Vacation rentals may be an ever-growing topic of conversation socially and within travel and accommodation, but so much of the industry remains misunderstood. In this article, we tackle 6 of the most common misconceptions surrounding short-term rentals:
- Rentals are insignificant next to hotels
- Short term rental growth has stalled
- Vacation rentals are lacking professionalization
- The industry is disorganized
- Alternative accommodation is not COVID safe
- Guest experience at short term rentals is unpredictable
1. Vacation rentals do not represent a significant proportion of international accommodation
It has been said that STR capacity doesn’t compare with that of hotels worldwide. Back in 2017, it was announced that Airbnb had notched up 4 million listings worldwide – in excess of the top 5 hotel brands combined (3.9 million). Now they’re at around 7 million vacation rentals. To give more of visual representation of the current situation from country to country, we prepared the following chart:
Mexico, Spain, Portugal, France and Brazil have more short-term rental rooms than hotels rooms, with many others close to tipping point.
We’re also waiting to see how the numbers settle after a turbulent period. Back in April, we did some research to compare how hotels and vacation rentals were recovering from the pandemic. It showed that vacation rental performance was recovering much more quickly in the wake of COVID-19. In fact, some weeks through the summer have seen demand in certain markets out-strip that of the same week of 2019.
This shift is as a result of consumer demand changing shape in favour of rentals as people seek self-sufficient and contained flexibility; staying less centrally and for longer than hotels. We predict that this trend will have ramifications on the balance of both supply and demand in the long term.
Vacation rentals are competing for hotel guests, and winning
What’s more, it has been repeatedly corroborated that Airbnb and other short term rental platforms are converting hotel clientele. Indeed, with 60% of those who have used both accommodation types preferring vacation rentals, it’s fair to say that Airbnb and pals are worth noting as competition for traditional lodging.
2. Vacation rental growth has plateaued
And that brings us onto our second common misconception – that growth has plateaued. COVID-19 disrupted pretty much everything – travel being one of them. In the absence of copious guests arriving in most markets, listed vacation rental inventory was seen to reduce.
However, with the demand trends mentioned above, and the clamor to return to travel, supply is already picking up once more; the first marked positive delta for some time in terms of vacation rental supply was recorded in June - we will watch this space.
3. Vacation rentals are not professionalized
You could be forgiven for thinking that something that originated from 2 friends letting an airbed in their apartment wouldn’t be particularly professionalized. Forgiven yes, correct no...
As you can see in the world breakdown above, the most developed STR regions are seeing over 15% of inventory managed by property managers with over 50 listings under their management.
4. The short-term rental industry is disorganized
And then there’s industry disorganization; or lack thereof. While the industry has boomed over the last 10 years especially, it existed a long time before that - as evidenced by the founding of arguably the most substantial vacation rental management association in 1985; VRMA.
Nowadays there are hundreds of associations established to help property managers and short term rental stakeholders navigate the complicated world of rentals. We put together an article to describe how they help, and which might be appropriate for you.
Principally, they coordinate industry minds and action to align regulation, promotion and resolve barriers to success.
5. Vacation rentals are not COVID safe
Being more fragmented can also pay off - vacation rental property managers have been able to adapt effectively and efficiently to new demands on accommodation. ‘Low-touch’ has become a new buzzword for the sector, with hosts offering contactless check in and keyless entry. This kind of independence is just not possible with a centralised hotel building.
Of course short-term rentals are also organically better suited to these new COVID-19 related demands - as touched on above, they are uniquely blessed with self-sufficient spaces and dedicated amenities, with more flexible operation and location.
Beyond this, COVID safe cleaning protocols are just as possible in rentals and no less regulated.
6. Guest experience is unreliable
Finally, there is a misapprehension that guest experience in short term rentals is unreliable and inconsistent compared with other accommodation types. With the review systems in place across all the top vacation rental booking platforms, it is possible to select a property with a strong review score and breadth of reviews.
The chart above illustrates the average number of reviews per Airbnb in August as 17. Furthermore, the current average review score is around 4.7/5. This exemplifies the quality and quantity of reviews for the average vacation rental listing.
There is also a review score breakdown by a number of factors including cleanliness and value, and it shouldn’t be forgotten that browsers are able to read individual comments on a specific listing. It could be argued that the ability to distinguish property by property gives the consumer a much more granular and informed choice.
Pleasantly surprised? Learn what else short-term rental data can do to support your business at www.seetransparent.com