Vacation Rental Making Impact Over Hospitality Industry

This article talks about the industry vacation rental sector and its impact on the major hospitality brands.


HOTELS HAVE been at the forefront of accommodating travellers of all needs for many years. The concept of homestays, vacation rentals (VR) have tipped the coin upside down within a matter of a decade. Ideally, what took the hotel industry (investments, marketing, maintenance etc) to achieve a stronghold in the hospitality industry; it has taken less than half of that for the new age vacation rentals to offer quality hospitality to traveller’s worldwide.

Initial hiccups

Hotels offer a set standard of accommodation and other facilities. These standards are maintained across branded hotels where ever we travel. With vacation rentals, each accommodation differs from the next. This aspect delayed the VR adoption among travellers. However, in the western markets, there are vacation rental associations which help draw and define a set standard of services. Allowing the VR industry to weed out scamsters and maintain a strict level of service to travellers always.

Advantages to the traveler

The look and feels of rooms offered in hotels are quite similar, whereas each vacation rental property is unique in design and location. A vacation rental allows travelers to choose among the variety of lodging options from loft apartments, beach condos, mountain cabins, boats or farmhouses suitable for any travelling group, couples, or backpackers.

Since travelers communicate with the vacation homeowner in advance, they know exactly what they're paying for before check-in. Whereas at hotels, travelers end up paying the bottled water fee, energy surcharge fee, baggage holding fee and more.

These are just a few advantages among many which give more flexibility and power in the hands of travelers with VR.

A new revenue stream for the property owner

The vacation rental business has opened up a stream for property owners to host travelers and earn extra income. The property can be anything from a single room with private bath, condo, cabin, cottage, chalet, villa, apartment, estate, lodge, townhome, studio, castle, farmhouse, bungalow, or boat.

With platforms such as Airbnb, HomeAway and other mainstream aggregators listing vacation rentals, achieving higher reach as a property owner has become much more organized and transparent.

Even managing properties on multiple channels have become a breeze with many applications which allow the property owner to list, distribute, promote, and manage revenue without having to develop technical skills overnight.

Property maintenance is one of the biggest challenges for any property owner to manage. Today there are many service providers who manage properties pre, post, and during guest stay on a very transparent basis. This means, that the property owner has to hire the right service providers and get the ball rolling.

The future of VR services

Smart speakers such as Google Home, Amazon Echo, and Apple Homebot are about to replace room service attendants and front desk personnel at vacation rentals in the US. Well, if you can order room service through Alexa or access your rooms via smart locks paired with Google Home, then why should a property owner hire people to manage property and guests? The future is about driving inefficiency in managing properties and guests with far fewer investments.

What the numbers say

Vacation homes have been in existence for hundreds of years. However, the modern variation of vacation rentals connecting travelers using the World Wide Web began in the west and has grown exponentially ever since.

With a market volume of US$17,949m in 2018, most revenue is generated in the United States. By the year 2022, the United States is expected to generate over 47 million users in the VR market.

In India however, it's only since the turn of this decade that VR has taken over from its humble beginnings. This year, VR market in India has generated US$357m. And, by 2018 over 17 million people are due to use vacation rentals in India. This year, the average revenue per user (ARPU) in the Vacation Rentals segment amounts to US$25.75 in 2018 and projected to grow steadily through the coming years.

All in all, from the service providers (vacation home owners) to the consumers (all of us), technology is driving costs of delivery to new lows every year, and reaching out to new age, young travelers worldwide. If homeowners can easily set up their properties as vacation homes without breaking a sweat and achieve quality hospitality for not much, then this is a stark warning for the big hotel chains which have invested millions of dollars on properties and manpower to deliver the exact same experience, if not better.

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