The future of industry consolidation in the short-term rental ecosystem
World: Amiad Soto, co-founder and CEO of the property management platform Guest, sponsor of the recent Short stay summit in London discusses the who, what, where and then in terms of consolidation in the short-term rental ecosystem.
While the entire world and the hospitality industry have been rocked by Covid-19, travel is not slowing down. A year and a half after the start of the pandemic, pent-up demand for travel, along with continued access to vaccines, has caused consumer attitudes to return to vacation, whether for quick vacations, weekend getaways. -end or longer term remote work stays.
And our data proves it: UK Christmas bookings are up 433% from holiday bookings at the same time last year. Prices are also on the rise, with average Christmas 2021 nightly rates 102% higher than 2020 and 47% higher than 2019.
With alternative accommodation being the first choice for those looking to avoid the crowded areas associated with traditional hotel stays, vacation rental bookings are not slowing down. This makes the short-term rental ecosystem ripe for consolidation; here is my vision of what is to come.
Why consolidation is the way to go
The massive expansion of the short-term rental industry has generated greater customer expectations from clients and, in turn, has increased the workload for property managers and vacation rental owners. The number of technology products and solutions needed to maintain a successful business is increasing, and as a result, software companies in this space must come up with full service offerings to meet the demand. To achieve this in the alternative hosting industry, you need a substantial amount of resources to keep pace, and the only way to increase product quality is through consolidation.
While I don’t think it’s a win-win market, when it comes to software, for example, having multiple small players hampers the ability to bring standardization to the market. ‘space. It is also a headache for users to work with several different vendors that offer standalone service or capability, resulting in the need to switch between platforms.
For example, channel integration is one of the most important aspects of short-term rental management, and the days of connecting calendars through iCal are long gone. All major OTAs continue to add additional capabilities to their APIs and adapting to those capabilities to deliver a best-in-class user experience is a huge job. When you add additional business needs like accounting, analytics, owner relationships, payments, revenue management, etc.
This is why at Guesty we have raised $ 110 million to date and are constantly expanding our R&D team every year. Property management software with many tools appeals to guests. As such, consolidation is a priority following our Series D financing and two acquisitions earlier this year. [MyVR and Your Porter]. Through these initiatives, our users have access to a larger team working on the next generation of products, services and technologies to fuel their growth, increase their revenues and grow their businesses.
We are also now able to cater for those we did not serve previously, such as hosts who are new to the rental business as a side gig. And we won’t stop there – we will continue to push for further industry consolidation with future acquisitions and product offerings.
But it’s not just about software.
Consolidation will result in standardization of hotel brands in the short term
Alternative accommodation hotel brands – think Mint House, Vacasa and Sonder – are capitalizing on their appeal to the personalities of travelers who have emerged from the pandemic. And their success shows.
Sonder Confirmed Its IPO In A Major $ 2.2 Billion PSPC [special purpose acquisition company] the merger deal and Vacasa will also go public in a $ 4.5 billion SPAC following the company’s recent acquisition of TurnKey, which offers rentals in 80 destinations across the United States. These players continue to expand their footprint by capturing smaller hotel brands while introducing more technology and automation into their day-to-day operations.
As a result, we can expect more property management companies raising capital to acquire more inventory to meet consumer demand. What we can also expect from their consolidation efforts is the focus on aligning their style, aesthetic and branding guidelines across all locations. Design and equipment must align with each market and property to create a cohesive brand.
New age digital nomads, long-term business and leisure travelers now expect familiarity, flexibility, comfort, and consistent service and amenities in the same way more traditional travelers know what. expect traditional brands such as Hilton and Marriott. Mint House’s “Mint Pass” program, which allows customers to move from place to place with benefits and a comfortable “work from home”, is a prime example. [WFH] configurations. And Sentral launched its Home + flexible living offering to combine the comforts of home with the adventure of travel, so customers can live, earn, work and travel simultaneously.
Consolidation of the industry will act as a catalyst to put more emphasis on brand building, which in turn will push hospitality mega-brands to look to increase their number of direct bookings.
Short term rentals are designed to meet the demands of today’s travelers
Demand is at an all time high and supply has not yet caught up; the case in point is Airbnb’s Brian Chesky, noting that the platform would need millions more hosts to meet the growing desire to book rentals.
In the coming year, it will be the technology and hotel brands that intelligently consolidate the market, pivot and adapt quickly to changing consumer expectations, that will prevail.
One thing is certain: the short-term rental ecosystem will be a lucrative space for large property management companies, as well as independent and smaller hosts and owners, as they continue to meet new consumer demands. ‘today.