Vacation Rental Industry Ready to Explode
If you work in the hospitality industry and watched the Super Bowl this year, you might have noticed that the only travel related company with an advertisement during the game this year was HomeAway.com, the largest vacation rental site. Vacation rentals have been around forever but perhaps the emergence of HomeAway.com into the mainstream media marks a turning point for the industry.
It seems to me that the vacation rental industry finds itself where the hotel industry was about 10 years ago… lost. This is allowing a few third parties to become very powerful. If you go into Google and search for “Vacation Rentals”, you’ll see that the first natural listing is probably vacationrentals.com, from Homeaway. The second listing is probably VRBO.com (Vacation Rentals By Owner), also a Homeaway company. The third listing… Homeaway.com, and the fourth is cyberrentals.com. Surprise! Cyberrentals.com is a Homeaway company! My instinct tells me that there must be some rule against that in Google, but then again, if you search for Hotels in Google I wouldn’t be surprised if you get Expedia.com, Hotels.com, Hotwire.com, and Travelnow.com which all feed the same bank account. So what’s the difference?
Maybe it doesn’t seem so bad because hotels (at least the hotel chains and more savvy independent hotels) have learned the importance of having their own online presence with a great website and solid online marketing strategies, and have done a great job of taking back a good percentage of the online bookings directly back through their own sites. I can’t say the same, however, for the vacation rental industry. Although there are a few out there, it is very difficult to find a website that is owned and operated by a vacation rental owner or management company that actually allows online bookings. By online bookings I don’t mean filling out a form and requesting availability through an e-mail exchange. I mean real time availability requests and instant booking confirmations with online credit card transactions.
Why is that? At first I thought it must be that the process of booking a vacation rental is quite different than booking a hotel. Many ask for large security deposits up front which are returned after the guest departure, and the search criteria of a vacation rental customer will be extremely different than a hotel customer. Vacation Homes will vary in terms of total capacity, bed configuration and a long list of features. So maybe nobody has built a system that can accommodate all of these different search criteria, and then organize the results in a way so that they can be booked online. Not true… there are actually plenty of companies out there that offer these systems. So why then do vacation rental properties still use manual e-mail forms and phone calls to book their properties? Because they want to! Vacation rental owners and management companies prefer to screen each and every renter that is going to occupy their properties. Many fear that if they automate their reservations process, there is nothing to prevent a rowdy group of 18 year old high school students from taking over a house and destroying it. Those that have implemented online booking capabilities, of course, rave about the benefits of having it on their sites.
I can understand the fear of renting out a home versus one of a few hundred hotel rooms. After all the manual processes required to manage the reservations for 2 or 3 homes are not as rigorous as a large hotel, so why take the risk? I’ll tell you why… At the end of the day, as this industry grows, certain owners and management companies will have more user friendly websites. Some already do. We learned very quickly in the hotel industry that when it comes to marketing and selling online, consumer preferences are much more important than those of the supplier. If you are trying to rent out homes in Orlando and you’re up against other companies that allow customers to easily search through a large selection of homes based on relevant criteria to find the home that they want, while you are still asking customers to fill out forms and wait for an e-mail response just to find out if you have a property that suits their needs and if it’s available, you are going to lose a lot of business.
There is a lot of discussion in this space surrounding how to use the internet to attract customers. Until recently there was no group in LinkedIn to discuss these issues, so I started one. If you’re interested in joining, click here. There is a real hunger for information and guidance among the owners of vacation rental properties. Most of them have other jobs, and so are not dedicated full time to finding customers and renting out their properties… let alone hiring someone to help them with their e-commerce strategies. Many have been ripped off by so-called SEO experts who have charged them large fees and produced little results. Having been burned they are scared of making further investments into SEO and want to do everything themselves. The main goal of this conference is to allow vacation rental owners and management companies to come together and share ideas and experiences in person. Hopefully we’ll get a couple of great speakers to take the conference to another level.
It seems that the hotel industry is, and should be, quite threatened by the recent exposure that this industry has been getting. After all, Homeaway.com’s tagline in their commercials is “Rent a house for half the cost of a hotel.” Sounds enticing… and of course the hotels will say “Yes but customers want the high level of personalized service that we provide.” I have a feeling that as awareness of the vacation rental industry grows, the idea of picking up a carton of orange juice and keeping it in the kitchen refrigerator will trump the $13 glass of personalized orange juice from room service. Of course it remains to be seen how governments all over the world might address the growth of this ‘informal’ industry. Many hotels complain that people are renting out their homes and apartments on the internet and do not have to pay any of the taxes that hotels have to pay, nor do they have to abide by any of the same regulations.
One thing I do like about what I am seeing in the Vacation Rental industry is that the third party websites such as Flipkey seem to be taking a much more supplier friendly approach to their relationships with vacation rental owners and managers than their parent company, Expedia, did over the years with hotels. I was particularly impressed with this post on Flipkey’s blog in which they invited another vacation rental company to provide tips to owners and managers about building their own sites and marketing them.
In summary I believe there is a lot of opportunity in the vacation rental industry for both suppliers (owners) and vendors. This is an untapped industry where there is a desperate need for tools and knowledge that fit their needs. Right now I would like to see the vacation rental industry save themselves from repeating a lot of the same mistakes that the hotel industry made, and I believe that can only happen through open dialogue, open minds, and the sharing of ideas and experiences. I hope to see you in Miami on June 28th, 2010.