A dozen years ago, before HomeAway acquired VRBO and before vacation rentals had any presence with major online travel agencies (OTAs), rental managers were busy adjusting to the new world of online marketing and discussing how to raise awareness of the vacation rental industry. At the same time that Expedia and TripAdvisor were dipping their toes into vacation rentals, Airbnb began its incredible story. First, Airbnb formalized couch surfing and then redefined the private accommodation landscape, which helped push vacation rentals to the forefront of the hospitality industry.
Fast forward ten years.
The business of vacation rentals evolved, and the short-term rental landscape looks very different today. Vacation rentals have the attention of travelers and the major travel and hospitality brands and investors. Alternative accommodations are the new normal, and unique travel experiences are the new standard. There’s never been more choice, an overwhelming choice, of accommodations to choose from.
The average traveler and rental guest look a lot younger, too. Millennials are traveling more frequently than the generations before them, averaging almost four vacations per year. These young, technology-centric guests expect the perfect rental experience: the uniqueness of a vacation rental with VIP-level amenities.
This article discusses how players in the hospitality industry—long-established hotel brands, short-term rental marketplaces, and luxury residential buildings—are evolving to meet the rising demands of rental guests.
Hotel Invasion in the Short-Term Rental Market
The line between vacation rentals and hotels is fading. Vacation rental inventory can now be found side-by-side with hotel rooms through online travel agencies such as Expedia, Booking.com, and TripAdvisor. Similarly, hotels can be found on major vacation rental marketplaces such as HomeAway and Airbnb. For hotel brands, this strategy is a no-brainer. More impressions lead to more bookings, and hotel executives feel their brand, and their ability to provide quality listings and concierge services, stands out among the sea of rental home listings. “As some of these platforms have grown into millions and millions of units, there is an almost paralyzing array of choices and a lack of branding,” said Marriott CEO Arne Sorenson. “The lack of real attributes of quality around service and product makes this an area where we think we can deliver something which is simply better.”
However, Airbnb doesn’t perceive hotel inventory on its platform as a threat. In fact, according to its policy, Airbnb “welcomes listings hosted by professional hospitality providers if they offer unique spaces and personal hospitality to the community.” These “personal qualities” can include access to common gathering spaces and rooms that incorporate local influences. As long as the listings contribute to Airbnb’s authentic and communal brand, the company will expand its listings and offer additional options to consumers.
Hotels haven’t stopped at cross-listing though. Major brands have witnessed the rampant growth of short-term rentals, and they do not want to sit idly by, so they are developing private accommodation strategies to grow with the evolving travel landscape.
For example, Marriott is currently testing a six-month short-term rental pilot in partnership with London-based home rental management company Hostmaker. Each of the pilot’s 200 homes is handpicked to adhere to Marriott’s standards and consists of one or more bedrooms, a full kitchen, and laundry facilities. Marriott expects to capitalize on a gap in the vacation rental market between easily accessible quality rentals with customized services and high consumer expectations. This is where hotel chains plan to grab market share—at the top end of the market, which is the most lucrative to vacation rental managers.
AccorHotels shares a similar thesis on the opportunity for hotels within the vacation rental market. The French hospitality company, with more than 4,200 hotels in over one hundred countries, wants to leverage its expertise and infrastructure to accommodate the rising consumer demand for quality and concierge services. The company jumped at the opportunity to enter this new market and acquired short-term rental operators Squarebreak, Travel Keys, and Onefinestay and consolidated them under the Onefinestay luxury brand. AccorHotels promotes the work it does to vet each home for comfort and uniqueness and has standardized amenities to ensure rental guests enjoy a consistent brand experience across properties. In fact, Onefinestay goes to great lengths to create a luxurious end-to-end service and offers amenities such as twenty-four-hour guest support, personalized check-in, and professional cleaning throughout the stay.
Airbnb’s Push for Hotel-Like Quality
Thanks to its meteoric rise over the last decade, Airbnb has felt significant and understandable growing pains. With so many diverse listings and the largest number of individual hosts and managers, Airbnb faces new challenges to identify listings that align with consumers’ growing interest in quality. In fact, Airbnb recently made global changes to its basic requirements for hosts and its review system. The new standards outline clear expectations for every host to follow, with specific guidance and instruction on cleanliness, amenities, and check-in. Keenly aware of this push for quality, the policy intends to create a more reliable and predictable stay for guests.
Additionally, Airbnb updated its review system to better facilitate honest feedback about the rental experience. According to Airbnb’s blog, “Hosts and guests can only see reviews from a completed trip after both participants have completed their assessment of the experience.” The blog post added, “We believe members of the Airbnb community want to ensure that their profile is an accurate representation of the way they approach hosting and traveling. We are committed to finding new, personalized ways to help our community share honest feedback and trust.”
Yet, a bigger indication of the massive push for quality came in February’s announcement of Airbnb Plus. Leveraging a segment of “Superhosts” with stellar reviews and service, the new program creates a collection of high-quality and well-equipped homes. In practice, this means predictable amenities and services that move the private accommodation experience closer to that of a hotel travel experience but with the charm and uniqueness of a vacation rental. A collective of this type of inventory would be a massive differentiator in a travel landscape that has seen commoditized inventory on all the major online travel websites.
However, the real difference is in the property itself. Every Airbnb Plus property is visited in person to ensure hotel-like conditions and amenities and is inspected with a one hundred-point quality checklist that includes things like fully stocked cooking equipment, fast Wi-Fi, filtered water, and quality toiletries. The inspection goes beyond cleanliness and amenities, incorporating the property’s intangibles of character and thoughtfully arranged decor. Attention to detail like this demonstrates Airbnb’s push for hotel-like quality and indicates a significant maturation of the product compared to Airbnb’s early days of air mattresses on the floor and leftovers in the fridge.
Emphasis on Concierge, Amenities, and Services
The elevated quality and concierge services within hospitality isn’t isolated to hotels and Airbnb. In fact, vacation rental marketplaces and managers have caught on to consumer demands for extraordinary experiences and have positioned their businesses accordingly.
This is changing the way vacation rental managers approach their own marketing. For example, look at the landing pages for TurnKey. Contrary to the traditional approach of immediately showcasing their listing inventory, the emphasis is first on the unique experience that each property provides. The message to the consumer has shifted from quantity to quality and features terms like “exceptional vacation rentals,” and “one-of-a-kind vacation rentals offering the experience of a fine hotel.”
That said, the quality experience goes beyond the comfort and condition of each property. TurnKey has recognized the demand for VIP-customized service and promotes amenities like keyless entry, a concierge app with local entertainment and restaurant suggestions, and boots-on-the-ground staff to answers questions 24/7. Yes, we all know these are the same services that many rental managers have provided for years, but many managers have yet to adjust their marketing to fully highlight this part of their business.
The types of hotel-like concierge services that are becoming the new norm for short-term rentals are permeating other living styles. Residential renters are starting to demand more in-apartment amenities, and luxury buildings are in a full-fledged “amenities arms race” to outdo each other. “We raised renters’ expectations and now have to provide this huge array of amenities just to get their attention,” said Daniel Geham, studio director for Humphreys and Partners Architects. “What was once a luxury is now an entry-level amenity.” Amenities like laundry rooms and fitness centers are practically mandatory these days, while items like Wi-Fi lounges and yoga rooms, which were once cutting edge, are now commonplace.
As the lines blur between hotels and private accommodations, convergence is bleeding into the long-term residential living experience. In the case of “Niido Powered by Airbnb,” the two are one and the same. The development firm Newgard has teamed up with Airbnb to build fourteen Airbnb-branded complexes by the end of 2019. The apartments are leased on an annual basis, but tenants can rent out their units for up to 180 days a year (tenants keep 75 percent of the profit and Niido takes 25 percent). Airbnb guests who rent a unit will have access to hotel-style amenities, which include on-demand concierge services and luggage storage.
What Does This Mean for Property Managers?
The operational role of a property manager, for the guest and the owner, is rapidly changing. Consumer expectations for quality and concierge services are growing, and managers must adapt to meet these elevated standards. With property management commissions getting squeezed by new managers in every market, a refocus on delivering excellent property care services is a key differentiator. Companies that leverage intelligent property care programs will rise above their competitors and capitalize on the continued growth of the vacation rental industry.
Even if you can’t upgrade your tech stack today, setting brand standards can help you meet guest expectations. Brand standards are the guidelines that define the personality of your vacation rentals, for example how you want guests to feel when they enter your property and interact with your business. Brand standards are a staple of most hospitality providers and help ensure a quality and consistent guest experience.
Deciding how all the small details should be handled builds a cohesive program that can be followed by staff and cleaning contractors to ensure consistency. Remember, this is how hotels and new tech-enabled operators are planning to gain market share. Brand standards will be a key differentiating factor as private accommodations and vacation rentals enter the next phase of maturity within hospitality.
Quality is always and has always been a priority for us at http://www.emeraldislandrentals.com
Recently we installed many tech upgrades and our premium homes all have much bigger flat screen SMART TVs and bedside phone chargers. What once used to be a luxury amenity (flat-screen TVs) is now standard. Two years back we installed 32″ flat-screen TVs and now they all look small and we had to upgrade from simple 32″ flat-screen TVs to Roku/Smart 50″ TVs. We are talking about 6-7 upgraded TVs in a villa. It is needed, our customers expect that and we want to meet that need.
“As some of these platforms have grown into millions and millions of units, there is an almost paralyzing array of choices and a lack of branding,” said Marriott CEO Arne Sorenson. “The lack of real attributes of quality around service and product makes this an area where we think we can deliver something which is simply better.”
I find it interesting that this statement from the hotel side almost explicitly outlines exactly what we should be doing from the PM side, as well. And it’s evidence they are investing heavily in drivin this home in the eyes of the consumer. I don’t think the majority of PMs realize that the key battle we are waging is to leverage the unique, local, individualized customer experience vs the friction-free OTA/hotel experience.
Way too many PMs have neglected the branding and marketing of their customer experience, reflected in
both their staffing and their budgets. Instead there are many who are settled into the fulfillment role and simply provide the end product almost anonymously for the OTAs who are driving the traffic and bookings. It’s been way too easy to be a relatively successful PM for the past several years as this has evolved. I think the maturation and continued evolution of this market will thin the herd….which may ultimately be a very good thing for those PMs who are investing heavily in brand and experience right now and into the foreseeable future!
Really good article Jeremiah!
Excellent article! There’s nothing more important than establishing a Brand loyalty and it’s been very difficult to turn host and revenue due to falling short of our JZ Vacation Rentals Brand Standards, but its way too difficult to rebrand later, so it’s worth the sacrifice for quality over quantity.