The past few months have been an exciting time of travelling and networking for the Rentals United team. After two years of uncertainty in the events world, we are so happy to have been able to return to our favourite vacation rental events.
From the Short Stay Summit to Scale Rentals, DARM, Streamline Summit, Guesty Val and more, we hopped around the world to meet our partners, customers and other industry leaders in person. As always, we learned a lot from the discussions we had and the talks we attended.
Had to skip some of the events this year? Don’t worry. Here’s our summary of the most common themes talked about at this year’s vacation rental conferences.
Consolidation continues to reshape the industry
For a few years now, consolidation in the vacation rental industry has been underway – and it has only accelerated since the pandemic.
Property management companies
Well-funded property management companies backed by venture capital or private equity are gobbling up smaller players and inching closer to creating monopoly markets day by day. For example, the UK holiday rental market is almost completely dominated by “The Big Three”: Travel Chapter, Sykes and Awaze.
The implications of this are manifold. From the perspective of the companies carrying out the acquisitions, rapid growth comes with at least two major headaches.
One is the challenge of integrating the different technologies the acquired companies use. Property managers often have long-standing contracts with software providers that they can’t get out of for several months. As a result, the parent company has to manage multiple different systems across one organisation, which is an operational nightmare.
The other big challenge is providing customer service at scale and maintaining customer satisfaction. While an SMB may have been able to provide personalised attention to all its customers, a large company may have to resort to more “faceless” interactions that could impact the customer experience.
Consequently, large property managers may even lose guests to smaller, independent companies that are better equipped to provide one-to-one customer relationship management. For smaller, independent property managers, this could be a huge opportunity to gain new customers. However, they will face challenges as they compete against large operators with big marketing budgets.
Property managers are not the only ones who see an opportunity in growing through M&As. As you may have seen in our roundup of the latest vacation rental mergers and acquisitions, software companies are also rolling up competitors and companies that provide adjacent technologies.
For a company like Guesty, such a move means being able to diversify its product offering, expand its reach and serve multiple category segments.
For the end user, less fragmentation in the software industry should ultimately mean more innovation, faster product development and better customer satisfaction, as well-funded industry-leading companies are able to put more resources and financial investment into achieving these goals.
New technology trends are emerging
In 2022, using technology to manage your vacation rental business is not optional anymore. Software systems help property managers focus on growth rather than spending all their time and energy on operations. They also help to cut costs and provide a reliable way of tracking metrics.
As a result, even the smallest operators have adopted at least some sort of automation solution, usually an all-in-one software that covers all their needs.
All-in-one vs specialised software
However, as a business grows, it’s important to understand the importance of using specialised tools based on the company’s specific needs, such as a channel manager, PMS, revenue management system or home automation platform.
Software providers are increasingly working together to provide property managers with a smoother experience when using various systems, either through white labelling or software integrations.
For example, PMS providers often partner with specialised channel managers to provide their customers with high-quality, reliable API connections to not just the big OTAs but a variety of niche and regional booking sites.
We believe that for growing property management companies, a PMS integrated with a specialised channel manager makes up the ultimate tech stack.
This type of synergy allows both providers to focus on what they do best: the PMS takes care of all operational tasks while the channel manager automates distribution. Both save you lots of time spent on repetitive tasks so you can focus on other areas of your business that need your attention, like growth and customer satisfaction.
Dynamic pricing and revenue management
Dynamic pricing tools and revenue management systems have been available to property managers for years and are widely adopted across the vacation rental industry.
However, while we’ve come a long way in understanding how data can help us make informed revenue management decisions, we still have a lot to learn.
We now understand that revenue management is not just about dynamic pricing. Flipping on the auto-pricing switch in your revenue management system is not enough to prevent you from leaving money on the table.
How we think about length of stays, pricing per customer profile (corporate vs leisure), content quality, specific amenities for certain markets, ordering of photos, brand positioning on channels – and the list goes on – are all part of increasing conversions and driving incremental revenue.
As a result, we need systems that are capable of integrating revenue management and distribution data so we can adjust our prices based on rich market data and portfolio performance insights.
We know much more than we did a few years ago – and the outlook for understanding how data can help optimise our distribution and revenue strategies is bright.
Travel fintech is expected to grow exponentially over the next two years.
Since the onset of Covid-19, travel disruptions are common, making travellers more protective of their funds than in pre-pandemic times. In the travel industry, fintech is improving the entire customer experience across the different phases of the booking process.
Travel fintech includes payment facilitation and products and services designed to protect travellers’ financial investments. It’s an effective response to satisfying customers’ desire for greater security around their investments in trips, transport and accommodation.
More and more channels are hopping on board the fintech train. For example, Hopper Homes is planning to add fintech products to their vacation rental offering soon. Agoda has also opened a fintech unit to improve customer experience.
Diversifying distribution is top of mind for property managers
In the increasingly competitive world of vacation rentals, how to drive more bookings will always be a question.
An important keyword that keeps coming up in conversations about distribution is diversification. How do you ensure that, instead of relying on a handful of large OTAs, you’re driving bookings from a diverse range of sources?
Rentals United customers can choose from more than 50 different channels to get listed on, including global OTAs, travel metasearch engines, regional booking sites and niche vacation rental marketplaces.
Finding the right combination of channels to advertise on – without spreading yourself too thin – is crucial. Rentals United can advise you on expanding your marketing mix. In fact, our best-performing property managers are listed on an average of 11 channels.
Next to channel partnerships, another increasingly important source of revenue is direct bookings. Having a direct booking strategy – with your own website – in place is crucial to reducing your reliance on channels. However, the two aren’t mutually exclusive.
On the contrary, the best way to drive revenue in 2022 and beyond is a combined channel marketing and direct bookings strategy. An obvious example of this is using channels to be discovered by and get the first booking from a specific guest, then using remarketing strategies, loyalty and referral programmes to retain that guest and drive direct bookings.
In conclusion, the more diverse your sources of revenue, the better your business is likely to do in the coming months and years.
If you have any questions about diversifying your distribution, feel free to contact us now.