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The Vacation Rental Industry: Here and Now
Six Industry Trends That Are Impacting the Global Vacation Rental Industry
By Rob Käll, President of Bookt
W |
Large, complex, long understudied and definitely underestimated, the U.S. vacation rental market is poised for change. Demand for vacation rentals is growing, at a time when nearly $100 billion in leisure travel will be booked online in 2008.
While the country goes into freeze mode and hotel and airline analysts downgrade their already grim forecasts, vacation rentals are becomingly increasing attractive for those same inherent reasons - cost savings. As travelers look for most cost-efficient ways to vacation, vacation rental unit inventory is steadily growing to accommodate this need. This is also true for short term rentals in major cities, as business travelers look for cheaper alternatives to hotels.
Importantly, management companies and unit owners are more focused than ever before on putting their properties to work. Driving this trend is technology and improved distribution channels says Bookt, who has developed a new platform for vacation rental managers, tour operators, developers and larger travel organizations with diverse types of properties and portfolios, to attract and optimize their ideal customer bases far beyond current industry norms. Bookt sees the vacation rental industry as being on the brink of great expansion. The maturity of new technologies, the emergence of new tourism hubs, the industry's overall shift to online marketing and the need to turn underutilized real estate holdings into profit centers, has created the need for a new business model and new industry platform for the vacation rental industry.
The Vacation Rental Industry: Here and Now
Six Industry Trends That Are Impacting the Global Vacation Rental Industry
By Rob Käll, President of Bookt
Vacation rentals are one of the fastest growing segments of the global leisure travel industry; in the US alone, it's an estimated $100 billion market already. This growth has been fuelled by substantive shifts in consumer purchasing behavior, technology and the marketing and distribution of individual vacation rental units. And in spite of current economic woes, this segment of the travel industry shows no signs of slowing anytime soon.
At Bookt, we recently identified and monitored six of the most prominent trends within the rapidly growing global vacation rentals market. These trends, which we expect see continuing well into the next decade, will further push the industry into the lodging mainstream.
1. Increased ownership of second and vacation homes
This phenomenon, driven by the increase in affluence worldwide (and in the US, by the Baby Boom generation), has increased the global supply of vacation rental units. The economic expansions of the 90's and mid 00's contributed to the development of these properties, while the diversified real estate portfolios of US Boomers and the new global elite has yielded an unprecedented number of partially-occupied dwellings in attractive and upscale locations. This trend, which continues as Boomers retire, is one of the most important demographical trends affecting the vacation rental industry.
2. Increasing need to generate income from vacation properties
While the flush years of 1991-2001 and 2003-2007 encouraged investment in second homes and vacation properties thereby increasing the supply of vacation rental units, the inevitable economic troughs and the current residential housing crisis has ordered that owners realize some immediate return on those investments. Put more simply - today's vacation units need to become income-generating machines, not just static assets whose chief value is derived from appreciation. This shift in the use of existing units has also contributed to the increasing and diverse supply of vacation rental properties.
3. New tourism hubs with strong real estate components
Regions like Dubai, Southern Spain, and Costa Rica are all emerging tourist destinations, enjoying high rates of visitor growth over the past five to ten years (7.1%, 6%, and 9%, respectively¹). They also all have a high saturation of real estate investment, which has led to an increased proportion of vacation rental properties. These regions, although not unknown a decade ago, have burst onto the scene to command substantial attention from developers and tourists alike, with excellent rates of return.
4. Increased interest in family and small group travel
Small group travel is no small market, valued at $18.5 billion and driven by the increase in empty nesters and retirees, online booking and shifting travel habits. This market segment, particularly, is perfectly suited to the vacation rental home for its affordability and value, spurring the demand side of the vacation rental property equation. Family travel is also on the rise, constituting a small group of its own.
5. The online BOOM in vacation rentals
Once the purview of travel agents and word-of-mouth promotion, vacation rental properties are increasingly marketed and sold online. In the past, management and ownership of vacation properties often lacked the corporate structure of hotel chains or other lodging options and thus lacked the centralization of resources to develop and execute a comprehensive web sales strategy. While ownership consolidation has not yet swept the industry, technology and third-party service providers like Bookt have closed the gap, making it possible for both the single-unit proprietor and the 1000-unit corporations to develop an effective, comprehensive online presence that meets their strategic goals.
6. Transparency
Price transparency and categorization became commonplace in the larger lodging industry with the growth of travel review sites, social networks and photo and video enabled websites. This has aided the growth in vacation rental properties by removing any uncertainty associated with unique lodgings. With reviews, photos, accurate (and cross-checked) descriptions and categorization, vacation rental units have became as reliable as a large hotel chain's reputation.
If these trends continue, and we see no reason why they shouldn't, the vacation rental industry will expand exponentially over the next few years to become the new watchword in leisure travel. Facilitated by innovators, web architects and trusted strategy advisors, the vacation rental industry is indeed poised for great things!
For more information about Bookt or to arrange an interview with Rob Käll, please contact Vanessa Horwell at vanessa@thinkinkpr.com or +1.305.776.8817. Fact sheets and data regarding vacation rental industry trends are available upon request.
About Rob Käll and Bookt
Rob Käll, President of Bookt LLC, is a technopreneur at heart. He founded Bookt in 2008 to fill a large void in the global vacation rental industry, drawing upon his 12+ years of experience in developing and implementing some of the most sophisticated (and visited) real estate and property websites in the world. Bookt is a comprehensive web services provider to the global vacation rental industry, delivering seamless integration and turn-key web solutions. The company provides a complete range of services for vacation rental managers, tour operators, developers and larger travel organizations, from sophisticated website development, online marketing services, search engine optimization and CRM strategies. Rob is an expert in emerging web technologies, especially as they are applied to the travel industry, as well as behavioral targeting and engagement, deciphering marketing trends into widgets and applications, and online distribution hubs beyond the GDS.
For more information, please visit www.bookt.com.
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