Every December, I look back at major shifts in the vacation rental industry and predict what may lie ahead for the year to come. I’ll share my 2021 predictions in a moment, but first, let’s look back at how well I fared with my predictions for 2020—a year full of uncontrollable, world-changing circumstances that absolutely no one expected.
My entirely biased assessment would say that my predictions, somehow, ended up being pretty spot on! Let’s take each in turn.
2020 Predictions in 20/20 Hindsight
#1: First Failure of a “Megamanager” (Correct!)
Hostmaker’s demise in March of 2020 meant that I nailed this one before the end of Q1. The subsequent collapse of Stay Alfred, Lyric, and others unfortunately suggest I could have been even more aggressive on this particular prediction. (Say what you will about business models, but these closures mean a lot of our industry peers lost their livelihoods this year. I’m not celebrating being right about this one.)
#2: The Local Revival (Correct!)
With COVID basically freezing air travel, this has proven true in spades. After the unexpected industry dive off the cliff at the end of Q1, things came back in a big way for drive-to markets, and single-family rentals in particular. A large number of Rented’s own clients saw record revenues in 2020…by September!
#3: Focus on Profitability (Correct!)
The sheer number of times this has been addressed this year, notably by Simon Lehmann and AJL, as well as in numerous sessions at Amy Hinote’s Vacation Rental Data & Revenue Management Conference, and the Q4 issue of VRM Intel magazine itself tend to suggest that this particular one has been the trend of 2020, and will likely remain so for the foreseeable future—with good reason.
#4: Fundraising Shifts from “New Model” PMs to Tech Providers (Partly Correct)
I give myself half-credit here. As Pierre Becceril of Transparent showed us during Antonio Bortolotti’s Vacation Rental World Summit, fundraising for new model PMs did indeed dry up this year. But while I was correct on that front, what I missed was that it would also nearly disappear for tech providers. Apparently, in a pandemic, you can’t win them all.
So—do you trust me enough to read my predictions for 2021?
Looking Ahead To 2021
We’ve learned that even in a global pandemic, travel does not stop entirely—it just changes. Most notably, it changes in ways that can benefit professional vacation rental managers.
How? Here’s what I predict:
#1: People shun airplanes
While this has been a killer for the airline industry, it has been a boon for drive-to vacation rental markets. Even with the promise of COVID vaccines on the horizon, I predict air travel will not recover in 2021, but drive-to vacation rental markets will thrive.
#2: Families want single-family homes
If you don’t feel safe on an airplane, how safe will you feel in a hotel elevator full of strangers? I predict single-family vacation rentals will achieve a higher proportion of the overall lodging market, while hotels’ market share continues to shrink.
#3: Smaller groups seeking larger properties
With work and school going remote, extra bedrooms once dedicated to sleeping are now being repurposed as offices and classrooms. The same will hold true for vacations: whereas a 5-bedroom home used to be the target for multi-family trips, the same property is now within the search parameters of a single family. I predict booking data will reflect this shift.
#4: Longer stays
Again, tied to the remote work and school trend, as well as a mindset of “if I am going to travel, I might as well make it last for a while,” I predict length of stay continues to climb—though this will likely stabilize relatively soon and eventually creep back down to average levels at a speed that will depend on your particular market.
This leads to a bonus prediction, but one that will be hard to measure: since the fees charged by Airbnb and Vrbo become more obvious and onerous to guests booking longer stays, we’ll likely see more efforts to work around the system—that is, requests to “take it off the platform” and avoid those hefty fees. This trend could have some far reaching implications, and is certainly a space to watch for 2021 and beyond.
#5: Higher standards (part 1)
When your vacation is on the line, there are certainly people who will roll the dice and go with an unknown quantity host. When your life’s on the line? This one plays into professional vacation rental managers’ hands 1,000 times out of 1,000. I predict an increase in direct bookings/repeat bookings with the same management company for this reason alone.
#6: Higher standards (part 2)
Just like we saw in 2008 on the heels of the financial crisis, the corollary to the increased awareness and demand for single-family rentals in 2020 means that new—and new kinds of—guests will be drawn to vacation rentals. Often these guests bring higher expectations for service levels, responsiveness, property quality, and more.
I’m not alone in this prediction. Last month, Booking CEO Glenn Fogel told PhocusWire, “If I’m a hotel, I’ve got to worry because of corporate travel being diminished but also competing for leisure because there’s a step change in the number of people being exposed to alternative accommodation.”
A rising tide lifts all boats. This applies to raising the customer experience bar you must meet—and your revenue potential.
Most people will be happy to see the back of 2020. But the truth is that nothing will magically change come January 1, 2021.
Many of the shifts 2020 brought will continue as we enter 2021 and beyond. We each have a choice: to sit back and lament how the ground has shifted beneath our feet, or to begin the difficult and necessary work of adapting to the world we now live in.
Our mantra at Rented is to focus on those things within your control, and let go of the rest. This is obviously easier said (or written) than done, but it’s still true.
The year ahead of us is full of promise and opportunity for the local professional vacation rental manager. Adapting to changing customer expectations and adopting value-add technologies and services will be the difference in those managers who take advantage of that opportunity, and those who sit on the sidelines wishing for a world that no longer exists.
Which would you rather be?