Tuesday, 12 December 2017

The evolution of the vacation rental market in Airbnb






Opinion | Online

By Amiad Soto - Guesty | December 12, 2017

In recent weeks, we have witnessed two significant moves by Airbnb that will have interesting implications on the international, short-term and vacation rental industry.

Firstly, the platform has introduced Host Tools; and secondly, Airbnb has said that it will be following London’s cap on urban rentals, with a similar cap for Paris, coming into effect in January.

The booking giant is both courting the traditional vacation rental market, and putting some restraints on urban short-term rentals.

The global vacation rental industry, traditionally fragmented and with a large ecosystem of small players, is currently going through a period of rapid transformation and growth. It’s an exciting time to be in the short-term and vacation rental industry.
Embracing traditional vacation rentals with Host Tools

In October of this year, Nate Blecharczyk, co-founder and chief strategy officer for Airbnb, announced the launch of Airbnb’s Host Tools at the Vacation Rental Managers Association (VRMA) annual conference in Orlando.

With the new Host Tools, vacation rental management companies can directly integrate their vacation rental technology, like Guesty, to manage their operations more efficiently.


This is a significant move, showing that Airbnb is now both ready, and very willing, to embrace the traditional vacation rental market and move away from focusing solely on short-term rentals by individual owners. The vacation rental industry is estimated to achieve a global market value of $194 billion by 2021, a significant rise from $138 billion in 2016, and quite rightly Airbnb wants to be a big part of this.


Up until now, Airbnb has had a complicated relationship with property managers outside of the core urban areas. The reputation of the platform, as the natural home for accommodation sharing and private rentals, has been hard to shake.

Property managers, managing listings of multiple properties in traditional vacation or resort locations, have been both suspicious and underwhelmed by the platform. Essentially, they’ve not been convinced that the platform is part of their solution.

With the Host Tools, this is all set to change. The new developments will ensure that managing hundreds or even thousands of vacation rental listings through the platform will be easier and more accessible.

Vacation rental managers will now be able to work with the platform to improve pricing rules, create a professional listings page, have more accurate and up-to-date calendars and develop integrated messaging. These are all solutions that professional managers need in order to be profitable with Airbnb and work closely with their property management system of choice.
Exploring opportunities around rental caps

The next significant development of recent weeks is Airbnb’s announcement that it will be putting in place a cap of 120 nights on rentals in the 1st to 4th arrondissements of Paris. Paris currently has 400,000 Airbnb listings, making France the second largest market after the United States.

The decision, which goes into effect January 2018, mirrors initiatives already in place in London and Amsterdam. The cap will force hosts to comply with France’s officia


On the surface, this looks like it could be a way to keep urban rental hosts on their toes, however, there is a bigger story at play here.


The restrictions being put into play in these key urban hot spots simply means that urban property managers are having an impact on the real estate market. The caps don’t necessarily spell bad news. There are opportunities.

Property managers will need to really show they have an edge in order to win the owners over.

We’ve had in-depth conversations with some of our Guesty clients running operations in both Paris and London, and the feedback to the restrictions has been mostly

Property managers that are prepared to make adjustments can find profitable opportunities in these urban centers, but there will need to be changes made.

For instance, the number of listings in these prime hot spots will decrease as fewer properties are available on the rental market. With this decrease, prices will naturally rise and competition for attracting owners will increase. Property managers will need to really show they have an edge in order to win the owners over.

Savvy property managers are also looking at ways in which they can increase revenue from a smaller number of bookings. One solution is to approach their guests’ stays in a more “hotel-like” fashion and offer add-ons that enhance guest experience and increase the overall income from each guest’s stay.

We’ve heard of urban property managers even stocking their fridges with chargeable treats and alcohol in an attempt to replicate a minibar and add to the revenue of each guest. Another way of increasing revenue from fewer guests is to upsell late check-outs and early check-ins. Service levels will improve and there will be more professionalism.

The short-term and vacation rental industry is changing rapidly, and in order to succeed, property management businesses within it need to be prepared to move at the same speed (or faster) and to use tools that will help them make the most of available opportunities.

It will be interesting to see how the vacation rental and urban landscape evolve over the next 12 months. Stay tuned.

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