I’ve been to Paris many times, and the City of Light has never failed to impress upon me that she really is truly Magnifique. I’ll never get tired of the absolute awesomeness of La Tour Eiffel, especially sparkling at night and spotted through the glass roof of a riverboat on the Seine, as we enjoyed on the Monday night of the VRMA European conference.
But Paris is also a city with big challenges for vacation rental property managers. There is seriously restrictive and punitive legislation being faced by owners and managers operating within the city, including a rental limit of 120 days for a primary residence, and zero tolerance for second homes being offered for short-term rental.
It was very fitting that the Vacation Rental Management Association chose Paris for the annual European conference – a mark of solidarity for colleagues facing difficult choices, and a message to those in high office that the momentum of vacation rentals won’t be slowing down anytime soon.
I’m honoured to sit on the VRMA European committee, and I was also a speaker this year, so I know first-hand how much time and effort went into making this conference such a success. With more than 400 registrations (an increase of 30% on last year) coming from more than 22 countries (not just in Europe), Mike Copps and the VRMA team really excelled themselves and were a shining example of the professionalism that our industry is clearly and thoughtfully moving towards.
We will all have a different experience of Paris, depending on what sessions we attended, who we spent time with, and what conversations we had. Based on my experience of the conference, the themes that are buzzing round my head right now are acceptance, adaptability, change, opportunity, professionalism, sleeping giants, value and supply dynamics.
My first take away from this week is to accept what is. We’ve been told time and time again that VRPMs need to learn to work smarter with the OTA’s. As Simon Lehmann reminded us, “the game at the top of the sales funnel is done”. Phocuswright have predicted that by 2020, 72% of bookings will come from OTAs. This leaves a bleak figure of just 28% for direct bookings.
However, this doesn’t mean that direct bookings and reasonable margins are now a pipe dream. Far from it. Smart VRPMs are making use of all manner of marketing and operational tactics and efficiencies to drive repeat loyalty away from the clutches of the big boys. It’s not too late to change this percentage, but the real opportunity is in the repeat bookings. This battle might be over, but VRPMs have not lost the entire war.
Google is the (gently napping) giant in the corner. Be prepared. Be very prepared. Google’s mission, “to be the trusted place where travellers go for personalized information to make faster, effortless decisions”, isn’t just corporate fluff. It’s real, and with Google not only having the means and ambitions to jump right in and join the party, with 1 billion global users – they also have the customers. Watch this space.
The biggest threat to the vacation rental industry is supply. As Simon reminded us, supply is not about the sheer number of properties on the market. It’s about the quality of those properties and their availability. A million units could come on to the market tomorrow, but if the quality is ‘crap’ (excuse my French….), or the inventory is only available for a few limited weeks – then we have a supply issue.
Part of the bigger picture problem is that property managers need to get a lot better at communicating their value proposition or they risk not only losing out on converting RBO’s, but also getting access to the estimated 4 million properties in Europe that are currently not yet on the rental market.
The vacation rental industry as an entire entity needs to up its game and do a better job at communicating why a traveller should book a rental over a hotel. As Phocuswright Research shows, travellers aren’t looking for specifics of what they book. They are simply looking for accommodation, and the lodging that meets their needs in the moment of decision making, will be the one that tucks them in at night.
Voice-activated, smart home devices are not really about Tech. They are about Strategy. Alex Nigg presented us with a ‘brave new world’ of smart home tech. Currently in its infancy, although not for much longer, it’s easy to get caught up in the detail of the pros and cons of each device and whether we ‘like it or not’. This misses the point of the revolution.
The real opportunity is that smart home tech, including voice-activated devices, will give vacation rental providers an opportunity to understand their customers at a level that is currently undreamed of. Strategically-focused VRPMs will use this technology to make all manner of operational efficiencies, create new income streams and develop relationships with guests that would be the envy of many businesses. And this is only the beginning.
The vacation rental industry has unique challenges that other lodging providers do not. As Javier Cedillo-Espin, the dynamic CEO of onefinestay stated, the vacation rental industry will always be fragmented. This is its nature.
However, when you accept something just as it is, that’s when the shift begins. Our industry truly is currently the most interesting and potentially transformative vertical in the travel industry – it will be interesting to see what shifts between now and Las Vegas in October…
I’d love to hear your reflections so please feel free to leave your comments below.