The unsexy truth about the sexiest industry in travel

While by no means a new phenomenon, travelers are choosing vacation rentals over hotels more frequently than ever. And thanks to the rise of platforms like Airbnb and Vrbo, one would assume that hosting these travelers is also easy and profitable.

Vacation rental revenue is expected to exceed $81 billion in 2022, and with major constraints on supply, there’s big money – big money – trying to get a share of this cake.

Vacation rental may be the sexiest part of travel, but spend more than a few days peeling back the layers and you find an operationally complex business not nearly as sexy as it looks ( think about cleaning the toilets).

What triggers demand for vacation rentals?

The pandemic has accelerated travelers’ search for space, privacy and value. But to really understand vacation rentals, look at one driving force: personality or as a PhocuswrightMadeline List calls her, character.

• Each vacation rental is different: unusual, charming, special.
• Each vacation rental owner is unique, sharing their passion for a destination with visitors.

This character is what travelers (especially young travelers) are increasingly looking for (and posting on Instagram), fueling a cottage industry of owner-managers – what I call “homerunners” – who see a opportunity in delivering character in a professional manner.

The Vacation Rental Management Association (VRMA) International Conference at Caesar’s Palace in Las Vegas this year will break attendance records with 3,000 attendees. The conference exhibit hall floor will resemble some of the largest trade conventions in the world.

Collectively, these professional managers serve character to the masses. But how?

One of a kind, by design

I’ve spent most of the last decade studying these companies and to better explain their secret sauce I’ve developed the “limited edition” theory.

Inspired by the world of antiques and collectibles, Limited Edition concludes that items limited in quantity and imbued with personality can fetch big bucks with loyal collectors – bypassing commodity markets and creating value on terms. completely new.

Most vacation rental professionals (whether they know the name or not) practice limited edition by doubling down on four key differentiators:

• Family owned (or operated) business
• Locally based (no head office elsewhere)
• Specialized in a property type or region
• Delightfully surprising (like some of the best boutique hotels)

(Note: These differentiators – if you like acronyms – spell FLoSS, which is a good reminder to repeat them regularly for optimal results.)

Focusing on limited edition gives the owner-manager the chance to compete with (and even collaborate with) the best in their market, which has proven strong in adjacent sectors such as craft beer, where mum brewers and pop work together to exert strength in numbers on important issues such as regulations and standards.

The limited edition appeals to travelers’ preferences to support sustainable small businesses. The limited edition creates the personalization and confidence needed for any repeat booking campaign. And Limited Edition even appeals to homeowners, many of whom prefer relationships to transactions when it comes to the company that runs their family home.

Is the “Limited Edition” scale?

The limited edition, almost by definition, is not to scale. But that doesn’t stop many gamers from pushing the boundaries.

According to Goldman Sachs, more than $17 billion in funding has been invested in “several companies with limited track records and relatively small asset portfolios.” All based on one inescapable truth: this technology is propelling a generation of owner-managers of limited-edition buildings to extraordinary new heights.

Activities that were previously redundant like reservations and key replacements are now automated with reservation software and smart locks. Solutions that didn’t exist before, such as guest verification and dynamic pricing, are now part of the everyday tech stack. This technology frees up the time and energy to double down on the limited-edition activities homerunners can do best: complement hospitality, not replace it.

Instead of trying to scale the limited edition, top vacation rental companies recognize its limitations and then use technology to roll out standards that ensure it is consistent over time.

The unsexy truth? This challenge is difficult but useful. I share my tips on how to achieve this along with case studies of leaders currently doing it in VRMB’s weekly newsletter.

What makes this race different?

It’s a one-of-a-kind, scale $81 billion race – what could go wrong?

Unlike transportation or retail disruptors, vacation rental disruptors can be seen, heard, touched and put to sleep. This makes the race for first-mover status more than just market share. The winners of this race will have profound effects on the communities in which we live.

Done well, they serve as economic engines and pillars of community leadership. Done unprofessionally, they can negatively affect a block or neighborhood for decades.

There’s a lot to do in the vacation rental category, so what does it mean to be acquired? In his latest op-ed, Carl Shepherd, co-founder of HomeAway, argued that landlords and property managers need to do a better job – if only to avoid getting banned altogether. These owners and managers, Carl explains, have the most to lose: the responsibility lies with them.

But I believe that the accountability crisis goes even deeper: all stakeholders, including (read: in particular) those with the most to gain must also do their part. As with any healthy community, this means showing up to be part of the conversation, uniting behind the norms, and being aware of the system that supports us but could collapse if we don’t find the balance. Self-interest is great, just play the consequences of your actions a little further than the next fiscal quarter.

I’m so passionate about this movement that I’m producing a docuseries called “Homerunners” which goes behind the scenes to explore some of the boldest attempts to scale vacation rentals without losing the little things that make us great. . Please enjoy the trailers for our first two episodes.