In 2018, an estimated 75% of vacation rental reservations were made through third-party booking sites – up from just 35% in 2012! Transparent and VRMA’s recent US VR survey also indicates that on average, PMs have 84% of their inventory listed on third-party booking channels.
The explosion of OTA juggernauts such as Airbnb over recent years has raised the profile of third party booking sites significantly, bringing a stampede of traffic to short term rentals. This influx has in turn attracted property managers to capitilize on the opportunity to market and sell their stock to the masses. As dependence on OTAs has grown, so have OTA options, and these booking channels have been under pressure to develop their features and services to cater to and attract the quickly evolving market.
And so, online travel agents (OTAs) are now generally accepted to be a central part of the vacation rental industry, but how satisfied are hosts with their options?
First let’s look at OTA dominance – who is using the platforms? Figure 1 shows us how OTA uptake differs across different areas. The top 9 respondent states average 86%, with Alabama PMs listing an whopping average of 98% of their listings on OTAs, yet South Carolina are much more independent in their distribution. The other states are represented by regions, with the PMs from the South and the West reporting higher OTA usage than their Northwestern and Midwestern counterparts. Canada averages much higher at 93%. These numbers tend to correlate with the age – older, more established markets tend to utilize third party booking channels less.
Meanwhile, when we look at OTA usage by PMs of different sizes, the overall trend is larger PMs being less dependent on the online agents. This is to be expected, as the draw of direct sales not subject to commission is only limited by the resources required to power a significant direct channel.
Now we can look at OTA satisfaction. In our 2019 US vacation rental survey, respondents were asked to rate their satisfaction with the top 5 online travel agents (and other) from 1 to 5 (5 being very satisfied).
The responses are illustrated in figure 3, where we can see that of the top 5, VRBO and Airbnb are enjoying the greatest user satisfaction scores at 2.9. However, I think we can agree that an average for these main players of under 2.5 out of 5 is not particularly positive, and things are even worse for Tripadvisor, which scores only a 1.9/5 for satisfaction amongst its users. Let’s drill down a little further – which platforms are performing best in different areas?
In figure 4, we can see how PMs of varying sizes rate the main OTAs. Something to note is that Airbnb see a general trend of being preferred by larger PMs, while VRBO are experiencing the opposite. Curiously though, satisfaction dwindles as PMs grow in size; those managing 2-9, 10-49 and 50-99 properties report 2.7, 2.4 and 2.2 out of 5 respectively. However, for PMs with over 100 units under management, a hugely improved score of 3.3 was recorded. This definitely bucks the trend, but may be explained by these much larger operations having relatively more staff to handle the platforms and the platforms themselves assigning dedicated account managers – afterall, it benefits OTAs to dedicate resources to keeping the largest of their clients happy.
When we look at satisfaction rankings by PM type, we also see a clear trend. Urban managers scored OTAs at 2.75 out of 5, while the average from seaside and rural mountain operations was under 2.5. Part of this rosier perspective may be connected to the ‘newer’ nature of urban managers. Urban property manager survey respondents were, on average, founded 7 years later than those in seaside or rural/mountain locations, and also source far fewer bookings from alternative sources. These operations have grown with the OTAs and also likely have stock, stay length and guest demographics more suited to these booking channels.
Despite the overall ratings we collated for the top 5 vacation rental online travel agents being a little underwhelming, the growth of the industry and consumer reliance on these reservation platforms secures their cog in the machine. And popular opinion seems to go further than that – results in figure 6 indicate that not only do very few PMs suggest that they will reduce their use of OTAs, but almost a third project an increase in their use.
And so things aren’t looking too bad if you’re an OTA – reservations through their platforms look set to increase over the coming year at least, and there still seems to be a lot of room for improvement in the eyes of their hosts. The introduction of programmes such as Airbnb’s professional co-host and Booking.com’s partner hub has signalled not only the beginning of acceptance of professional management companies, but the embracing of their services and often superior guest experience. It is interesting that the ‘other channels’ were consistently ranked more highly – and while it is hard to attribute this, the general suggestion is that smaller, less established channels are doing more to keep their clients happy – a healthy example and competition for our juggernauts! The scene is set for many positive changes in our OTAs over the coming months, especially for professional organisations, as they try and ride this wave of growth.
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