Barefoot Technologies Blog- Vacation Rental Industry News

What Every Vacation Rental Manager Needs to Know (But the OTAs Aren’t Confessing)

Posted by Guest Author on Mar 31, 2015 10:00:00 AM

This blog was originally posted on Holiday Vacation Rentals by Alan Hammond found here  

Professional vacation rental management companies are important to the growth of the industry and need to be careful that they don’t become minimalized to property service providers. Unfortunately, some of the large online travel agencies (OTAs) may be contributing to a perception that can undermine the value of the vacation rental manager to the industry.

The renting of vacation homes is a hospitality and guest services business that, among other things, is not and should not be confused with a cleaning service or depository for keys. In the race for competitive edge, control of the marketplace, and profit from vacation rentals, OTAs, rather than promoting management brands, often seem to undervalue or ignore altogether the importance of the professional rental management company’s role.

The primary objective of the OTAs is to increase returns to their shareholders. Their revenue strategies include increasing subscription fees, premium ad-placement fees, and transactional fees as a percentage of the rental rate.

While the future impact  of OTAs in vacation rental distribution is uncertain, it is likely they will attempt to have rate parity, best rate guarantees, and no block-out dates to increase their profits as they grow in dominance. Currently, consolidation of OTAs is occurring as larger companies seek to maintain dominance and grow revenues, most recently evidenced with Expedia’s acquisition of Travelosity. Interestingly, Airbnb, a new entrant to the industry, has broken from the traditional OTA model by charging the consumer directly for the service provided, which has been met with high acceptance among users. Consumers appear to be willing to pay the transparent OTA fee for the convenience of using Airbnb as a one-stop service.

While some OTA distribution channels continue to sell listing ads, others are aggressively pushing transactional “Book It Now” integration to vacation rental managers as a necessity for better conversions. Professional managers that do not rely on OTAs know better.

A recent article by Tnooz reported that according to a SaleCycle survey, “conversion rates for those making a travel booking are generally low—often in the single digit percentage range”.  The conversion rates specifically for vacation rentals are likely even lower since customers generally know what to expect when it comes to hotel rooms, while vacation rental homes are all unique and travelers have more questions they’d like answered before booking.

One of the most commonly cited reasons for the low online booking conversion is that travelers (in our case, renters) are still not ready to complete their travel booking. Price is a major factor in the decision as they feel a cheaper deal may be found elsewhere and continue shopping.  OTAs may be finding themselves in a competitive struggle for consumer loyalty and to convert shoppers, which will drive more consolidation in the distribution industry.

Counterintuitively, OTAs may be conditioning users to look for a better deal elsewhere. Professional managers who do not give up control of their inventory to OTAs can benefit from higher conversion rates resulting from a better shopping experience and the ability to provide best rate guarantees when booking direct from a rental management company not encumbered by OTA agreements.

Another significant consideration is that shoppers will pay more for products and services they know. This is a compelling reason for vacation rental companies to commit resources to building a strong brand!  Unfortunately, some OTAs are stripping the value of a vacation rental company’s brand from their ads.

While OTAs may bring parties together, after the initial introduction, these intermediary or “middlemen” have little to do with the actual sale and vacation experience. Large and increasingly predatory OTAs are neither the only source of rental inquiry nor the deciding factor in the purchase and guest experience.

OTA middlemen sometimes appear not to understand that the property manager doesn’t just take accept a booking in exchange for a key and clean the property on departure. Vacation Rentals are not a commodity sale. This misperception minimalizes the services that are regularly performed by professional vacation rental companies to a function of caretaking, rather than recognizing them as managers of guest services and experiences that are essential to the vacation rental industry and which will become increasingly important if vacation rentals are to be recognized as a preferred accommodation type by travelers.

Not only are OTAs overrated as “necessary” for booking conversions, but according to the American Hotel & Lodging Association’s (AHLA) comprehensive study on distribution channels, OTAs do not create demand or raise overall occupancy. Rather, OTAs shift demand from one market or property to another, capturing a middleman fee in the process. This raises costs to the rental property managers. These costs are then passed to the property owner and, ultimately, to the consumer in the form of higher rental rates.

The practices of the OTA should be understood, and companies that choose to use them need to carefully manage how they do so. As OTAs grow in dominance in online search, they can bring a significant additional cost the rental guests that use them.

In time, market forces will impact the role and value of OTAs similarly to the changes that occurred in the hotel industry as hotelbrand.coms better managed their use of distribution channels and avoided high OTA fees by improving their online marketing and using customer loyalty programs.

Currently in Europe, OTA rate parity is being challenged under antitrust regulations. Some hotel brands have begun providing a comparison of intermediary and direct rates on their websites, dispelling consumer perceptions that shopping via OTAs will result in a better price and increasing brand direct conversion rates.

While OTAs change pricing models and strategies, vacation rental management companies need to remember that guest services are critical to successful management in the hospitality business.

Professional rental companies are in the customer relationship and care business. A booking is just one part of the multidisciplinary management skills necessary to be in the hospitality business.

Travelers are seeking rest and relaxation, new experiences, rejuvenation, and the creation of fond memories.  While a well-cared-for property is important, professional rental managers need to understand and exceed guest expectations, which requires a high level of personalized services for success.

Booking a property for a vacation is more than a real estate transaction or booking. If the vacation rental industry becomes reduced to the process of booking a property for an accommodation through a third-party OTA, professional vacation rental management companies will be providing a disservice to guests, property owners, our businesses, and the future of the industry.

Alan R. Hammond is the founder and Managing Director of Holiday Vacation Rentals. He has served as a Director and is the immediate past Treasurer of the Vacation Rental Managers Association (VRMA) and holds the Certificated Vacation Rental Manager (CVRM) designation. A recognized industry leader, Alan is quoted in the book The Rental Game: Winning with a Professional Vacation Rental Team by Maureen Regan.

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Tags: rental indusrty competition

Avoid The Pitfalls Of Vacation Rental Scams

Posted by Adam Zippin on Feb 6, 2014 4:34:00 PM

With the season interim rolling through and companies switching their bookings, images, and all that comes with new season of renters, scammers can creep in unexpectedly.  We preach the awareness of rental scams and how to educate your potential guests as how to best avoid a scam but seldom do we as an industry take a proactive approach to scams.  Often, we will respond to an attempted scam but many times, the damage is already done.

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Tags: Rental Management, Client Expectations, Scams, rental marketing, Vacation Rental Software, rental indusrty competition

Seven Useful Tools For Shoulder Season Vacation Rentals

Posted by Adam Zippin on Jan 16, 2014 5:52:00 PM

As winter begins to fade it becomes more important than ever to capitalize on your winter season guests.  These guests can vary dramatically based on your market but one thing is the same, the main season is ending and your guest are beginning to shift from those coming to stay for the peak season to those who are looking for a shoulder season getaway.

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Tags: CRM Tips, Property Management, Client Expectations, Property Management Software, Competitive Advantage, Offerings, Vacation Rental Software, Property manager marketing, How to market vacation rentals, rental indusrty competition, Browser Based Software, Barefoot Technologies, Marketing

How to Seasonally Market Your Rental Properties

Posted by Adam Zippin on Nov 14, 2013 5:48:00 PM

Well it’s the time of year up here in New England where rumors of snow are backed up by frigid mornings and mildly warmer days, most call it winter but I am lucky enough to call it hockey season.  Now some may not see the difference between a winter enthusiast and a hockey fan but differences like this can distinguish your business from the rest.  With the winter coming in, the rental market shifts drastically up here, and in any location with winter snow.  So how does this resonate through with your business?  Here are 8 ways to beat the winter with simple marketing tools

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Tags: CRM, CRM Tips, Rental Management CRM, Rental Management, Second Home, Vacation Rental Industry, Property Management Software, Management Software, Competitive Advantage, Offerings, Vacation Rental, Vacation Rental Software, Rental management Software, rental marketing, Property manager marketing, How to market vacation rentals, rental management business, professional management, rental indusrty competition, rental industry competition

Airbnb.com Bounces Back: And In Impressive Fashion!

Posted by Adam Zippin on Oct 15, 2013 1:12:00 PM

My last blog got some mixed reviews after I wrote about the subpoena that Airbnb.com received.  Some people liked it and we got a tweet out there, others were not so impressed with my views.  So this week, I am glad to report that Airbnb.com has partnered with Pepsi Next to anchor its newest promotion.

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Tags: Barefoot, Property Management, Second Home, Client Expectations, Property Manager, Vacation Rental Industry, Management Software, Competitive Advantage, Vacation Rental Software, HomeAway, rental marketing, Property manager marketing, How to market vacation rentals, professional management, rental indusrty competition, rental industry competition, Airbnb.com

Blog Update: Why Airbnb Has A Tough Road Ahead 2.0

Posted by Adam Zippin on Oct 8, 2013 5:35:00 PM

 Back in May I ran a blog about Neil Warren who had rented his room through the popular site Airbnb.com.  This site has made news headlines a few times for its rental policies and the people who are avoiding laws and legislation while using the site.  One member found renting a room was violating her condominium complex’s policies.  Mr. Warren was in violation of several leasing laws for the city of New York.  He however, decided it was best to continue renting his apartment to quests.

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Tags: Barefoot, Vacation Rentals, Property Management, Client Expectations, Property Manager, Vacation Rental Industry, Management Software, VRBO, Property manager marketing, How to market vacation rentals, VRBO Portal, Vacation Rental Software, rental management business, professional management, rental indusrty competition, rental industry competition, vacation rental scam, Airbnb.com

A Successful Year For Vacation Rentals: Beating Hotel Occupancy Rates

Posted by Adam Zippin on Sep 26, 2013 5:06:00 PM

Congratulations are in order to the industry as a whole for a solid summer season.  According to an article by RIS Media, the average rental per week rose 19% over the same time last year.  In this numbers thick report, the stats are in and it was another banner year!  While we are always happy to see your success, we can't help but feel a bit of deja vu.  To add some juice, here are a few of our favorite numbers.

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Tags: Vacation Rental, Client Expectations, Property Manager, Vacation Rental Industry, Competitive Advantage, Vacation Rental Software, How to market vacation rentals, rental management business, professional management, future of vacation rentals, rental indusrty competition

Why Complacency is Killing Your Vacation Rental Business

Posted by Adam Zippin on Sep 24, 2013 4:50:00 PM

Last week I wrote a blog on why you need to use a portal program as a part of your business strategy.  This week I want to step back and take a look at why thoughts like this are so very important.  As I trolled the internet for industry news the other day I realized that more and more companies are moving into the rental booking and transaction market.  It first started with Wyndham and other hotel companies buying up rental companies.  Lately however, companies like TurnKey, BookingPal, HomeAway and others are pushing into the transactional aspect of rentals.  The business model of these companies is one that should be, not worrisome, but certainly relevant to your future business.

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Tags: Vacation Rental Software, rental management business, professional management, future of vacation rentals, rental indusrty competition