With the vacation rental market exploding with growth in the United States, we brought in European rental expert, Mike Bolger of GoHolidayLets to discuss the changing rental landscape in Europe. Here is his take on what allowed the rental market to grow at such a rapid pace:
It’s common knowledge that hotel brands all over the world are looking closely at the self-catering, serviced apartment business model, and Europe is no exception to this rule. In fact, in many respects, it has led the way. The holiday rental market in Southern Europe has grown in a phenomenal fashion in the last ten years, and websites like Holiday Lettings and OwnersDirect that allow individual owners to rent their dream properties to fellow travelers have been affiliated with this growth.
A few facts to put the potential business in perspective: In 2013, the number of outbound trips made by UK residents reached 56 million, reflecting a rise of 2% on the previous year. This was a return to positive growth after the 1% decline of 2012. The positive growth in terms of number of trips contributed to the rise in outgoing tourist expenditure, which increased by 6% to reach £34 billion in 2013. This has shown upward growth ever since.
How did this happen?
Europe is no different than the United States; most people have a dream of retiring (even in a part time fashion) to the sun.
Light financial regulation by the European Central Bank and national central banks allowed individuals access to funds to purchase secondary homes in various parts of Europe. Traditional property managers, cleaners, support personnel were all easily accessible in Spain, Italy, Portugal, and the Canary Islands. Lower income rates also maintained margins for renters, and traditionally, people from Northern Europe travel to warmer climates via “the package holiday.” Others in the Scandinavian countries travel south to the Canary Islands to avoid dark winter months.
The final catalyst
The availability of the internet was another catalyst that helped pull this all together. Those selling properties were able to sell based on the phenomena of owners renting their own properties in the Algarve Portugal or Costal Del Sol Spain from the comfort for their homes in London or Dublin.
Even still, the key here wasn’t the availability of support labour or internet access. The key was the arrival of the “budget airline.” Middle income earners that previously couldn’t afford costly travel could now afford travel due to the work of Michael O’Leary, Irishman and CEO of Ryanair, and Stelios Haji–Ioannou, founder of Easyjet. With low cost airfares available, the dream of owning your a vacation home became a reality for many.