It wasn’t so long ago that vacation rentals were reserved to mom & pop shops and advertising limited to a few billboards, local classifieds, and word of mouth. Today, the cottage industry is worth upwards of $100 billion and is expected to exceed $170 billion by 2019. – and it’s no longer just family run locations. Choice Hotels successfully entered the vacation rental market last year and there’s no doubt that its competitors will soon follow suit.
Hotels aside, the greatest change to vacation rentals over the past decade has without a doubt been AirBNB, which streamlined the entire process from advertising to renting back in 2008. Curious about what the next major change to the cottage industry might look like, we asked a group of industry experts…
What’s The Future Of Vacation Rentals?
Here’s what they had to say…
“Vacation rentals will topple hotels in the next 10-15 years, reshaping the hospitality industry.
More partnerships among vacation rental sites, airlines, car services, restaurants, museums and other touristy spots.
Vacation rentals will stimulate the growth of housekeeping and maintenance services, and we can expect to see partnerships, M&A among vacation rental brands and online marketplaces for local labor.
Creativity and experience will go mainstream, i.e. rentals with well-invested designs and decorations will dominate the industry.
Vacation rentals on business trips will become more and more common, but not to the point where they would be replacing hotels. Hotels with reasonable prices should still have a large market share.”
Andrew McConnell, Co-Founder & CEO of Rented.com
“In the next 10-15 years vacation rentals will look a lot like hotels look today. What do I mean by that? Many of the similarities are already starting to be apparent. As hotels shift to more of an “asset light” model where different parties own (Investors like REITs), manage (onsite managers), brand (Hilton, Marriott), and provide distribution (Expedia, Booking.com) for hotel rooms, they already in many ways are similar to how vacation rentals are structured. The same splits exist: owners (individual homeowners), managers (local rental companies), brands (Wyndham is the biggest, but no brand has the scale of hotels yet), and distribution (Airbnb, VRBO). The glaring gap is “brand.” Expect the gold rush that is currently underway to lead to an eventual shakeout with fewer, but far larger “brands” providing vacation rentals to guests across the country, and the world, and providing a more professional and consistent experience.”
Michael Joseph, CEO & Co-founder of InvitedHome
“In 10 years, the vacation rental industry will be akin to today’s hotel industry, transformed by consolidation, professionalization and ubiquity. What is now a largely fragmented model of independent players will undergo a wave of mergers. A smaller number of dominant brands will arise and gain market share across multiple destinations, offering greater quality and consistency for travelers and homeowners, much as the hotel industry united and professionalized under hospitality titans like Conrad Hilton. This will lure a new class of homes into the industry, whose owners were previously leery of the vacation rental concept, and it will lead to the quick decline of owner-managed properties, as individuals struggle to compete against professionally-serviced outfits. A decade from now, people will book a vacation rental with as much ease and confidence as they do a hotel room, turning – and returning – to brands they trust.”
Yulia Kozhevnikova, Real Estate Expert at Tranio.com
“The vacation rental market will be more regulated, with popular holiday destinations in Europe such as Barcelona and Berlin introducing a ban on private landlords that have not obtained licensing. In light of developments such as this, the market is set to become safer and more transparent.
Demand for vacation rentals will grow due to the continuous year-on-year rise in cross-border travel. This growth is especially noticeable amongst those travelling independently.
Hotel property will continue its merge with residential real estate. Small serviced apartments with kitchenettes and hotel-like services will be the most in demand throughout the vacation property market.
The travel industry’s use of artificial intelligence technologies will expand further, with vacation rental services to be integrated with mobile apps similar to Lola.”
Adham Sbeih, CEO of Socotra Capital
“The demand for vacation rentals in highly desirable locations–coastal and tourist areas–will expand for both trophy properties, as well as lower end properties such as duplexes, fourplexes, and in-law quarters. Lower end properties in particular will provide direct competition to the hotel and motel industry, which will likely respond to market pressures by turning motel properties into long-term SROs (single resident occupancies).
Meanwhile, properties that have been family heirlooms will be more likely to remain in the same family than in the past, thanks to these rental opportunities. Historically, trophy properties have tended stay in a family until maintenance and upkeep become unaffordable, at which time they sell. But with the increasing popularity of VRBO and Airbnb, legacy properties will stay in families for longer periods of time, if not indefinitely.”