If this does not make you raise an eyebrow on the value of vacation rental industry, then nothing will. Although AirBNB is not technically vacation rentals, it is an example of the world looking or being forced to look at other lodging markets beyond hotels, B&B’s, campgrounds and staying with your best buddy. This model focuses on a company marketing someone else’s products and taking a commission. As you can see Wall Street sees huge values in this model between this funding and HomeAways imminent public offer. ”Assuming Airbnb's funding deal closes, the company will be getting $100,000 in valuation for every single one of the site's 100,000 or so rental listings.”
What does this mean to the local vacation rental company? We have been saying this for about 3-4 years now, not only is vacation rentals becoming more popular, a lot of that popularity is being driven by Wall Street. So what does this mean to a vacation rental company? It means that if you are not running your business like other very competitive industries, you will find it very hard to compete. Do you have a budget? Do you empower your employees so that they can tap into that budget without having to get the owners permission? Do you have a 1, 3 and 5 and maybe even a 10-year strategic plan on paper. If the answer is no, well you better start the process because the big boys are coming. Wyndham recently bought Resort Quest for 56 million, which mean if you are in a market that is serviced by Resort Quest, you now compete against Wyndham - their international marketing program, their point program, their call centers, their linen buying program, their ability to invest 10x what you can invest in the chamber of commerce, social media and any local program.
If you are not in that market, how long do you think you have before they or one of their competitors decides to come into that market. How they come in could be an opportunity, but only for those that think like them. Regardless, as a market matures, those in it, find niches or segments and build yield management strategies to focus on core products. Look at the hotel industry, airlines and pretty much any other mature market. Southwest purposely did not add baggage fees because they understand their market and it has become their major advertising model. With these complexities you of course need good vacation rental software technology that is evolving and someone you can trust.
