NB: This is a guest post by Pedro Colaco, president and CEO of GuestCentric Systems.
Due to the recent economic downfall guests are searching for alternative accommodation products for their leisure travel.
Vacation rentals are capitalizing on this trend and finding ways to reinvent their offer and look for new online distribution channels.
Firstly, there are now important distribution sites like Homeaway to sell their units.
Secondly, vacation rental owners and managers finally understood that having their own website and a reliable ecommerce system with social marketing tools can help them grow their business.
These two aspects, coupled with consumers’ willingness to accept lower levels of service, are now turning vacation rentals into real alternatives to hotels for leisure travelers. But what aspects of the environment are influencing the shift to vacation rentals?
1. Guest search is intensifying
Industry studies show that the overwhelming majority of travelers (up to 80%) select their accommodation through the Internet and over 50% end up booking online.
In addition, online search is intensifying and consumers are searching tens of sites for experiences outside the “normal” hotel before booking.
New accommodation products are emerging with an experience and budget orientation: vacation rentals, design hostels and couch surfing are now all valid accommodation alternatives for leisure travelers.
2. Specialized distribution networks are being established
Searching for and booking vacation rentals online has been difficult to date. Mostly, vacation rentals have been rented out via intermediaries and word-of-mouth.
But, since HomeAway acquired VRBO in 2006, the vacation rental online distribution business has grown very rapidly as an alternative to traditional mediation agent.
HomeAway.com has been the unifying force that has taken a highly fragmented and localized business and made it easy for consumers to search for vacation rentals on a global scale.
This rapid adoption of distribution sites is similar to the adoption of online travel agents like Expedia as a preferred tool to search for and book hotels in the late 1990’s and early 2000’s and is the foundation of establishing e-commerce and distribution networks for vacation rentals.
3. Professional website design and high quality pictures are affordable
A successful online business starts with a website that transmits quality, professionalism and credibility through professional design and good pictures.
With today’s technology it is extremely easy for vacation rentals to have a professional website that:
- Communicates their property’s unique look and experience to web visitors.
- Is quick and easy to setup, avoiding long and complex web design “projects”.
- Can be kept updated without external involvement.
- Provides a pay-as-you-go model, so that upfront investment is minimized.
When setting up a website, images are paramount, as they are the second factor right behind pricing in terms of influencing the choice of property to stay in.
With the proliferation of digital cameras, it is now extremely easy even for amateur photographers to create good pictures that provide renters with the experience at the property.
4.Ecommerce solutions are readily available
82% of hotel guests prefer to book directly at the website of the property if they can get a good price and a trustworthy experience.
While vacation rentals are not experiencing this level of direct business yet, industry studies show that direct rental business is increasing at good pace, and it is expected that the same behavior as for hotels will apply.
If you tie these results with the rate of growth of online bookings in 2009/10, then now is the perfect time for vacation rentals to capitalize on the online opportunity.
A powerful ecommerce offer enables properties to maintain good levels of occupancy rates and decrease distribution costs.
5. Social engagement is the new word-of-mouth
The use of social media like Facebook and Twitter has changed the way people communicate, forever. Word-of-mouth is now amplified by millions.
This creates the perfect opportunity for vacation rentals to overcome the SNAD (significantly not as described) curse, as positive reviews of a property distributed by a network of friends can generate immediate referral business.
Satisfied customers will always provide and share good reviews and comments about their stay. Hence, no matter the size of the property it is very important to have direct communication with guests in order to promote and sell their units and understand their needs.
This will reflect on an increase in people that follow the property and create a snowball effect on the property’s brand. New technologies simplify this social interaction and provide the necessary information to create strategic viral marketing campaigns to increase market share.
Conclusion
Guest search is intensifying and alternative accommodation products like vacation rentals are becoming mainstream options for leisure travelers due to their willingness to accept lower levels of service.
Vacation rentals are capitalizing on this trend and behaving like mini-hotels by looking for new online distribution channels, establishing their own websites, e-commerce systems and leveraging social media to overcome the SNAD (significantly not as described) curse, and create referral business.
By adopting this strategy, vacation rentals are becoming mini-hotels that can compete for business and improve occupancy rates and profitability and weather difficult economic times.
NB: This is a guest post by Pedro Colaco, president and CEO of GuestCentric Systems. More information and case studies.
About Special Nodes
Cost and comfort are a big part of the reason travelers are looking toward vacation rental homes and condos. With generally more space than a hotel room a family of 4-6 can rent a 2 bedroom home or condo and have a full kitchen for preparing meals and more than one TV and more privacy. And the weekly or monthly rate is almost always lower than 2 hotel rooms.
Nice article. Another development I think will be that the “pay to list” model will come under ongoing pressure, like other classified areas. We recently launched http://rentalspot.com as a free listing site. Time will tell how the industry evolves.
You make an interesting point about the ad-supported model for vacation home listings. I think Rentalspot.com is a category first for the industry and a much-needed alternative. Wish you the best of luck and the site looks great.
Good for you http://rentalspot.com. The vacation home rental space needs a free service like this.
Yes it’s nice to know there is an option for homeowners to turn to when we want to list and promote our homes free of charge. We needed an alternative to VRBO and http://rentalspot.com might turn out to be what the doctor ordered. The ad-supported model is tested and true but what I like about the effort is the site’s plans to offer premium services – and I bet it will still be a bargain compared to the existing alternative that I’ve used before.
@Tobias – thanks for the comment and good luck.
Incidentally, not sure if @Terry and @jjs work for you but their comments and the all important link (no-follow, sorry) are from the same IP.
That’s because we are married (same house, same computer) and are both fans of the site and the potential for the service.
Very interesting, I totally agree and there are so many advantages to holiday rental ie privacy, space and comfort.