Non-professional vs professional vacation rental hosts: how are professional management companies better?

What started as an opportunity to rent a spare room or home out for short periods has spawned an industry. And it’s easy to see why – the business opportunity of rental arbitrage is clear. Professional vacation rental hosts sprang up, investing in property and seeking higher ROIs than long lets offered, or answering the calls of owners seeking the same level of detachment as with long-term let property management companies.

But what does this professionalisation mean for the industry? Do those professionally managed short-term rental listings perform as well as those hosted by non-professionals? Are there disparities in the demand types they experience or trends in ratings? What can PMCs learn from the amateurs?

We’ve taken professional vacation rentals across the US and Europe and analysed the following metrics against amateur listings:

  • performance (occupancy, ADR and RevPAR)
  • demand (length of stay, booking window and domesticity)
  • management (distribution and reviews)

We considered listings whose owners manage 5 or more properties or have an associated domain to be professional, and the remainder amateur. This professional portion amounted to 42% in the US and 34% in Europe.

Performance – non-professional vs professional vacation rental hosts

Our first chart considers performance in terms of revenue across both Europe and the US. The difference in occupancy across the two sets is negligible (52% amateur vs 49% professional), however, daily rate is where professional vacation rental hosts really excel. ADR in professional 2 bedroom stock is 42% higher than in its non-professional counterparts ($203/$143).

Ultimately this brings RevPAR (revenue per available rental night) up to $100 for professionally managed short-term rentals, beyond the $74 for ‘hosted’ properties. In other words, every available night in a rental returns $26 more overall if professionally managed.

Demand – non-professional vs professional vacation rental hosts

So, thankfully for professionals everywhere, their expertise are vindicated in terms of return. But does the demand they attract differ, and what should that mean for operators?

First length of stay. Maybe unsurprisingly, guests tend to stay 1 day (20%) longer in owner-hosted homes than in professionally managed properties. This may be due to homelier feels being sought after for extended trips. Moreover, it may be a nod to PMCs to go that extra mile, especially if it equates to 20% more in accommodation fare per booking. The disparity in booking window was also negligible at 44 days for non-professionals and 42 for professionals. Perhaps a slight suggestion of superiority where last minute bookings are concerned.

Domesticity meanwhile presents a slight difference. Domestic guests book 85% of professional stays, while amateur owners attract 88% domestic bookings. Even more interestingly, this number looks very different on opposite sides of the Atlantic. While in the US there is no disparity whatsoever, in Europe however, professionals book just 75% domestic visits, while they make up a much superior 84% for amateur hosts.

So, we can see that the demand attracted to professional stock differs slightly, and property managers should factor that into their strategies. Play to strengths or learn how to tap into other demand types that your fellow professionals aren’t winning.

Management – non-professional vs professional vacation rental hosts

Finally we come to operating approaches. Unsurprisingly, professionals have the edge where distribution is concerned, with 2 listings across the main OTAs per property on average. In contrast amateur hosts tend to stick to just the 1 listing.

Our final chart above shows first that professionals secure far less reviews. They will receive 1 review for every ~4 reservations, while hosts come in closer to 1 in every 2. This matters, as notching up reviews fast is key to listing health and in general for performance. Secondly, we can see again that professionals are rated less highly than non-professional hosts. Read our discussion blog for more on the reasons behind this and some strategies for combatting it.

Professional short-term rental management companies versus non-professionals

So ultimately, professionals get more bang for their buck. Professionally managed properties make a better return on investment, but we've also learned that they fall short compared with amateur-hosted listings in a few areas. There are still improvements to be made, and there are steps to take to make them, and that untapped performance can only be good news for the professional vacation rental hosts, the owners and the industry!

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