Essential advice vacation rental managers should learn
The travel industry has never been more confusing than it is right now. There’s a lot of data and info flying around and it can be hard to work out what’s reliable at times. That’s why it’s important to rely on the people who really know their stuff. Travel specialists Skift recently held an online forum attended by experts and professionals from all over the industry from such diverse fields as travel tech, cruises and airlines and of course vacation rentals. We’ve summarised some key insights and expert advice for vacation rental managers that we think can help inform your business practices going forward.
Travel restrictions are the biggest factor
Sure, some things are obvious but it’s always useful to have actual data to back up your intuitions. According to various experts, including Richard Clarke, Senior Analyst at Bernstein, the absolute number one factor in determining whether or not guests will book vacations is travel restrictions and lockdowns. If guests aren’t able to leave their homes, of course they’re not going to be travelling for leisure.
On the other hand, a clear and obvious pattern seen in almost every market was that as soon as restrictions were lifted, bookings shot right up. It’s not rocket science, but a key piece of advice for vacation rental managers is that you should be keeping an eye on travel restrictions and lockdowns in three key locations:
- Your immediate area
- The area of your guests
- Intermediate areas that guests may need to transit through to reach you (e.g. neighbouring countries)
You should be carefully monitoring your marketing approach based on restrictions and rules in these areas. If restrictions are being loosened in a particular area, you may wish to consider turning up your marketing spend or focus on that location in order to capitalise.
Confused by the different travel restrictions? Check out our informative article here.
Prices don’t determine bookings… yet
Arguably, one of the less obvious learning points from the forum was that one of the biggest reflexes faced by many businesses at this time – cutting prices – is probably not as effective as you’d expect.
As discussed by Seth Borko, Senior Research Analyst at Skift Research, in previous crises, such as the economic crash of 2008/9, it made sense to react to plunging sales by slashing prices in an attempt to win the business of customers who were tightening their purse strings. However, the current situation isn’t just an economic crisis, but a health one. Many experts are advising against serious price decreases for the following reasons:
- It can take several years before prices can return to pre-crash levels
- Many businesses will be faced with increased overheads in both the short and longer term – such as higher cleaning costs or necessary alterations to properties
- Price isn’t (yet) enough of a factor to persuade a reluctant guest to travel
That’s not to say it’s not a worthwhile strategy (cheap bookings are better than none after all), but it’s not the golden bullet many business managers see it as. However, once the situation starts stabilising a bit more, expect competitive pricing to become much more important.
Pro tip! OTAs and Sales Channels are often the go-to booking platforms for price-conscious guests. This means there’s a great potential to leverage Direct Bookings to reach other audiences who may have different priorities. By using a mixture of channels and direct bookings, you can reach the widest possible audience.
Cleanliness is key
So if price isn’t going to persuade a guest to stay with you, what is? Well, according to numerous experts, it’s all about safety. Indeed, to quote Luís Araújo, president of Turismo de Portugal, “Our biggest competitor right now is fear”. Guests are reporting that it’s not the search for a bargain that’s determining whether they are booking a property, it’s whether they believe that they will be safe and taken care of.
Hygiene is of the utmost importance to pretty much every guest right now, but there are a couple of different schools of thought into how that can affect behaviour and booking intention.
The first is that many guests will prefer the idea of staying in a vacation rental over a hotel due to the reduced risk of infection in a private rather than public setting. This is supported by the data, as vacation rentals are vastly outperforming hotels at the moment. This is forecast to continue for a while, at least until business and conference travel returns in earnest.
On the other hand, one factor that does seem to be the case is that, whilst guests feel safer in private accommodation, they often trust the more rigorous, standardised cleaning protocols they perceive hotels to have. Whether or not this perception is accurate is open for debate, but one potential contributing factor is the visibility of hotel cleaning versus that of private accommodation. We’ve all seen cleaning and maintenance staff doing the rounds in hotels, but in a vacation rental we often have to trust that this is being done even if we can’t see it.
The key factor for vacation rental owners and managers is communicating to guests that not only is their accommodation safe due to the increased privacy and reduced interaction with strangers, but that their cleanliness and hygiene protocols are on par with the leading hotels. Be sure to indicate your cleaning procedures clearly in your listing description in order to reassure guests.
There will be winners and losers – but European markets may have an advantage
Unfortunately, it’s inevitable that certain businesses, people and even countries will come out of this crisis better than others. There are a multitude of factors which determine this, from pre-existing economic conditions to the government’s handling of the pandemic, and a whole range of other things besides. Some of these changes will be temporary, others may be permanent. As Jennifer Iduh, Head of Research & Development at the European Travel Commission pointed out “Tourism as we know it has ceased to exist”.
However, a few key things did stand out from the forum that vacation rental managers may want to be advised of.
The industry is, on the whole, recovering at the moment, but the trajectory has stalled a little recently, mostly due to the current situation in the USA which has been struggling to get on top of the pandemic in the same way that many European countries have managed. This means that businesses that rely heavily on tourism from the USA will likely face challenges in the short term. The USA and Asia initially led the recovery in terms of bookings, but have now fallen behind Europe and the gap appears to be widening according to Skift’s research.
Issues in the USA and Asia, coupled with the lack of long-haul flights at the moment led to some serious questions being raised about how well European markets can recover. However, there are reasons to believe this concern may be overstated, or at least may impact fewer businesses than first thought. Firstly, it appears that the disruption to long-haul travel has mostly impacted luxury and business accommodation, which see the greatest share of long-haul travellers. Whilst this is of course bad news for those involved, those in economy and/or leisure markets are typically less reliant on long distance guests.
Indeed, the data shows that nearly 90% European guests come from within the EU rather than further afield, as discussed by Franck Gervais, CEO Europe of hotel group Accor. Given that European borders are starting to open up more and more, vacation rental managers within Europe should still have a comparative advantage when it comes to attracting guests, especially since they may be unable to leave the continent for a while.
Given all this, it’s not surprising that drive-to travel in Europe has seen the fastest recovery of any vertical examined, as air travel remains difficult for many. One piece of advice given was to draw a “driveable” radius around your property and market to customers in that area. However, this comes with the caveat that guests may be willing to cross one national border, but rarely more due to the increased complexity that arises when dealing with multiple countries. Guests are still nervous about the possibility for further lockdowns or restrictions that could make journeys to or from destinations tricky.
Finally, given that tourism is going to be much more local for a while, it’s important to make sure that you understand the unique offerings your area can provide to your guests, as well as the personal touch you can provide as a vacation rental manager. As Lola Akinmade Åkerström, Co-Founder of NordicTB points out, “People connect with people… now is the time to reach out to the storytellers in your local community”.
Fellow Co-Founder Janicke Hansen agrees that local knowledge is especially important, but goes further, elaborating on the importance of considering how we communicate to local rather than international guests: “It’s surprising how little people know about their local community and what you can experience in your own neighbourhood because it’s not being communicated and we’re not encouraged to discover our own regions.” With so much marketing and communication traditionally directed outwards, towards international or non-local visitors, it’s a good idea to refresh your knowledge of your location and market that towards those nearby who may not know about it yet.
Given how quickly the global situation is changing, vacation rental professionals can be forgiven for being confused or overwhelmed at the moment. However, there remains plenty of expert advice for vacation rental managers from all over the industry, which could go some way towards making your businesses operations a little bit easier.
For more information and advice on managing your vacation rentals, check out the rest of our blog or reach out to one of our account managers for a consultation.