Things have changed dramatically for the vacation industry and there is a year-year increase in the number of people booking vacation rental properties. According to this study, the vacation rental industry is expected to grow at a rate of 7.07% per year until 2021. Just like in any industry, the vacation rental industry is continuously changing.
Airbnb’s growth is at staggering rates with over 150 million itself is an indication that the vacation industry has grown into a massive industry. If you are a vacation rental business looking to continuously improve your property management to enhance the guest experience, it is important to know these 7 technological transformations in the vacation industry to thrive in the competitive industry.
The emergence of vacation rental booking platforms
A couple of decades ago, booking a rental property was hard. You either had to call up the providers directly to book rooms or contact through a reservation agent to make bookings. But today, modern technological advancements have made it possible for people to book vacation rentals in an easy and convenient manner. Vacation rentals platforms are a large community of vacation rental hosts that make it easy for property owners to create their listings and for travelers to book vacation rentals effortlessly. This growth of vacation rental platforms is expected to continue as the travel websites have started displaying vacation rentals in their search results. With this change, the vacation rental industry will have brand new business opportunities.
Traveler expectations are evolving
While this really is not a technological transformation, the evolution of traveler expectation has given rise to many significant technological advancements. Different generations crave different services when it comes to booking vacation homes. These days, millennials travelers prefer taking short and spontaneous trips and booking such trips is much easier and affordable with vacation rental platforms. Millennials constitute over half of vacation travels who expect a simple and instant booking process. If you are running a vacation rental business, ensure that your properties are listed in vacation rental platforms and offer instant booking. The demand for vacation rental websites among the new generation will grow as mobile technology continues to evolve.
The new generation is becoming increasingly comfortable with the online processes and modern technology that facilitates it. They look for memorable moments, unique travel experiences, and little extras to make their vacation memorable. Additionally, to ensure that their expectations are met, today’s travelers are indulging in more online research and reading and posting reviews to rate service providers. Today’s travelers also expect high-quality listings on vacation rental platforms like Airbnb. They like to see high quality, real pictures that make them feel like this is exactly the vacation rental they have been searching for. Young travelers are now comfortable with a simple check-in process and expect technology and connectivity through from booking to checkout.
The efficiency of processing bookings
Efficiency and speed of booking are significant for both travelers and vacation property owners as it allows them to scale their business as they expand their user base. With an increase in travelers seeking vacation rentals, it becomes important for property owners to track booking requests, reservations, guests to check-in, and process payments. Vacation rental platforms allow property owners to facilitate instant bookings, automate payment processing, and manage everything connected with booking and reservation with ease.
Data processing makes the difference
The right data can answer complex questions and makes the business process simple and efficient. If you want to know whether you are pricing your vacation rental correctly, or when it is time to increase your minimum stay requirements or to modify your check-in checkout times, data can tell you clearly. Vacation rental platforms give you a lot of information about booking, guest experiences, and a lot more so that you that tweak your offerings to deliver the best customer experience.
Subscription pricing gave way to transaction pricing
The days when property owners had to pay a subscription fee to list their properties are gone. The industry has come a long way from the subscription pricing pattern to the transaction pricing structure where property providers can create their listings on the vacation rental platforms for free. In the transaction pricing model, both hosts and guests have to pay a commission fee on every booking made.
Although vacation rental platforms take a share from booking profits, a lot of that money is used to attract more users and thereby drive more traffic to the platform. This pricing model also allows property owners to list their properties on multiple platforms as they don’t charge until booking is confirmed. In this way, property owners gain more exposure and have to pay at the time of completing a booking.
Efficient ways to avoid double bookings
Earlier when property owners received a booking request, they had to manually update their schedule and availability on each listing business website to avoid double bookings and last-minute cancellations. Today, vacation rental platforms centralize all bookings and allow property managers to manage their bookings from a single place. The rental platform also features robust API connections and synchronize calendars automatically eradicating even the smallest chance of double bookings.
Influence of Blockchain technology
Blockchain technology is positively influencing the vacation rental industry and offering immense opportunity for industry players. Vacation rentals on a Blockchain will allow guests to easily check the credibility of a host and the other way around as well. Even with all technological advancements, verification issues are still a problem as both users can create fraudulent accounts. But, with Blockchain technology, all user actions will be clearly recorded that helps in establishing trustworthiness.
Considering the fact that the Blockchain system is decentralized, the information within the system will be more transparent, trackable, and secure. Finally, Blockchain technology efficiently simplifies payment processing using cryptocurrencies. Being a global ledger, Blockchain technology also reduces the difficulties in billing and online transactions with credit cards. Additionally, Blockchain can also assist vacation rental platforms with managing loyalty programs allowing users to receive more profitable offers and deals.
Growth in the vacation rental industry has given rise to the myriads of technology solutions. Property owners around the world have started using vacation rental platforms and custom software to streamline their booking operations, marketing, guest communication, and other business processes. In short, both hosts and guests must adapt to technological advancements in the vacation rental industry to keep up with the competition and grow their business.
Gone are the days when people used to plan their travel with the help of a travel agency that handles all the booking and related activities. Now the hotel and vacation rental industry are quite different than it was in the last decade. The vacation rental industry is growing tremendously and has undergone a lot of significant changes in the past years. The past year has seen plenty of new trends that will have an impact on how the industry will shape up in 2020. Before going into the rental market trends that will influence the vacation rental industry in the coming year, let’s look into some significant statistics.
Vacation rental industry statistics
The vacation rental industry is very lucrative and is growing in the past few years, thanks to new technologies and software.
- In 2018, it was estimated that the number of vacation rental business in the US was 23,000 and 115,000 across the globe.
- Airbnb alone has over 150 million users across the world.
- Over 52% of travelers worldwide lookout for suggestions from friends on social media before planning their trip. They browse Facebook pages and stalk the vacation photos of their friends to make a decision.
- Europe accounts for 60% of all vacation rental properties, the U.S for 20%, and the rest of the world for the remaining 20%.
- New third-party tools and technology that streamlines hosting services are gaining momentum.
- It is predicted that millennials will spend over $1.4 trillion on travel alone by 2020. They are more likely to choose short term rentals instead of a hotel for their travel.
Trends that will influence the vacation rental industry in 2020
It is expected that the vacation rental industry will continue to transform and become more popular as we move into 2020 and a new decade. With that said, let’s look into the rental market trends of the vacation rental industry and how it might look like in 2020.
Vacation rentals will topple the hotel industry by 2020
While initially, travelers were hesitant to try vacation rentals and hosts were reluctant to allow random people to stay in their personal space, vacation rentals are transforming now as a major business as travel trend changes. Back in 2015, Hilton said that they believe it is relatively impossible for peer-peer marketplaces to pose a major threat to hotel groups. But, it seems like the scenario is changing.
Every year the vacation rental industry is growing double in size while hotels are growing only by 1%-2% every year. This huge difference in figures indicates that vacation rentals will overtake the hotel industry by the end of the 2020s.
Unique accommodations will rise
The variety of vacation rental rentals and unique accommodations are rising over the past few years. Nowadays peer-peer vacation rental platforms aim to offer unique staying experience. For example, Airbnb offers unique stays in igloos, tiny houses, bubble domes and tree house which deliver a different experience to travelers altogether.
In fact, reports say that over 71% of millennials prefer staying at non-traditional vacation rentals when traveling. If you are running a vacation rental platform, consider incorporating unique accommodations to your platform so as to offer an out-of-ordinary experience for your guests.
Millennials will influence the vacation industry
Millennials in the age group of 20-34 years are the most powerful and influential customer group of the vacation rental industry. They love to immerse themselves in other cultures and behave like the locals when in another country. Hotel accommodation is not capable enough to offer such a kind of staying experience for them. But, the vacation rental industry well caters to millennials in offering fast and efficient listing and booking system.
The millennial generation has grown up with the latest technology and hence demand convenience in everything they do. They demand convenience and real-time information at their fingertips and they demand that vacation rental is at the forefront of technology usage as well. From booking a vacation rental to making the payment for it, the entire process must be easy to complete on a smartphone in just a couple of minutes. Hence, to satisfy the needs of millennials it is important for vacation rental platforms to be tech-savvy and incorporate the latest technologies in their platform to make the whole process of booking vacation rentals convenient and effortless.
Technology will play a significant role
Technology is an integral part of every facet of the modern world and the vacation rental industry is no different. The use of modern technology in a peer-peer vacation rental platform to make the booking experience seamless for both guests and hosts will continue to expand in 2020 as well. In 2020, there will technical solutions for every aspect of vacation rental management. Some of the aspects of vacation rental booking made easier by technology is communication between guests and property owners, security issues, online payment, instant booking, etc.
Vacation rental platforms can use machine learning algorithms and AI to develop a deeper understanding of images to offer better matching to guests, improve review using natural language processing, support more advanced search using technology to make it convenient for users to get the most out of the platform, and leverage a lot more with technology.
Instant vacation rental bookings
There is one key factor that makes many vacation rental platforms highly demanding- Instant booking. Most travelers these days are exclusively browsing for vacation rentals that allow them to book rentals instantly. It gives travelers the confidence that they won’t miss out on their dream vacation rental due to slow response time.
Above all, instant booking is more common with hosts on popular vacation rental platforms like Booking.com and Airbnb as these platforms allow guests to book vacation rentals directly. Instant booking is critical for last-minute booking as users want their booking confirmed instantly. This is exactly when the instant booking feature plays a significant role in increasing conversions in any vacation rental platform.
Peer-peer vacation rental platforms will be the ultimate choice for rental owners
With the emergence of peer-peer vacation rental platforms like Airbnb, most vacation rental owners are choosing these platforms to manage their rental properties. The choice of the listing site has a significant impact on the success of vacation rentals. It can greatly impact the rental owner’s ability to receive bookings. For example, Airbnb is an affordable choice for most vacation rental owners as it takes only a 3% booking fee and delivers a great traffic volume.
Another reason to choose such platforms is that in case of any issues, vacation rental owners get a quick response from these peer-peer rental marketplaces as they function as an efficient community. As vacation rental platforms will help property owners to oversee all areas of their listing to maximize exposure and revenue, this trend will keep growing in the coming years as well.
Mobile booking is on the rise
Without any doubt, anyone can say that mobile browsing and buying through mobile phones is on the rise. According to Criteo, over 80% of last-minute bookings in the travel industry are made on mobile devices. Hence it is important for vacation rental platforms to optimize their websites for mobile devices to grow their business.
Having a mobile-optimized vacation rental platform facilitates guests to search for accommodations easily, communicate efficiently, and book their stay and trip via their smartphone which leads to quicker conversions.
Now that you are familiar with the vacation industry travel trends to watch out for in 2020, you will have ideas and know what to look out for in the new year. Your vacation rental business can adapt to these rental market trends and by planning your marketing strategies around them, you can attract more customers overall.
In this rapidly changing environment, technology will play a significant role than ever in the revolution of the vacation rental industry. Vacation rental platforms must ensure that they use robust technology solutions that allow them to grow their business to stay competitive in the dynamic industry of vacation rentals.