The huge disruption in the vacation industry caused by the Coronavirus has led to major changes in behaviour from both hosts and guests. One of the biggest questions on the mind of property managers is that of how guest booking habits will change after Coronavirus. Will these changes be temporary or should we expect them to become part of “the new normal”?
Of course, nobody knows for sure. But making sensible predictions can help us to prepare for what may lay ahead. We’ve sifted through the initial data from the likes of AirDNA, expert opinions and outright speculation to try to explore the possible changes in guest booking habits we might see in the vacation industry in the coming months and years. Time will tell how accurate these predictions are, but we as an industry should be prepared to consider all scenarios.
Last-minute bookings dominate, but for how long?
It won’t surprise anyone that bookings are down across the board. Initially, bookings for the middle of 2020 and beyond remained relatively stable, but as the world is realising that the current predicament won’t be over anytime soon these have slowed quite a bit.
That said, whilst the overall number of bookings being made has dropped considerably, there are two particular types of bookings that have seen a big increase: mid-term rentals and last minute bookings.
We’ve already detailed why mid-term rentals are seeing a surge (and how to adapt your rental business accordingly), but the recent increase in last minute bookings is worth exploring here. There are several reasons for why the booking window has shrunk. The first, and arguably the most important reason is that the various lockdowns, travel bans and “shelter in place” requirements have meant that people have been searching for somewhere to stay right now. These might be essential workers and medical personnel travelling to at-risk areas, people stranded abroad who can now no longer return home, or perhaps those who have realised that their current location isn’t set up for an extended period of isolation.
Additionally, there are those who have taken to short-term rentals as a way of self-quarantining, particularly in non-urban destinations (more on that in a minute). Finally, there are those who sought out alternative holidays after their initial plans were disrupted, but those likely make up a much smaller proportion of current booking activity at this point in time.
The big question about all of this is how long last-minute bookings will remain the norm. Arguably, this all depends on how the pandemic develops. We’re certainly no medical experts, but the leading scientific opinion is that there is a real risk of subsequent outbreaks happening. If that remains a likelihood, guests will be understandably cautious about making bookings too far in advance in case restrictions return.
Greater flexibility will be required
Given the aforementioned caution on the part of guests, it’s going to be more important than ever that property managers and rental hosts are able to be flexible. In the most basic terms, that means allowing free or greatly reduced cancellations for bookings which may be disrupted in future. Whilst cancellations can be frustrating, it’s well established that properties with more flexible cancellation policies tend to see more bookings.
Similarly, property managers will need to be as flexible as possible when it comes to accommodating rebookings. Allowing guests to move their booking dates free of charge is arguably the most effective way to reduce cancellations. In addition to this, arranging credit for your guests to use at a later date could be key to preventing them from asking for full refunds, or taking the credit offered by sales channels and booking another property instead. More info on credit and rebooking is available here.
Finally, property managers will also have to be flexible on price, at least initially. A temporary reduction on rental rates will be key to winning back guests during the early stages of recovery. The economical effects of the outbreak have impacted consumers’ pockets, so they’ll likely be looking for lower prices in order to travel again. Keep an eye on your competitors’ pricing models and adjust accordingly.
Whilst nobody is claiming to predict this with absolute certainty, many commentators and experts have suggested that the type of destinations guests will be seeking out are likely to change. Rural and non-urban destinations have seen a surge in demand recently, as guests try to escape busy cities in favour of “isolated luxury”. However, this has since been condemned in many places as irresponsible, as such locations often don’t have the medical infrastructure to support a large influx of tourists.
Looking further ahead, logical speculation suggests that the demand for rural and leisure locations is likely to increase as people are released from confinement. Those who have been cooped up in cities will be looking for some green space, and those who would have opted for an urban destination for their travels will be hesitant to risk the usual crowds.
Arguably, property hosts in non-urban locations will be best placed for the rebound in the short-term, as they are able to advertise and market their remoteness as an advantage. Destinations that are only accessible by car, or which don’t require any public transport may actually be seen as preferable in the initial stages of recovery. However, we’d advise against marketing properties specifically for refuge or quarantine, as many rental channels and OTAs are following government guidelines and taking a very dim view of such behaviour.
That’s not to say that urban rentals are dead forever of course. Major cities will always be a hotspot for visitors, and tourist attractions will see a rise in demand eventually. But such a rebound may come slower to urban markets than rural areas. An exception to this may be business travel, which some have predicted to recover before leisure travel does. There is however some debate about the extent to which business travel will return. Many employees are now adapting to new ways of working and some are speculating that digital remote work will become more normalised in future, though the idea that this will replace business travel entirely seems to be something of a stretch. Indeed, domestic business travel in China is slowly waking up already, and there is no reason to suggest the same won’t happen elsewhere.
Guests will value hygiene & cleanliness more
We’ve already established a few ways in which guest behaviours may change, but it’s worth considering potential changes to their values too. Top of that list is the increased importance of hygiene and cleanliness. Emphasising the sanitary nature of properties will be of utmost importance for those looking to persuade guests to visit in the wake of the virus. Where some hosts may have been able to get away with a little sloppiness or less-than-thorough cleaning in the past (especially in lower-end accommodation), many guests will no longer accept anything less than absolutely spotless properties for the foreseeable future.
Indicating the cleaning procedures that you have in place will be both necessary and advantageous when it comes to securing bookings. Remember, vacation rentals will be competing with hotels which typically have much more regimented cleaning protocols, so detailing the extra precautions you’re taking will go a long way towards easing guests’ concerns. Indeed, given the more private nature of whole-property rentals, rental providers may actually have a unique selling point over busier public accommodation like hotels if marketed correctly and responsibly.
Because of this increased importance of cleanliness, guests may be more willing to pay for cleaning services than they were in the past. The extra cost may be worth the reassurance of knowing the property is hygienic and safe, though any increases in price should be proportionate to the additional services offered. You may also wish to consider offering “hygiene packs”, such as hand sanitiser and disposable face masks to help guests feel safe.
The current situation seems to change every day and nobody knows for sure what the future of the vacation industry looks like. However, tourism will eventually rebound (it always does), and considering the ways in which guest booking habits might change can help property managers and rental hosts be prepared for whatever the new normal might be.