Kombucha loving Generation Z are fueling returns for vacation rental landlords. Professional landlords are tapping into the rapidly expanding short-term rental market led by companies such as Airbnb, HomeAway and Booking.com.
In an effort to boost yields across their portfolios, residential landlords are turning to the vacation rental market to maximize rental returns and reduce voids in a low-yield environment. The rise in the home sharing economy has been meteoric with Airbnb alone now present in over 191 countries and having over 500 million guest arrivals since its inception.
The increasing trend towards alternative accommodation preferences over more traditional hotels is driven by Gen Z and Millennials demanding a multi-option and multi-location offer which is not catered for by hotels which tend to be clustered in the traditional tourist zones. Eating, drinking and staying local is a trend that appears to be here to stay.
Raising the bar
The booming market is tapping into the sharing economy ethos and Airbnb’s tagline ‘belong anywhere’ sums up the aim fairly well. There remains a wide spectrum, however, of the quality between units ranging from fully serviced ‘hotel-style’ experiences to shared spaces complete with unvetted cohabitors with questionable hygiene.
Professional landlords are finding new ways to stand out from the crowd and a rapidly emerging ecosystem of full management and self manage SaaS solutions have sprung up across the globe helping them do just this. Software solutions promise to optimize management processes and boost margins through the upselling of add on goods, services and experiences.
Hyper-localised recommendations and host-curated experiences delivered through technology platforms allow guests to experience neighborhoods that were previously out of reach for even the most educated traveler. Local entrepreneurs that are able to harness their deep local area knowledge, are reaping the rewards with stellar reviews from guests driving repeat bookings and higher visibility in the booking portal search rankings.
Tech-savvy guests are demanding instant access to complementary services and 24-hour check-in solutions that turn a run of the mill stay into a slick, fully serviced experience with on-demand services ordered at the touch of a button. Clumsy key exchange procedures are being replaced by modern video supported check-in and smart-lock solutions which take the anxiety out of a delayed flight leading to the inevitable late arrival.
When building GuestHug we used the latest in geo-fencing technology to streamline the check-in process. The App uses similar technology to that used by the likes of Uber and Deliveroo, and automatically checks guests in when they arrive at the property using geolocation as a trigger. An in-app welcome video also greets guests remotely giving hosts the ability to deliver a personalized experience even when they can’t be there in person.
We created a cutting edge piece of software that harnesses the latest in mobile technology, enabling landlords to save time and earn better margins while giving guests an amazing set of experiences during their stay. Most of the apps in the market were aimed at either helping landlords with management efficiencies or helping guests but rarely giving benefits to both. The short-let sector is competitive and our subscribers use GuestHug as a tool to differentiate their offer in a crowded market.
The removal of ‘in-person’ check barriers through the use of management apps such as London based GuestHug and smart-lock solutions such as Nest, August and Nuki mean that professional landlords now have the tools available to them to rapidly scale their operations whilst keeping overheads at a minimum.
If you think about what the key pain points are for short-let management are, one of the key hurdles is overcoming the wasted man hours associated with meeting guests face to face on arrival. The remote handling of guest check-ins with the latest in geo-location technology is a game changer to the sector and gives professional hosts the edge they need to keep ahead of the game. With full management companies charging up to 20% of gross revenue, owners who are able to self-manage utilising technology as the facilitator are reaping the rewards and are able to increase their yields by up to 100% without the costly management charges.
24 Hour access is the new norm
Guests are demanding more flexible ways to live, work and travel and it comes as no surprise that this extends to check-in options which should be available 24 hours a day with no fuss. Whilst every owner has their own set of access solutions, technology is at the core of making the process smoother and less stressful.
In fact, landlords who want to be accepted onto the Airbnb Plus programme (basically a vetted category of Airbnb listing) need to be able to offer round the clock check-ins as standard – this is squarely aimed at the business traveler who is looking for a high quality end to end experience, and don’t want to be left in the dark if they arrive late at the units after a long day of back to back meetings.
Venture Capital funding into travel-tech start-ups reached record levels in 2018 and appetite for investment into the sector remains strong. With a total of US $13 billion of vacation rental revenue in the US alone last year, 2019 looks like it’s going to be another busy year. Going forward we think the big trends will be centred around giving guests hotel style experiences within the surroundings of a home setting and tech will play a big part in this.
Delivering hyper-localised and personalized experiences to guests and better access to on-demand goods and services will enhance the guest experience and allow landlords to boost their margins through upselling. More sophisticated integration with a smart lock and smart home technology such as Alexa and Google Home will also feature allowing guests to customize their home settings, including temperature control and having their favorite Netflix series preloaded when they arrive.
In an industry that, last year, was valued at $100 billion and is predicted to reach $167.9 billion by the end of 2019 the home sharing phenomenon looks like it’s here to stay. Traditional property investors have started to turn to Airbnb to improve returns in a low yield environment with short-lets achieving on average between 40 and 50% more rent compared to a longer-term letting.
The rise of the sharing economy movement, including the likes of Airbnb, is driving a more flexible way to work, live and travel and the property industry is responding with innovative solutions to cater for a new wave of demand coming from the next generation who are tech-savvy and place increasing value on flexibility, access to on demand services and immersive local experiences.
The vacation rental market has taken the world by storm. Where once travellers needed to book stays at large hotels or seedy motels, they now have the flexibility to rest their heads in an innumerable array of private residences from single bedrooms to luxury compounds all around the world. It’s all possible thanks to the rise of sharing economy platforms like Airbnb.
But while Airbnb and its ilk offer renters a bewildering variety of destinations, the day-to-day management of the rental properties themselves is left entirely to the property owners. Between flipping units, handling questions, and managing guest access, running an Airbnb rental is much more like a full-time job than many owners might want. However, the right combination of guest management platforms like GuestHug, smart locks such as those from Nest, and related IoT devices might offer a solution to some of these management headaches.