute you may receive.

 

Updated Chargeback Information Relating to COVID‐19

As of 4/6/2020, the card brands have not made any adjustments to the chargeback rules or timeframes to accommodate the COVID‐19 pandemic. They maintain that merchants are ultimately responsible for issuing a refund to the cardholder when the merchant has cancelled the service. Merchants can offer a credit or voucher for future use if that is acceptable to the cardholder but should process a refund promptly if the cardholder declines the merchant’s offer.

Outlined below are the two most common chargeback codes used to‐date by issuing banks to justify COVID‐19 cancellation disputes, and how you can best protect yourself against them:

Cancelled Services/Credit not Received

  • Used when the guest cancelled and is expecting a refund, even if they were in violation of your cancellation policy.
  • Best chance of reversal will PROVE the guest agreed to your cancellation policy and cancelled outside of it.
    • Guest signatures and/or initials are within 1” of your cancellation policy
    • Proof the guest had to click to agree to your cancellation policy online to complete the booking
    • Documentation showing the date the guest attempted to cancel

Services not Rendered/Provided

  • Used when the guest participated in the transaction then claims they did not receive the services because the merchant was unwilling or unable to provide it.
  • Best chance of reversal will PROVE the guest completed their stay or agreed to your cancellation policy and cancelled outside if it.
    • Guest signatures and/or initials are within 1” of your cancellation policy
    • Proof the guest had to click to agree to your cancellation policy online to complete the booking
    • Documentation showing the date the guest attempted to cancel

In anticipation of these chargebacks increasing due to COVID‐19 cancellations, Visa recognizes the significant burden on the merchants, and has issued a statement regarding their intent to resolve disputes fairly and with consideration given to the unprecedented situation merchants find themselves. Without technically changing chargeback regulations, they’ve recommended the following:

  1. If a cardholder purchased services and the merchant cancels due to a government prohibition of providing the service paid for, the cardholder should not have a right to dispute the transaction and receive a refund.
  2. If a cardholder is unwilling or unable to use the services made available by the merchant, who has fulfilled its obligations to provide the service and has properly disclosed its terms and conditions, the cardholder should not have a right to dispute the transaction and received a refund.

While we are very early stages of the fallout of this pandemic, it appears Visa is attempting to clarify that if a merchant cancels the reservation, funds should be returned to the cardholder. However, if the cancellation is due to government access prohibition, no refund should be due. Ascent Processing is

hopeful that this will indeed prove to be the case, become a permanent adjustment to the Visa regulations, and be adopted by MasterCard, American Express, and Discover. Please note that it is still the merchant’s responsibility to respond to each dispute received with the pertinent information and documentation to prove their case.

With estimates of an upcoming 20% or higher unemployment rate due to the current medical and financial conditions, one can only imagine how many cardholders will attempt to dispute otherwise valid transactions in order to reduce their own debt and monthly expenditures. In anticipation of this, Visa has modified their processes to include velocity tracking of chargebacks coming from individual issuing banks across all merchant types. Their intent is to intercept as many invalid chargebacks as possible before they get to the merchant, but their ability to manage this on a case‐by‐case basis is limited.

 

BOTTOM LINE:

To maintain the most control over your payments during this extraordinary time, be flexible and offer your guests solutions that satisfy their needs.

Stay safe out there, friends.

Airbnb to pay $250M to hosts for canceled bookings: “We want to fix this.”

By
Amy Hinote
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8

In a call today, Airbnb CEO Brian Chesky apologized to its hosts/suppliers for abruptly canceling March bookings in response to COVID-19 with no notice to its host community. “I’m sorry that we didn’t consult you as partners,” said Chesky. “We want to fix this.”

However Airbnb also announced it will allow guests to receive full refunds for trips starting on or before May 31 that were booked prior to March 14 as the company continues to struggle through the coronavirus’ impact on the travel industry. 

Along with the apology, Chesky announced four actions Airbnb is taking to provide relief for its hosts/suppliers.

1. $250M Host Relief Fund

Airbnb has created a $250 million USD Host Relief Fund to pay hosts for reservations that Airbnb canceled with no notice, saying, “Airbnb will pay 25% of what you would’ve received for a cancellation based on your cancellation policy.” According to the Airbnb community page, here is how it works:

For a reservation to be eligible under our extenuating circumstances policy, it must have been booked on or before March 14 with a check-in between March 14 and May 31, 2020. If a reservation is covered:

  • Guests will be able to cancel for a full refund for COVID-19-related circumstances.
  • From our $250 million USD Host Relief Fund, Airbnb will pay 25% of what you would’ve received for a cancellation based on your cancellation policy. For example, if you would normally receive $400 USD through your cancellation policy, we’ll pay you 25% of that—or $100 USD.
  • We’ll send an email with more details in early April to hosts who are getting a payout. Future payments from the fund will be made on a monthly basis to hosts with qualifying cancellations.
  • This policy will also apply retroactively, including any cancellations you may have had since March 14.

For reservations booked on or before March 14 with a check-in after May 31, we recognize there may still be uncertainty. In the coming weeks, we’ll be asking hosts and guests to revisit these reservations and choose to either cancel or re-commit to the reservation.

Finally, for any reservations booked after March 14, your cancellation policy will be in effect as usual and COVID-19-related extenuating circumstances will not apply.

You may be wondering about the importance of March 14. In response to the WHO declaring the disease a global pandemic, that’s the date we announced coverage under our extenuating circumstances policy for situations related to COVID-19.

2. $10M Superhost Relief Grants

This Superhost Relief fund started with Airbnb employees and provides grants, up to $5K.

“Because communities support each other in times like these, Airbnb’s employees have donated $1 million from their own pockets to kickstart a fund for hosts struggling to make ends meet. Airbnb’s founders are also personally contributing $9 million. We’re here to help you weather the storm, and we’ll get through it together. If you meet the eligibility criteria, we’ll invite you to apply and start sending out grants in late April 2020.”

3. Guests will be able to send Hosts a Personal Contribution

Starting in April, Airbnb is creating a way for previous guests to send financial help to hosts. They can send hosts a note and attach a contribution if they would like to show appreciation for hospitality and help out hosts they’ve stayed with in the past. 

“Just a few weeks ago, our global community was bringing more than 2 million people together every day. Collectively, you’ve made many millions of people feel at home. And thousands of them have told us how grateful they are for your flexibility—so we’re making it easy for them to help. We’ll reach out to guests who’ve stayed with you recently and left 5-star reviews to ask if they want to send a note and a contribution in connection with a previous reservation. You will receive 100% of any guest contributions.”

4. For US hosts, Provisions in the government stimulus bill

Language in the CARES act that allows hosts to take advantage of relief through small business loans and grants. 

“This is just a start,” Chesky added, saying that Airbnb is working on “building a number of new programs, new ways to drive demand to you to help you build your business.” 

For example, he said that a team is looking at travel insurance options.

Understanding Aid Available through the Paycheck Protection Program for Vacation Rental Managers

By
Brooke Pfautz
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8

A Simple Guide to Help Vacation Rental Managers Understand Aid Available through the Paycheck Protection Program

Undeniably, the vacation rental industry has been absolutely shaken as a result of the spread of COVID-19. Companies are hurting badly, and I’m seeing it first-hand. Many are furloughing or laying off employees; some have gone dormant; and others have already closed their doors. If the restrictions and lockdowns on travel continue, many more vacation rental businesses will not survive. Fortunately, the government has come together to approve several aid packages to help small businesses in our industry.

These programs include the Economic Injury Disaster Loan (EIDL), the Families First Coronavirus Relief Act (Families First), the Coronavirus Aid, Relief, Economic Security (CARES Act), and state-based programs.

By far, the most impactful aid for vacation rental managers is a section within the CARES Act: the Paycheck Protection Program.

 

What is the Paycheck Protection Program?

The Paycheck Protection Program (PPP), formed under the CARES act, is a $349 billion program that provides small businesses with cash-flow assistance through 100-percent federally-guaranteed loans. The best part . . . all or part of the loan may be forgiven.

Highlights

  • Businesses can borrow money for payroll, health care benefits, employee compensation, mortgage interest, rent, utilities, and interest on debt.
  • All or a portion of loans may be forgiven as part of a process that incentivizes companies to retain employees.
  • Loan amounts up to $10 million
  • No collateral required
  • No personal guarantee required
  • Interest rate not to exceed 4 percent (Treasury Dept currently has it listed at 1.0%!)
  • Loan term up to 2 years (no prepayment penalty)
  • Payments can be deferred from 6 months to 1 year
  • Not taxed on forgiveness
  • Free to apply

Who Qualifies?

Pretty much everyone in the vacation rental industry qualifies. PPP loans are available for businesses with no more than 500 employees, and companies must have been in operation as of February 15th, 2020. 

Borrowers do not need to demonstrate actual economic harm in order to qualify. Instead, they simply need to make a series of good-faith certifications, principally that current economic conditions necessitate the loan to support ongoing business operations, and that the funds will be used to maintain payroll and address other covered expenses.

What can I use the funds for?

The main idea behind the PPP is to retain employees. The funds can be used for payroll and commission payments, group health care benefits/insurance premiums, mortgage, rent, utilities, and interest on any other debt obligations that were incurred before the covered period.

How much can I get?

Businesses can receive roughly 2.5 months of payroll costs.

Payroll costs in this case are defined as salaries, sick leave, separation agreements, insurance premiums, retirement benefits or payment of state or local tax assessed on the compensation of employees.  For example, if you average $500,000/year in the payroll costs above, you can receive a loan for just over $100,000 ($500,000 / 12 = $41,667 x 2.5 = $104,167).

I’ve created an online calculator to help calculate the amount you can get and how much will be forgiven.

Click here to try it for yourself.

Can I get some or all of my loan forgiven?

Yes. There is a component in the PPP that businesses would be eligible for forgiveness on portions of their loans if used for certain costs like payroll, mortgage, rent, and utilities that are incurred during an 8-week period starting on the loan’s origination date. The amount of forgiveness is based on the number of workers retained (or rehired) vs. the same period previously.

However, it is important to note that the amount of loan forgiveness will be reduced if salary cuts exceed 25 percent.

What about the SBA Economic Injury Disaster Loan (EIDL)?

EIDL Loans are provided directly from the Small Business Administration (SBA), and loans are available up to $2M. Rates are 3.75 percent, and terms are available up to 30 years.

EIDL Loans require:

  • Pledged collateral for loans in excess of $25,000
  • SBA-acceptable credit history 
  • SBA-determined ability to repay
  • Personal financial disclosure and tax returns
  • Please note . . . it is still unclear at this time if you can take loans under both EIDL and CARES PPP. We are waiting for guidance from the SBA

How do you apply?

Loans will be available immediately through SBA 7(a) certified lenders, which include banks, credit unions, and other financial institutions. The deadline to apply for the Paycheck Protection Program is June 30th, 2020.

SBA Lenders will begin taking applications for businesses and sole proprietorships April 3rd and for independent contractors and self-employed individuals April 10th. 

For more information, contact Brooke Pfautz, founder and CEO, Vintory at Brooke@Vintory.com or 410.458.3900. You can find us (and a bunch of free advice) at Comparent.com or Vintory.com 

 

Resources

PPP Application

PPP Information Sheet from Treasury Department

Treasury’s Website for CARES Act

Treasury Interim Final Rule

SBA Webpage Dedicated to the PPP

SBA Webpage Related to COVID-19

US Chamber of Commerce Summary of PPP

US Senate Committee on Small Business & Entrepreneurship – Guide to the CARES Act

CARES Act – Click here to read the bill in its entirety 

List of the 100 most active SBA 7(a) Lenders

USBank Paycheck Protection Loan Program Inquiry Form

To Apply for SBA’s Economic Injury Disaster Loan (EIDL) Program 

SBA Paycheck Protection Program Online Calculator

Monthly Revenue Scenarios across Vacation Rental Markets as Travel Restrictions Extend

By
Amy Hinote
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1

How financially exposed are vacation rental managment companies to travel interruption caused by the spread of COVID-19? The answer varies across vacation markets and depends on how long disruption continues.

The leisure-based vacation rental industry is characterized by its seasonality. For example, ski markets were approaching the end of their season, while beach markets were just beginning theirs. With Spring Break and Easter holidays, many markets were heavily exposed during March and April. However, May represents only 1 to 11 percent of total annual revenue across all vacation rental markets. 

The following tables show the percentages of 2019’s total annual revenue realized during the following periods: 

  • March through May
  • March through June
  • March through July
  • March through August

The longer travel is disrupted, the more significant the impact will be. According to the following data, most vacation rental markets will be able weather interruption through June. If travel is further disrupted through July and August, we can expect to see a changed landscape across the vacation rental industry.

The following data sets were provided by Key Data. Download the pdf with all monthly percentages for vacation rental markets listed below. 

Revenue as a Percentage of 2019 Total Revenue: March through May, June, July, and August

 

Beach Vacation Rental Markets

Mountain Vacation Rental Markets

Urban and Resort Vacation Rental Markets

Click here to see the entire data set.

Vacasa issues new statement on furloughs and April reservations

By
Amy Hinote
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1
Vacasa vacation rental team makes Inc Top 10 fastest growing companies

*This story has been updated from the previous version as we received new information from Vacasa.

Vacasa Statement from Sarah Tatone, head of communications:

Over the past few weeks, coronavirus (COVID-19) has impacted individuals, communities and businesses across the globe. Every day, new travel restrictions and regulations are enacted. As of today, 36 U.S. states have “shelter in place” orders or similar mandates that limit or prohibit use of vacation rentals. As a result, we are unable to operate in many of the markets where we care for vacation homes. In response to the business impact we’re experiencing, we have made the difficult decision to furlough many of our valuable team members for approximately 90 days. We will pay 100% of the medical, vision and dental premiums for our participating furloughed employees and families. 

We still have core members of our local teams caring for our homes, while also taking extra precautions to keep each other safe and healthy. In markets not impacted by travel restrictions and regulations, Vacasa will be honoring existing reservations, and continuing to accept new reservations. In markets that are temporarily shut down, we are securing each of the homes we manage upon the final guest’s departure and closing it for the duration of the local regulation. We are continuing to monitor this evolving situation closely, and we are adjusting our policies accordingly. 

Once this crisis passes and demand for travel increases, we have every hope to bring the team back and continue on our path towards growth. During this time, we are keeping the health and safety of our guests, homeowners, employees and communities as our top priority. We remain committed to doing what we love: providing Vacasa homeowners and guests with reliable care.

As a result, many marketing, data, and on-the-ground staff members have been furloughed for 90 days. 

Stay Alfred closes all properties for 8 weeks

By
Amy Hinote
-
8

According to Spokane’s The Spokesman, “Spokane Valley-based Stay Alfred is closing its properties nationwide for eight weeks, beginning April 1, to help reduce the spread of COVID-19.”

“While we regret the impact this decision will have on our guests and our teams, we are seeking to minimize that impact in every possible way. All stays booked for this period will be automatically refunded in full,” Jordan Allen, CEO of Stay Alfred, said in a statement. “We at Stay Alfred look forward to serving our guests again in brighter days ahead.”

According to an inside source, Stay Alfred walked away from 17 apartments in downtown Savannah that the company rented under a master long-term lease. Companies like Stay Alfred, Sonder, Lyric, and Domio rent apartments in urban areas under long-term leases (or master leases) and then furnish and provide these apartments as short-term rentals for visitors. With a short-term drop in travel demand, a projected transformation in business travel, and an anticipated shift to leisure markets for vacationers, these urban providers are expected to face a bumpy road ahead. 

According to The Spokesman, “Through a company spokeswoman, Allen declined to comment on if Stay Alfred would offer refunds to guests who booked reservations prior to the closing date. He also declined to say how many employees would be affected by the 60-day closure, but indicated the company will continue to provide health benefits during the furlough period.”

“Allen said the company, known for popularizing the concept of upscale travel apartment rentals in walkable downtown locations, plans to rehire employees after the furlough ends.”

Someone Just Hit Pause

By
Matt Ward
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0

Someone just hit pause on the vacation rental industry…and the world.

I never thought in my lifetime that I would witness the global economy come to a screeching halt. It did.

The Minnesota Safety Council says that a train going 55 MPH takes 200 feet to stop in ideal conditions. For the last few years, the economy, and more specifically, vacation rentals were moving at a much higher rate of speed, and we watched that train stop on a dime. To the point that it was excruciatingly painful.

However, as we learned as kids, with every action there is an equal and opposite reaction. We are now going to be witness to “Bill and Ted’s Excellent Bounceback”. I’m sure if they named it, it would be their “most excellent bounceback”.

The stock market will come back.
Businesses of all types will come back.
Restaurants will come back.

And Vacation Rentals will come back.

And this time, we will all come back with a vengeance.

We will rise from the ashes, better than before, having learned valuable lessons. We will rise above this like we did in the aftermath of 9/11 and we will be better than before!

We will not overhire.
We will not overspend.
We will not underestimate the value of cash reserves.
We will be better managers, leaders, and colleagues.
We will value our personal and professional relationships so much more, because we see that those relationships are the ones that pull us through the difficult times.

Relationships are in fact the currency by which we live now, yet we don’t often realize it. As we take stock in what we have now, what’s left, and what we need to rebuild, I hope we realize the true nature of the relationships we have and what they mean to us and our business.

I think Darik Eaton, owner of Seattle Oasis Vacations Rentals, summed it up well when he shared with me what occurred when he called his owners. He said “When reaching out to our management clients I was mentally bracing for impact. However, the relationships built over time are stronger than the disease and the economic impact both on our companies, and our owners.”

As a referral consultant, I see so often with clients that they put off the little things. The small touches that impact others in positive ways, and they often don’t put a great deal of value in them. That is until they need to lean on that contact. At that point, it’s too late.

If you are reading this now, and you think it’s too late, consider this . . . Now is the time to start spending just a tiny moment of your day and reach out to someone in your industry and help them when they may need it most. These tiny moments are deposits of trust in your contacts, and they grow over time, much like compound interest. Start making small, daily or weekly, trust deposits. As that trust compounds over time, you’ll be able to lean on your network of contacts to make a withdrawal in the future.

Use your time wisely after you are out of triage mode so that when it comes time to hit the Play button, you’ll be ready and rippin to go!

Let’s live each day, with a smile on our face, and pep in our step, and the outlook and belief that this industry will rebound better and stronger than before.

#WeAreVR . . . let’s get that trending!

Until next time, don’t forget to Live Happy, Smile A Lot, and Virtually #High5 Everyone Around You. 

The Importance of Deep Cleans – Let’s Get Real

By
Natalee Pfeifer
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6

Since submitting this article, COVID-19 has surfaced and ravaged the globe, the economy and this industry. Now, more than ever, it is the property managers ultimate and ethical responsibility to ensure every workspace and rental home is thoroughly cleaned and disinfected. It may actually be time to bring in the blow torches, folks. Not really…but maybe? COVID-19 has a surface life of up to 17 days. This is a daunting new discovery and one that must be taken seriously in your workplace and rental inventory, to reduce the spread of this virus and to provide a safe and virus-free environment. Therefore, it is strongly recommended that deep cleans, or additional deep cleans if the home has been occupied since the initial clean, must be completed prior to the arrival of returning guests.

With travel being severely limited – or not allowed at all – now is the time to prepare for the return of your guests. Now is the time to thoroughly clean and disinfect your workspaces. The simple act of cleaning may not be enough, according to the CDC & EPA, here are some key term differences to keep in mind:

Cleaning removes germs and dirt from surfaces. You can use soap and water to clean surfaces. This doesn’t always kill germs, but removing them lowers their numbers. It’s suggested to clean surfaces before you disinfect them.

Disinfecting kills germs on surfaces. Disinfectant chemicals are stronger than soap but do not necessarily clean visibly dirty surfaces or remove germs. Killing germs lowers the risk of infection. To properly disinfect, products need to remain on a surface for a specific amount of time — usually 3 to 5 minutes.

Sanitizing also kills germs, but disinfecting kill more of them. Some products are capable of doing both, but disinfecting requires a bit more work. Still, sanitizers effectively lower the risk of infection.

You may be asking, well who is going to pay for all of this amidst economic uncertainty? That is a valid question. Owners may be less likely to agree to cover the cost of additional cleanings. Here are some suggestions for lightening the burden.

CDC Guidelines – share CDC guidelines on disinfecting a home (as the CDC recommends we all behave as if we are infected/carriers, so should we in respect to the homes we care for).

Keep it in-house where possible – Enlist salaried staff who may have a lightened load due to the pandemic. Ensure they have the right equipment and the proper PPE (personal protective equipment).

Offer a payment plan – Consider allowing a payment plan for owners who are concerned about costs with pending economic uncertainty.

Update your PMA (if you haven’t already done so) – Experts agree, this virus will come in waves. Until a vaccine is available, we should expect the resurfacing of COVID-19. It would be wise to include mandatory deep cleans as part of your Pandemic strategy.

Ethical responsibility – this one should be a no-brainer. COVID-19 should be treated as a major extenuating circumstance. Everyone has a role to play in staunching the spread of this virus, a deep clean (or additional deep clean) is an important process and should be the bare minimum process offered for all returning guests.

Guests will expect it! – Now, more than ever, guests are going to expect and require knowledge of a properly cleaned and sanitized home prior to their return or booking. Promote your efforts! Enlist marketing to capture your staff cleaning and disinfecting. Educate them on the differences between cleaning, disinfecting, sanitizing (it may help them in their own homes). Show off your efforts and get them excited about returning once this all clears.

Keeping COVID-19 at bay is a responsibility for every one of us. Now is the time to prepare. The uncertainty is legitimate, but consider a realistic timeline once this all clears. You will have guests who will require time to get their lives back in order before they even consider taking their trip. You will have guests who are distressed by being cooped up they will need their respite away from their homes. No one can predict these things for sure, but you can count on your guests expecting a white-glove, maybe even test kit in hand approach to renting with you once this all clears.

 

This article can easily be filled with dozens—no, hundreds—of reasons why the deep clean is important, and we can outline every facet of what should be touched during said deep clean. However, in 2020, it’s time to take a different approach to this crucial aspect of professional property care. The deep clean is not simply ensuring every nook and cranny is touched, disinfected, scraped, magic erased, laundered, power washed, blowtorched, and Febreezed on an annual/bi-annual/quarterly basis; it is quite literally the heart and soul of professional property care.

OK, so blowtorches aren’t necessary, but are you paying attention yet?

This single event is checking the pulse of your business. Yes, really.

The Gunk Is Real

It is not reasonable or realistic to expect absolute perfection from your staff on a changeover clean. A changeover or turnover clean focuses on disinfecting the kitchen, bathrooms, floors, linens, and surface areas. It is helpful to toss in a weekly rotation of deep cleaning tasks, such as dusting ceiling fans, baseboards, knickknacks and décor, and AC vents, but we simply don’t have enough time, manpower, or resources to justify a full deep clean every week.

For example, a home that sleeps 12 people with a 16-week rental season will host about 200 people. A vacation home is lived in (much) harder than a residential home. Of those 200 people, how many do you believe will take the time on their vacation to thoroughly wipe down the blender after they have splattered it while making margaritas? How many will take the time to remove every crumb from the utensil drawer they were just noshing over? And what about the crumbs from the pizza they just sliced that fell into the burner pans and beyond? Do you realize that most people don’t even know you can lift up the range cooktop and clean under it?

Honestly, the gunk is real. As vacation providers and memory makers, can we even be mad about this?

The answer is no, we want them to come gunk up these homes because that gunk is money in the bank for us and our owners. That gunk is employment for someone; that gunk helps the economy. We just don’t have time to deal with it on turnover.

Checking the Pulse

While the deep clean gives us a chance to “de-gunk,” or clean to perfection, it also gives us a chance to check the pulse of many facets of the business—and it begins in the home.

Inspect the property thoroughly for those nice-to-have upgrades, the strongly encouraged upgrades, and the critical upgrades.

Use this time as a great opportunity to plan a replacement schedule with your owner, as well as any necessary renovation plans. Having a minimum standard policy in place for your rental program holds the owner accountable for any necessary upgrades.

Upsell preventative maintenance plans, preventative pest service (especially in your fur-friendly properties), fall or spring maintenance tune-ups, upholstery and carpet cleaning, power washing windows and decks, and, of course, the deep clean.

This process calls for effort across multiple departments and offers the critical opportunity for relationship building with your owners. It is not a good idea to have your owners deep clean the property themselves, so if it isn’t in your PMA yet, put it in there today. It is beyond embarrassing having to criticize the owners’ hard work, and it isn’t any less embarrassing on their end. Just remove that uncomfortable exchange and keep your deep cleans in-house.

The time for deep cleaning is circumstantial to your business and your local industry; however, it is necessary that this process is done, at the very least, on an annual basis.

Deep cleans also keep your staff employed during slow seasons, if this applies to your business. Planning a successful deep cleaning effort across your inventory of properties is quite the logistical feat. It is important to communicate with an owner prior to scheduling a deep clean. Completing a deep clean right before a construction crew enters the home and erases your efforts is not the perfect scenario. Ideally, a deep clean is performed just prior to or following the rental season. If a home is particularly well used, a mini-deep clean during the season is also necessary.

Pricing Deep Cleans

Pricing a deep clean can be tricky, and many factors must be considered.

How long should the deep clean take? The process is a strenuous and lengthy one. Expect a deep clean to take anywhere from a full day to a week, depending on the size of the property and how many days or weeks it was rented.

Are you paying your cleaners hourly or piece rate?

Will your cleaner be laundering linens on the property or bringing them back to an in-house facility? Will they be outsourced, or both in-house and outsourced? Even with an in-house laundry facility, bulky and specialty comforters that require dry cleaning will need to be sent to a dry cleaners, so you should factor in that cost, as well as the cost of extra trips to and from the dry cleaners. Or you can simply bill it directly to the owner.

What will your market bear? A property management company should expect to charge anywhere from one-and-a-half to five times the amount of a typical turnover cleaning fee. This approach may not result in a solid return on investment (ROI) if your cleaning fees are on the low end, so you may want to consider creating a formula to calculate an hourly fee.

For instance, if you charge $20 to clean a small apartment on changeover, even utilizing the five-times multiplier, then this would not result in a solid ROI, especially if your cleaner is earning an hourly wage. Even a small apartment can end up taking anywhere from five to eight (or more) hours to deep clean (including multiple trips to launder linens and comforters, especially if no on-site laundry facility is available). Pull out a calculator and crunch some numbers to ensure you can pay your cleaner a fair wage for a more laborious job, cover the cost of materials and/or tools used, launder linens, and turn a profit. You are running a business after all.

As more and more guests skip the check-in office and head straight to the property, the cleanliness and appearance of the property are the first impressions those guests have of your company. The first impression is critical and sets the tone for the rest of their stay. It is no secret that a sparkly clean and well-cared-for property is quite simply how a professional property manager stays in business. Guest expectations are at an all-time high, as are your guests’ options for leaving reviews and sharing their experiences in an ever-connected world. Thus, the deep clean should be handled as mission critical.

Panel Discussion with Vacation Rental Leaders about Action Plans and Considerations: *Recording Available*

By
Amy Hinote
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1

“This is the storm no one predicted.”

VRM Intel hosted a panel discussion on Tuesday, March 24, to discuss current strategies, actions PMs are taking now, cancellation policies and future considerations.

Mike Harrington, CEO, Carolina Retreats; Amy Gaster, CEO, Tybee Vacation Rentals; Ben Edwards, CEO, Weatherby Consulting; and Robin Craigen, CEO Moving Mountains

Latest Data Show Sharp Drop in Forward-Looking Occupancy for Vacation Rental Companies

By
Amy Hinote
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0

Over the last two weeks, booking pace in the US leisure-based vacation rental industry–for stays through July–has seen a significant slowdown as travel restrictions due to COVID-19 have spread all around the globe. 

According to market data provided by Key Data, year over year (YOY) adjusted occupancy as of March 23,  2020, declined as much as 37 pecent (Hawaii) for April and as much as 13 percent (California) for June, compared to adjusted occupancy for the same periods as of March 23, 2019. 

March & April Booking Pace: YOY Adjusted Occupancy Percentage Change — as of March 5, March 13, and March 23:

In the charts below, you can take a deeper dive into YOY booking pace acitivity for Hawaii, Oregon, California, Colorado, the Gulf Coast, and the SE Atlantic Beaches. 

How to read these charts:

In the charts below you will see each region followed by an “as of” date (for example, “Hawaii: As of March 23rd”). This means that that the two metrics—adjusted occupancy rate and average stay value—represent reservations on the books as of March 23rd, 2020, compared to reservations on the books as of March 23rd, 2019.

The data sets compare booking pace for 2019 and 2020 as March 5, as of March 13, and as of March 23. 

Adjusted Occupancy measures paid occupancy, or nights available to rent. For example, adjusted occupancy excludes owner holds and maintenance holds.

The Average Stay Value measures the average booking total for reservations for 2019 and 2020 as March 5, as of March 13, and as of March 23.

Download the pdf.

Data provided by Key Data Dashboard, March 23, 2020

 

Florida Governor Issues Executive Order to Quarantine Travelers from NY, CT and NJ

By
Amy Hinote
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0

Florida Gov. DeSantis today issued an executive order directing anyone flying into Florida from an area with a substantial community spread of COVID-19, “to include the New York Tri-State area (Connecticut, New Jersey, and New York),” to isolate or self quarantine for 14 days. The order takes effect at 12:01 a.m., March 24, 2020. 

Executive Order:

“Governor Ron DeSantis issued Executive Order 20-80, directing all persons whose point of departure originates from outside the State of Florida in an area with substantial community spread, to include the New York Tri-State Area (Connecticut, New Jersey and New York), and entering the State of Florida through airports to isolate or quarantine for a period of 14 days from the time of entry into the State of Florida or the duration of the person’s presence in the State of Florida, whichever is shorter.”

Read the entire executive order below. 

EO 20-80 by ActionNewsJax on Scribd

Help Vacation Rental Companies Get Federal Relief: A Message from VRMA Pres Toby Babich

By
Amy Hinote
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0

We’ve been receiving calls and emails asking how property managers can petition for federal assistance for vacation rental management companies.

Below is a letter from Toby Babich, president of the Vacation Rental Management Association (VRMA), addressing this. The VRMA is drafting a series lettters, and Babich is asking you to distribute thes letters to colleagues and local, state, and national officials. 

How you can help:

  1. Read Toby’s message below.
  2. Go to https://www.vrmaadvocacy.org/covid19 to learn more.
  3. Download the letter to Congress
  4. Share this letter with your colleagues to get the word out
  5. Share this letter with local, state and national representatives, especially those with whom you have relationships or influence. 

 

Message from Toby Babich, VRMA

Vacation Industry Leaders,

Times are desperate for our industry, and we need your voice to join with a chorus of others to ensure recovery of this industry is our advocacy priority at the local, state, and national level for the duration of 2020.  Attached is the initial communication to national lawmakers from the VRMA, and we expect a series to follow as the situation develops.  I am asking you to distribute this, and future letters to anyone and everyone in your network both within the industry, and most specifically to any local, state, or national governmental representatives you may have influence with.  I urge you to take action right now, and support the collective power of this grassroots effort to ensure the vacation rental ecosystem remains a topic of any recovery discussion we are able to influence.  The rebuilding of our industry must begin now, with a focus on recovery funds, and government assistance. 

Our industry needs your voice, support, and influence now more than ever.

Thank you, and please let me know if I can assist in any way.

Download the letter here.

Toby Babich

President

Vacation Rental Management Association

Vacation Rental Management Companies Adapt Cancellation Policies to Extend Rebooking Dates and Offer Credits

By
Amy Hinote
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11

For small business owners, there is little that is more difficult than being faced with a circumstance in which they cannot make their customers happy.

Business owners and managers are facing that situation today, whether it is the grocery store clerk who doesn’t have bread, the convenience store that doesn’t have toilet paper, or the call center agent that can’t provide a cash refund. Banks are closing branches stranding customers from accessing their accounts for things that can’t be done online, doctors are having to postpone surgeries, salons are having to cancel their regulars’ appointments, and hotels are not providing refunds for events and groups that cannot be held—which is why many events have been postponed instead of canceled.

Like airlines, most vacation rental companies are standing by their cancellation policies by not offering cash refunds, but they are moving quickly to extend rebooking dates, eliminate change fees, and offer their customers credits towards future bookings. 

 

Waived change fees, extended rebooking dates, and credits for future stays

In light of the events surrounding the COVID-19-related travel restrictions, both airlines and vacation rental companies are trying to work with customers by relaxing change fees and extending dates for rebooking.

Delta, for example, has adapted its cancellation policy during this time as follows:

  • You can cancel your ticket and the value of the ticket will become an eCredit for future use. If you’re uncertain of future travel plans, we recommend cancelling and rebooking once your new travel plans are confirmed.
  • Even if you’re not able to reach us before your departure  and  don’t take your flight, all changes will be processed, and your ticket number automatically becomes an unused eCredit  within 24 hours. 
  • We’re extending any Delta ticket for travel in March or April that is set to expire before June 30, 2020, to permit travel until December 31, 2020. You can rebook and fly with these tickets until the end of this year.

Turnkey Vacation Rentals also relaxed some of its cancellation restrictions, offering its guests 18 months to rebook:

  • Like Southwest, all non-refundable payments for bookings can be used as a credit for another booking at that home in the next 18 months. And you don’t need to make that booking right now; you can book it at a later time.
  • For bookings more than 30 days from check-in, TurnKey only collects a 10% non-refundable deposit. We are adopting the Southwest approach here as well, making that deposit available as a credit if guests cancel before the 30-day mark (when full payment is due). That can be applied to a booking in the next 18 months. 

In a similar way, Vacasa, the largest vacation rental management company in North America, also moved to open credits for future stays:

 

Reasons for existing cancellation policies 

While COVID-19 has presented difficulty in handling call volume and working with guests to honor cancellation policies, it is important to remember that there are valid reasons these policies exist in the vacation rental industry. 

First, the average booking window for vacation home rentals is between 57 and 138 days in most US leisure markets. If a stay is canceled less than 30 days before arrival, it is very difficult for rental operators to find new guests for that property. For example, a 4-bedroom home is very hard to rebook in less than 30 days since most families and groups who require more than 4 bedrooms plan their stays over 8 weeks in advance. 

Second, these homes are individually-owned properties. As a result, vacation rental managers have a fiduciary responsibility to the homeowners they represent. There is risk on both sides of the contract. When a guest enters into a contract to rent a vacation home, the guest is able to secure the home they want for their vacation, and the manager blocks out those dates, taking away the ability for anyone else to book that individual home. The guest is then able to cancel up to a certain point, even though the management company has a significant less likelihood of rebooking the home rental if it is canceled. In turn, the guest takes on the risk that some bizarre, unknown personal, regional, or national event might occur that would keep them from being able to—or wanting to—go on their vacation. Many companies offer travel insurance to mitigate these risks for both guests and homeowners. 

Third, management companies have to be consistent with the contractual agreements they’ve entered into. If management companies offer cash refunds to some guests while not offering it to others, these companies face potential liability for unfair business practices.

In addition, when trying to show lost revenue for financial assistance or cash relief, voluntarily ignoring contracts by handing out cash refunds can hurt the management company’s ability to secure assistance or funding.

 

Airbnb’s Adaption of Extenuating Circumstances Policy is costing its suppliers 

When a management company or homeowner lists their homes on Airbnb, they have the option to select from a menu of cancellation policies—ranging from Flexible to Super Strict 60 Days. Note that in all choices, Airbnb’s service fee is non-refundable.

Last weekend—with no notice to its suppliers—Airbnb made a unilateral decision to override these set cancellation policies by adapting its Extenuating Circumstances policy, saying:

In response to the extraordinary events and global disruption to travel caused by COVID-19, today we are announcing updated coverage under Airbnb’s Extenuating Circumstances policy. Airbnb’s Extenuating Circumstances policy allows hosts and guests to cancel eligible reservations with no charge or penalty. This policy now applies to existing reservations for stays and Airbnb Experiences made on or before March 14, 2020, with check-in dates between March 14, 2020 and April 14, 2020.

Airbnb procatively sent emails to guests offering 100% refunds (minus the Airbnb service fee, of course, which would be credited on a future stay). This offering negated existing cancellation policies set by hosts (homeowners and managers). After pushback from its host community, on Sunday, Airbnb declared it would also refund its service fee.

We fully expect to see a class action against Airbnb, as management companies and owners are carefully documenting all of Airbnb’s actions, resulting cancellations, and changes to its policies and its website verbiage with no notice to suppliers.  

To stop the bleeding with Airbnb, vacation rental management companies are blacking out dates on Airbnb’s website. Without knowing if Airbnb will decide to honor reservations made on its site, some large management companies are looking to reduce exposure by limiting availability on the site for the near term.  

Many guests are just now learning that Airbnb is only a website that lists home rental options. Airbnb does not own these homes, doesn’t service these homes, and doesn’t have liability for these homes. When Airbnb refunds a guest, it is refunding the homeowner’s money, not its own. The only money Airbnb is losing is the service fee, and it is only refunding that for bookings that start through April 14. 

 

Vrbo Encourages “a credit for full value and flexible stay dates within the next year”

In contrast, Vrbo, with more experience in the vacation rental industry, is honoring its homeowner/manager cancellation policies. Vrbo’s policy states:

If you need to cancel or change an upcoming reservation due to travel restrictions, you can do so within your traveler account. If you are making changes outside the cancellation policy window, please contact the property owner or manager to discuss their cancellation and refund policies. If you do not see a button to cancel your reservation, please contact the property owner or manager directly for assistance. 

The difference between the two companies is largely found in the the makeup of their inventory. Airbnb lists more urban short-term rentals and shared spaces (which are more affected by travel restrictions), while Vrbo primarily lists stand-alone, individual second home rentals in leisure markets. 

This week, Vrbo sent an email to its suppliers “encouraging” them to relax their existing cancellation policies offering to reward suppliers with higher search-order placement (and penalizing “vis-vis”) for offering more flexible cancellation policies. 

According to its Community website, Here’s what HomeAway is doing as part of our COVID-19 Emergency Policy:

HomeAway is refunding 100% of money it makes through traveler service fees when someone must cancel a trip due to COVID-19.

We ask that Homeaway partners (homeowners and property managers) handle cancellations for trips booked before March 13 with stays that fall between March 13 and April 30 in one of two ways (even if those trips are outside of the set cancellation policy):

Option 1 (Default): Offer a credit for full value and flexible stay dates within the next year (at no additional cost) to travelers who can’t take trips now due to COVID-19.

Option 2: If the traveler is unwilling to accept a credit, we advise partners to issue them a refund. If partners are unable to accommodate a full refund, HomeAway expects partners to provide at least a 50% refund if the traveler cancels during this time.

Here’s how HomeAway will enforce the policy stated above:

  • HomeAway will reward partners with additional visibility in traveler searches. The more partners do now for travelers, the more we will reward them moving forward (so a 100% credit/refund will count more than 50% refund).
  • Partners who do not abide by these standards (offering a 100% credit/refund of at least a 50%) will be disadvantaged vis-a-vis those who act within our policy.
  • Any intimidation of travelers (such as suggesting that travel is safer for them than staying home or dismissing the severity of the crisis) will result in permanent removal from HomeAway and Expedia Group.

 

A message to guests

Small businesses around the globe are encouraging their customers to take advantage of credits for future purchases instead of demanding cash refunds. Many local companies will have to shut down if they do not have the cash flow to stay alive until this passes. In travel and tourism, the hashtags #dontcancelpostpone and #postponedontcancel have been trending.

In the vacation rental industry, in particular, jobs in your favorite vacation destination, from Cape Cod to Colorado, from the Outer Banks to Oregon, from Hilton Head to Hawaii, from the Adirondacks to Arizona, and across the world are dependent on having enough cash to survive this. If you really want to help, the most important thing you can do is postpone your trip, instead of canceling. 

For management companies, vacation rental business owners encourage you to contact the Vacation Rental Management Association to petition them to work for federal relief for the vacation rental industry. 

Vacasa announces layoffs, executive pay cuts, and cuts in hours for others

By
Amy Hinote
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3

Earlier today, Vacasa notified employees it is laying off an unspecified number of workers, cutting the hours of others in half, and reducing executive pay.

“With rapidly evolving travel restrictions and closures in popular vacation destinations like ski resorts and beaches, we are seeing a significant decline in reservations and revenue,” Vacasa said in a written statement. “To preserve the longevity of our business, we have to make proactive and significant cost adjustments, including staffing changes across the organization.”

Vacasa added that interim CEO Matt Roberts will take no pay through the end of the year and that other executives will have their compensation reduced by half.

According to the Oregon Live, who first broke the story, “Vacasa had been Oregon’s most promising company in a generation, raising more than $500 million in outside investment that valued the business at more than $1 billion. But the hospitality and lodging industry has been walloped by the coronavirus outbreak, with vacation travel all but ceasing as people seek to protect themselves from infection.”

 

VRM Intel B2B Update for Vendors and Advertisers

By
Amy Hinote
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0

While property management companies are being disrupted by COVID-19, so are the companies that serve them. From technology providers to marketing service providers to distribution and supply companies, the VR vendor community has been impacted, as well. 

We want to schedule a time to share with you what we’re doing at VRM Intel to stay engaged with vacation rental managers in a meaningful way and show you options for places you can help and plug in. We also want to discuss messaging and get feedback from you on how we can help you during this time.

It looks like webinars are cool again . . . so here’s the info:

Please register for VRM Intel Update: For Vendors and Advertisers Only on Mar 23, 2020 12:30 AM CDT / 9:30 AM PDT at:

https://attendee.gotowebinar.com/register/4098227688041758989

After registering, you will receive a confirmation email containing information about joining the webinar.

For Vacation Rental Management Executives: What Do You Need to Do Now?

By
Amy Hinote
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7

Over the past 72 hours, it has become clear that vacation rental managers are facing a much more serious impact from COVID-19 than previously expected. With circumstances changing each hour, company owners and executives are finding it difficult to prepare for the future when the end zone keeps getting pushed further away.

Multiple vacation rental management (VRM) company leaders have contacted us to find out what other managers are thinking and what actions are being taken. Consequently, we reached out to industry leaders who have extensive experience in dealing with crises. Even though the COVID-19 challenge is unprecedented, there are company executives who have weathered 9/11, fires, the BP oil spill, back-to-back-to-back hurricanes, and many other bizarre and unexpected challenges.

While we do not want to overreact, after speaking to experienced VRM executives, there are some concrete strategies enterprise-level property managers can implement to prepare for the road ahead.

 

Be realistic about the timeline

Yesterday, President Trump responded to the question about how long this situation will last, telling a surprised nation, “We’ll see what happens, but they think August, could be July, could be longer than that.”

After speaking with multiple C-level VRMs after that press briefing, there is substantial disagreement about whether or not Trump is to be believed. Some managers believe that “he says things off the cuff all the time” (as one PM described), and it won’t be that long. Others believe Trump’s timeline is accurate.

Whether you are preparing for this to be a 30-day or a 150-day disruption, careful and proactive planning is critical. Each company has its own level of acceptable risk. The strategies below originated directly from experienced enterprise-level vacation rental managers who are determined to weather this storm and ensure the viability of their companies and their communities.

 

1. Expect expanded CDC guidelines and state and local restrictions

The CDC and Trump administration have provided guidelines for US citizens to limit the spread of this coronavirus.

In addition to these guidelines, state and local governments have been putting policies and restrictions in place that directly affect vacation rental companies, including: 

  • Closing of theme parks, public beaches and ski resorts
  • Non-essential travel restrictions, including destinations closing the region to visitors
  • Closing of restaurants, bars, and nightclubs
  • Shelter-in-place mandates
  • Mandatory curfews
  • Non-essential business closings

 

2. Prepare for your team to work from home

It is highly likely that your team will be prohibited from coming to work in the office, if it hasn’t happened already.

Robin Craigen, CEO at Moving Mountains in Steamboat, Vail, and Beaver Creek, Colorado, is packing up and moving his office home today. He shared that he wishes he had prepared for this two weeks ago when guidelines began expanding. He has purchased laptops for employees and is working with his IT provider to establish VPN connections and reconfigure his VoIP network. 

To shift to a remote workforce, team members will require access to email, internet, teleconferencing, limited file sharing, and function-specific capabilities (finance, HR, etc.) from their remote work site. They also require access to Software-as-a-Service (SaaS) applications in the cloud, such as the PMS and Microsoft Office 365.

Craigen advised managers to contact their IT providers immediately to get on their schedule and purchase laptops if your team doesn’t currently have them. Here are some steps to move to a remote workforce.

 

3. Protect cash flow, and do not use advanced deposits to pay expenses

While some states mandate trust accounting, others do not. For many, it is tempting to use advanced deposits (monies collected for future reservations) to pay short-term expenses. The most important advice from experienced mangers is do not do this.

According to Jim Olin, CEO of C2G Advisors and former ResortQuest CEO, “The worst item you can run out of during this crisis is cash. And this includes my suggestion to abstain from dipping into advanced deposits—whether it is legal or not.”

In the past, prematurely tapping into advanced payments for future reservations to pay expenses has been the leading cause of business closings during crisis situations. 

Olin added, “One other suggestion is to constantly analyze your cash flow statement for at least the next six months. Modify it weekly. During several hurricane crises, my CFO did daily cash flow statements since we got very, very tight. In fact, after Hurricane Opal, we got down to $230.66 one day, but we worked our way back up to a multi-million dollar company. Don’t give up, don’t stop sourcing cash, and don’t do anything illegal/stupid.”

 

4. Seek cash now

Review, renew, and expand your credit line now, if possible. And if you don’t have a line of credit, experienced executives strongly advise securing one. 

We are already hearing reports from California of banks “pulling up the drawbridge” (as one PM described) and limiting credit line exposure, so now is the time to work with your lenders to ensure lines of credit are secured, if it isn’t too late.

In addition, Small Business Administration (SBA) loans are available, but they take time; and the demand for these loans is going to increase. Money will be available from speculative lenders, but the cost of those funds is high and will only go up.

“I would highly suggest contacting your bank(s), look at SBA options, search for minority business loans (if applicable), look for the ability secure a line of credit, and any other short-term cash resources.” Olin said. “Make sure you know your NAICS code for your business since—most of the time—financial aid during a crisis is available by NAICS codes.”

 

5. Examine payroll expenses and research unemployment options

After 9/11, the first thing large VRMs did was eliminate overtime and initiate wage freezes and hiring freezes. Since payroll is likely your largest expense, the next step is to reassess the need for seasonal employees and contract employees and look at cutting business hours and employee hours.

You can also explore unemployment options for your current employees. States are offering unemployment benefits for workers affected by the coronavirus. In Alabama, for example, “the requirement that a laid-off worker be ‘able and available’ to work while receiving unemployment compensation benefits has been modified for claimants who are affected by COVID-19 in any of the situations listed. Additionally, claimants will also not have to search for other work provided they take reasonable steps to preserve their ability to come back to that job when the quarantine is lifted or the illness subsides.”

Based on historic performance for vacation rental destinations, when this challenges passes, or “washes through” as President Trump said, travel is expected to rebound quickly. Decisions about payroll will be the most difficult and the most impactful in managing expenses, so experienced managers recommend not putting these off.

 

6. Analyze other expenses, supply chains, and upcoming projects

Eliminate nonessential and recurring expenses, and take a hard look at each line item. One Georgia manager shared that they have eliminated comp stays and employee stays in properties, have stopped extending credit to homeowners for services performed in the home, and is looking at renegotiating vendor contracts and at better managing their supply chains.

With the need to conserve cash, some special projects will need to be put on hold. However, in some cases, if time opens up for your team members, this may be a good time to go forward on special projects like implementing new software, systems, or building a new website. This option isn’t right for everyone, as managing cash is critical right now. However, technology providers are likely to be flexible on the setup fees or will be willing to defer payments.

 

7. Settle competing interests in your mind

As one manager said, “this is the point where capitalism meets community responsibility.”

Each company has difficult decisions in front of it, weighing the need to preserve revenue against the need to limit visitors to protect the community. And each manager we talked to is carefully considering cancellation policies.

We will address cancellation policies in more detail this week, but most managers are currently offering rebooking for future stays instead of cash refunds. This is also true for airlines and cruise lines.

As one manager said, “There are no good choices here, just good decisions.”

As leaders in your destinations, you are in the difficult position of establishing priorities and setting examples in a very different way than you ever have before. However, state and local governments are acting quickly, so many of these decisions are being made for you.

 

8. Take care of yourself and your families

Not to be cliché, but this is a marathon not a sprint. You are not going to be able to help anyone if you are unable. Besides physical health, mental health is a major concern during this challenge. Taking care of yourself and your family must take a high spot on your to-do list.

While the challenges you face are real, you are not in this alone. There are thousands of other VRM executives out there going through the same thing. And we—at VRM Intel—are going to be here for you and will continue to find ways to connect you with other executives to share information and look for opportunities. 

Historically, travel rebounds quickly, and the vacation rental industry is more resilient than any other sector in tourism. The decisions you make are critical to ensure you come out of this. And if the past is an indicator, those that do will be stronger and better than ever before.

Outer Banks Closes Doors to Visitors

By
Amy Hinote
-
1

As reported by OBX Today, Dare County is restricting visitor access to North Carolina’s Outer Banks beginning at 2 p.m. Tuesday. 

Read entire article. 

In response to updated guidelines from the CDC to avoid discretionary travel, the Dare County Control Group has made the decision to restrict visitor access to Dare County beginning today, Tuesday, March 17 at 2 p.m.

The decision impacts all beach towns in Dare County, including Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head, Manteo and Hatteras Island.

“While there are currently no individuals who have tested positive for COVID-19 in Dare County, officials weighed the potential benefits for community health along with the tremendous impacts these restrictions have on our community. These restrictions may be inconvenient, disappointing and have financial impacts, however, they were made in the interest of public safety to limit the spread of COVID-19,” the control group said in a statement.

Beginning at 2 p.m., checkpoints will be established at entry points to Dare County and no visitors will be allowed access. Permanent residents, non-resident property owners and non-resident employees of Dare County businesses may review entry guidelines at www.darenc.com/entry. Reentry permits from previous years will not be accepted. Staff is working to activate the online permitting system by 1 p.m.

To avoid contact with personnel, please display your permit on your dashboard so it is clearly visible for checkpoint personnel.

Visitors will not be allowed to travel through Dare County to access Currituck County (Corolla), Hyde County (Ocracoke Island), or Tyrrell County. People who reside, own property or work in Corolla or Ocracoke will be allowed entry.

Personnel working at the Emergency Operations Center are available to answer COVID-19 related questions using a dedicated phone line. Please call 252.475.5008. Personnel anticipates a high volume of calls. If you reach a voicemail, please leave a message and your call will be returned as soon as possible.

Who’s Your Director of First Impressions? Lessons from a Recovering 25-Year Director of Reservations

By
Connie Carlisle
-
4

Leading a reservation call center for Kaiser Realty on the Alabama Gulf Coast for nearly 25 years—through 9/11, several devastating hurricanes, the oil spill of 2010, red tide, and even shark attack scares—was anything but dull and boring. Sometimes we jokingly changed our department name from the Reservation Department to the Cancellation Department.

Most companies offer their staff customer service and reservation sales training, but what happens when this department becomes the actual voice of your company during crisis situations? 

The most important thing I can offer from my experience is that communication from the executive leadership needs to be proactive and precise.

I would say to you that, first, make them <your team> feel secure. Make sure that they are ok and that their families are ok. In most instances, the reservation team—even in today’s world where many of the reservations are being generated and confirmed online and through OTAs—will take the brunt of the distress calls from homeowners, guests, and even your vendors.

Why? Because they are there. Guests, homeowners, vendors, and even the other employees know that these individuals will answer the phones. Even if you have sent emails, texts, and have posted on your websites and owner/guest portals not to tie up the reservation lines, they will still call your 800 number or direct phone number and press that all-important “to speak to a live representative” button. These are the people that you depend on to never let a call go unanswered after hours, during weekends, and on holidays; and generally, these are some of the lower-paid people in your organization as well.

One thing that you figure out early on when you are working as a vacation rental reservation agent, is that you are doing something really important. You are helping families and friends form life-long memories. If you don’t figure this out, you probably don’t stay in the job very long.

Managing a department of anywhere from about 10 to 14 full-time reservation agents, our average tenure of the staff was 7 years. We were a true team and a force to be reckoned with. A lot of our guests, like your guests, booked the same large home, same week, year after year. We knew them. We knew their families, and we knew what that one week of the year meant to them. And they knew us.

When we did face something like a hurricane or the oil spill, a lot of the calls coming in were from guests and owners checking on us and checking on the state of the union.

What is your state of the union?

How will you handle cancellations or postponements? Is your policy a blanket policy or on a case-by-case basis? Have you communicated it to every person in your organization, especially those that will answer the phone calls? Does your staff feel like they can articulate the company policy while still showing empathy and compassion, or are they overwhelmed by the call volume and the hopeless feeling of not really knowing how they should answer questions?

And more importantly, do you have their back? Would you be willing to sit down in the cubicle next to them and answer a few calls to show your support and appreciation for what they are going through and doing for the company?

A lot of you know that Amy Hinote, the founder of VRM Intel, and I worked together at Kaiser, she as Director of Marketing and I as Director of Reservations and Group Sales. Amy had the sheer pleasure of starting at the company directly on the heels of Hurricane Katrina. The marketing series campaign, “The Calm after the Storm” that followed our company’s messaging throughout the back-to-back hurricane recovery was one of the best I’ve ever seen. But the biggest transformation for my staff—and them truly feeling their worth—was that Amy came into our reservation department, and she got to know each individual on that team, including me, and why we did what we did, day in and day out, and she showed her appreciation. She tells me this is what made her fall in love with this industry, these people and their need to not just satisfy the customer, but their need to solidify the customer in every way. We formed a bond between reservation sales and marketing that helped propel the company to even further greatness.

The coronavirus will pass, like most other crises have passed. While this event is unprecedented, many of you have unique experiences you can lean on to get through this. What you choose to do during this chaotic, scary time will help determine what your business looks like now, during, and after the storm. Your most precious commodity is most likely your people. Take care of them, talk to them, empower them, and they’ll take care of the rest. 

Over three decades in the industry, you learn a few lessons—like that every company should have an emergency plan that can work for any emergency. Here are a few considerations:

  1. Lay out a game plan as if you might not get back to normal for a while with ownership of each task, from every department, and add times to follow up with staff on a regular basis. Include a daily company briefing—where each employee can log in or call in from anywhere and hear the same message of what’s going on. 
  2. Make provisions immediately for employees that can’t (due to childcare, elderly parents, weakened immune systems, physically challenged, etc.) be part of the plan and make sure they don’t feel threatened or left out because of that.
  3. Provide clear and concise messaging about your policy to the reservations team, even if it is not good news. If you are offering rebooking or credit for future stays, and no cash refunds, make sure they know that your policy is firm. 
  4. Write an official company policy statement that your agents can read if a conversation gets heated. 
  5. Schedule executive leaders that can be reached during all shifts for extenuating circumstances or to make an executive decision.
  6. Communicate, communicate, and over-communicate.
  7. Make sure that every person on the team feels confident in his/her ability to do the job and offer solutions to any obstacle.
  8. Say “thank you” and “please”often—even when you are paying someone to do a job. Our jobs shouldn’t be our life. Our jobs help us have a life.

And remember:

  • It is much more costly to find and train a new employee than to work with situations of your current staff.
  • No one is the blame for this, and no one is exempt.
  • Be kind even when you have to be firm.
  • We make money, money doesn’t make us.

How long will this last? President Trump: “August, could be July, could be longer than that. “

By
Amy Hinote
-
2

President Trump answered a question during today’s briefing about how long disruption resulting from COVID-19 is going to last, saying “It seems to me that, if we do a really good job, we will not only hold the death down to a level that is much lower than the other way, had we not done a good job. But people are talking about July, August, something like that. So it could be right in that period of time where it, I say, it washes through.”

“Is this the new normal until the height of the summer?” he was asked.

The President replied, “We’ll see what happens, but they think August, could be July, could be longer than that.”

Dr Fauci later added, “I think the question that [was] asked about until July — the guidelines are a 15-day trial guideline to be reconsidering. It isn’t that these guidelines are going to be in effect until July. What the President was saying is that the trajectory of the outbreak may go until then. Make sure we don’t think that these [guidelines] are solid in stone until July.”

We will soon hear from analysts to determine if there is agreement on this timeline, but for vacation rental managers planning and preparing for the coming months, this new information is critical. 

The new 15-day guidelines that have been put together in response to the COVID-19 outbreak include recommendations that all Americans, including the young and healthy, avoid gathering in groups of more than 10 people, engage in working and schooling from home when possible, avoid discretionary travel, and avoid eating and drinking in bars, restaurants and public food courts.

CNN: Rich people are going to isolated vacation homes to “sit it out”

By
Amy Hinote
-
1

In a segment on Saturday on CNN’s Smerconish, talk show host Michael Smerconish discussed wealth disparity in the US with author Nelson D. Schwartz.

“There are reports of the wealthy getting access to private tests, escaping problem zones by chartering private jets, and retreating to isolated vacation homes,” Smerconish said. “One company, PrivateFly told us this kind of business is up 30 percent for them, and every day clients are air lifting their entire families from—say Spain—to a holiday home in the Cayman Islands (for example) to sit it out.”

Schwartz, author of The Velvet Rope Economy, described how the different economic classes are able to move through this crisis and added, “Meanwhile, people are leaving the city. . . and going to second homes while the rest of us deal with the realities of being here.” 

Colorado Governor Closes Ski Operations Through March 22

By
VRM Intel Staff
-
0

Last night, Colorado Gov. Jared Polis issued an executive order to close the state’s nearly 30 ski areas for one week amid the new coronavirus outbreak.

“Never would I have believed that a global pandemic would force the temporary closure of our world-class ski resorts,” Polis wrote in an email announcing the news. He went on to say that he and his family, like many others, were planning a spring break ski trip.

 

Message from Aspen Snowmass

Dear Loyal Aspen Snowmass Guest,

By order of the Governor of the State of Colorado we are closing all ski operations immediately. Additionally, we will close our ancillary businesses in an orderly manner over the course of the next week, with the exception of the Limelight Aspen. We will work closely with our current guests in house as they make travel arrangements. These actions are being done out of an abundance of caution and with concern for the capacity of local healthcare facilities should community spread increase.

We understand that this impacts a huge number of people; our employees, guests and the community as a whole. We are working now to address all of these issues and will work with each of these groups to minimize the impacts where we can.

We are closing The Little Nell and Limelight Snowmass for the season on March 23 and will reopen for the summer as scheduled. The Limelight Aspen will remain open. We will work with all of our guests who are currently in resort or who had future plans to visit this season. We will be offering refunds or credits and will work with each guest for the best desired outcome. If you are a guest in this situation, please be patient as we expect a large volume of calls and we will do everything we can to get to you as quickly as possible. You do not need to reach us right away to qualify for a refund or credit.

For employees, we are working diligently to provide them with a comprehensive list of what actions we will be taking. We will be offering two additional weeks of scheduled pay to all impacted seasonal employees. Employees will retain benefits status at the same level declared at the start of the season. We ask that our employees stay tuned for further detailed communications and understand the HR department will be overwhelmed with calls.

Our plan is to conduct some limited on-mountain maintenance to potentially have a limited late season opening if circumstances allow. We are all skiers at heart and we understand the therapeutic nature of our shared passion. Extreme circumstances call for extreme actions, and we make this decision in coordination with our local and state health agencies. Let’s work together as a community to support each other and will all come out stronger on the other side.

Inspections: A Major Key to Housekeeping Success

By
Padre Escapes
-
0

By Sage Viator, Executive Housekeeper, Padre Escapes

Here at Padre Escapes, we currently employ a small team of full-time inspectors year-round. This is not to say that one cannot run a successful vacation rental company without having employees solely dedicated to inspecting units once they are cleaned, but we think inspections are the key to our success. We have opted to add an extra layer of security between housekeeping and guests/owners that are checking in.

Because we are a drive-to destination for neighboring cities such as Houston, Austin, and San Antonio, as well as the Rio Grande Valley and the surrounding areas (all just a few hours away), we allow check-ins on any day of the year (seven days a week/365 days a year), and same-day add-ons are always allowed. This does allow the potential for more revenue to our owners but also limits how far ahead we can schedule cleans or inspections because schedules can change on a regular basis.

One of the most important aspects of control is the quality of work put out by the individual cleaners/subs and their accountability. That in itself is hard to perfect without some sort of inspection process. I have heard of companies implementing certain software systems that “inspect” the clean by having cleaners submit pictures; some companies opt to have their cleaners “self-inspect,” whereas others hire dedicated inspectors to go behind the cleaners as we do. I think all three of the aforementioned systems can work to a certain degree. However, I suppose the million-dollar questions are which one works best, and which one is the most cost-effective? As we all know, it’s not often in life those two criteria coincide. Before we go any further, I am not claiming our system is better or more cost-effective than any other system. I am simply sharing with you all what has proven to work for us in our current market.

For as long as I can remember, we have employed inspectors to check the work of the housekeepers. Personally, I think having a third party dedicated to inspecting the cleaners’ work eliminates any sort of bias one may encounter when having the cleaner “self-inspect.” The picture software seems like it would be useful for ensuring items/décor are neat and orderly. However, as far as cleanliness goes, I don’t think there is a substitute for being there in the flesh to see, smell, and feel the stages of cleanliness. How many times have you received a call about a strange odor in the unit or gritty floors? These things probably wouldn’t be captured in a photo or video.

We have had some pretty stellar cleaners in my time here, but we have never tossed around the idea of dispensing with inspections. Because we conduct a thorough inspection after every clean, only a simple walk-through must be conducted on the days leading up to the arrival if the unit has been unoccupied.

The walk-through consists of setting the air-conditioner to the desired temperature, checking TV/Wi-Fi, checking for any dead bugs, opening the blinds, and leaving our personalized “Welcome Flyer.” To maximize the productivity of our inspectors when they are not inspecting or doing walk-throughs, they are also responsible for guest service requests, which include technical issues (TV/ Wi-Fi), changing air filters, running items to guests, performing inventories, and vacant-unit checks.

Is our program successful? Unequivocally! If you divide our year-to-date reservations by the number of legitimate issues, we come up with a factor of 0.0048, or less than half of 1 percent. That is the value of the inspection process!

Is it cost-effective? We include the cost of inspection in our cleaning fee, thus turning the inspection process into a profit center.

Airbnb changes “Extenuating Circumstances” cancellation policy to override managers and hosts

By
Amber Carpenter
-
10

Today will mark the moment that we all realized that we were living in a world of complacency. We have become so enamored with the OTAs driving revenue and bookings for us that we forgot that they really don’t understand this business and they have little to no regard for their suppliers. 

To be fair, this quixotic moment is brought to you by Airbnb as it announced this morning that it is utilizing the Extenuating Circumstances Policy to allow guests in the United States—as well as a handful of other countries—to cancel their stays between now and April 1st without penalty.

In other words, if you have a confirmed guest set to arrive between March 13 and March 31, 2020, Airbnb is going to give them a full refund whether you agree or not. It is highly likely that this arrival window will include additional future dates as this situation progresses.  

Oh, and if you feel like canceling your arrivals between now and April 1, 2020, you can do that too without the public shaming and penalties that Airbnb usually enacts on hosts who do not honor confirmed bookings. Whew! No automated review on your profile saying that you canceled a stay outside of Airbnb policies.

The specific COVID-19 Airbnb Extenuating Circumstances Policy announcement is confusing at best:

“This extenuating circumstances policy covers our hosts and guests with eligible reservations who are impacted by the coronavirus (COVID-19) pandemic. If your trip is covered by this policy, you’ll have the option to cancel your reservation without penalties if you’re a host, and you’ll get a full refund if you’re a guest.”

The problem with this is that as recently as February 25, 2020—the Airbnb Extenuating Circumstance policy and page had very different verbiage and read like this:  

“In rare instances, if Airbnb determines that a Guest’s reason for cancellation falls within Airbnb’s Extenuating Circumstances Policy, Airbnb may override the Host’s cancellation policy (ex: flexible, moderate, strict) and make refund decisions.”

It states that an “Endemic disease declared by a credible national or international authority (such as the US Center for Disease Control or the World Health Organization)” might be covered.

I have not been living under a rock.  

I know that the COVID-19 pandemic is not “fake news,” and we are in unprecedented times. People are panicking. Taking those calls is hard. We know. We have been doing this for a very long time. We have been doing this through 9/11, hurricanes, oil spills, recessions, and more.

I cannot find evidence that this policy has ever been used in such a broad and sweeping manner.

However, I also know that many property managers have enacted their own COVID-19 policies that are striking a much better balance between the needs of the guests who are afraid to travel and the homeowners who are relying on their spring and summer rental income to pay mortgages. For example, many property managers are successfully allowing guests to rebook their vacation for later in the year without losing any revenue—similar to the airlines.   

So why doesn’t Airbnb know how to do this? And why would Airbnb think it can handle this better than the actual property managers and hosts that live and breathe this business every day?  

Worse, Airbnb is making us all look bad. Guests whom we have worked hard to convince to rebook now look to Airbnb like a hero.  

 

In fact, Airbnb has automated the process for guests to cancel their stay to make it even easier. Your guests will see messaging that looks like this when they login to check on their reservation:

Tomorrow or sometime soon, we will wake up and find out that other OTAs have followed suit. This has likely become a game of winning market share—or protecting market share.

Also, if you dig even deeper you will figure out that Airbnb is hard at work to update its search results algorithms and consumer-facing search filters to promote properties with the most flexible cancellation policies, which is great for guests but really hard for homeowners and property managers who cannot replace the lost revenue with 24 hours notice like an urban hotel.  

This is our wake up call.

The OTAs have a place in your portfolio, but it is not a replacement for your own marketing and brand. Those sales pitches that are out there trying to convince you that you shouldn’t mark up your rates on third-party channels are part of the problem. The cost of a third-party booking is not cheaper, it is not more efficient. You are trading operational control and your brand for instant gratification. 

After almost 20 years of doing this, I assure you that the majority of us will lean in and not only survive this challenging time but we will thrive.

Build a marketing strategy for the long game. Have the best website you can afford. Update it often. Implement a PPC, CRM, and marketing strategy that cultivates loyalty, word of mouth, and resiliency in tough times.  

Vacation Rental Booking in Leisure Markets is Holding Steady: Vacation Rental Booking Pace from March 5 to March 13

By
Amy Hinote
-
4

According to current data—and in contrast to other sectors of travel—vacation rentals are performing better than anticipated in spite of COVID-19 concerns.

We often talk about the resilient nature of the US leisure-based vacation rental industry, but since 9/11, the sector hasn’t had a global test like the one seen over the last few weeks. Yet the following regional data sets, provided by Key Data, demonstrate that forward-looking reservation activity is pacing above expectations in key markets.

The snapshots below show vacation rental booking pace—taken on March 5 and March 13—across multiple regions, including Hawaii, Oregon, California, Colorado, and the Gulf Coast and SE Atlantic Coast regions. 

We reached out to Scott Shatford, founder and CEO at AirDNA, which provides market data and projections for the short-term rental industry, to see if this activity is similar to what he is seeing. Shatford confirmed that these occupancy and stay value indicators parallel the vacation rental performance AirDNA is monitoring.

“The data suggest a surprising resilience of short-term term rentals especially in drive to destinations,” Shatford said.  “Revenue and bookings in many of these markets are actually up year over year as people extend spring breaks and take refuge from major cities.”

At VRM Intel, we are not data scientists. However, after discussing recent activity with vacation rental management executives, we have identified potential reasons for the consistent performance:

  • With a slowdown of international travel and cruise travel—and with a shutdown of theme parks and urban attractions—vacation rentals are a viable and less risky alternative. 
  • Drive-to destinations are more popular than fly-to destinations in times of uncertainty.
  • With spring breaks being extended, children out of school, and more employees working from home, the freedom to spend time in a vacation home is more feasible.
  • Vacation rental cancellation policies are less flexible than hotels.
  • Winter “snowbird” travelers, who are often over 60 years of age, are finding it safer to stay in the south than returning home.
  • Some consumers are “vacating” cities with their families to drive-to vacation homes for a safer, less stressful, and more enjoyable option.

While adjusted occupancy is holding fairly steady, we are seeing some destinations experience a drop in average stay value, indicating that some regions may be discounting in order to preserve occupancy. 

How to read these charts:

In the charts below you will see each region followed by an “as of” date (for example, “Hawaii: As of March 5th”). This means that that the two metrics—adjusted occupancy rate and average stay value—represent reservations on the books as of March 5th, 2020, compared to reservations on the books as of March 5th, 2019. The data sets compare booking pace on March 5 compared to booking pace on March 13. 

Adjusted Occupancy measures paid occupancy, or nights available to rent. For example, adjusted occupancy excludes owner holds and maintenance holds. 

Short-term Vacation Rentals Booking Pace Coronavirus as of March 13

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