Vacation rentals are booming. People are starting to trade their long-term holidays for short-term rentals that are not based in high-priced hotels, which presents an opportunity for real estate investors — as well as customers — looking for variety, experiences, and optimal pricing.
The rise of vacation rentals — the market has more than doubled in recent years — means there’s also more demand for solutions to handle everything from marketing to dealing with client issues, says Jon Parrish in Naples, Florida, who owns Oceanic Blue Retreats and other businesses in the hospitality industry.
But before looking at the changes, let’s rewind to the post-war period when vacation rentals were more of a shared model. During this time, families that rented homes for getaways were usually related and there was a trust factor in maintaining the property and any issues were dealt with internally. There were no managers that sorted things out on their behalf.
However, that model slowly changed: as these families found that their properties were laying vacant for extended periods of time, they also realized there could be money to be made by renting to outside parties. This lent itself to the rise of time-shares, with the first property management companies coming onto the scene by the 1970s.
Technology Was a Game-Changer
When rental management companies first gained traction, they often advertised themselves as a “full service” solution. That meant they took care of all of the details including handling reservations, as well as maintenance and housekeeping.
However, like most industries, the rise of technology disrupted the traditional model and took it a step further, explains Jon Parrish. Management companies that catered specifically to vacation properties became more popular and property management systems began popping up as tools for resorts and vacation property owners by the early 80s.
Of course, there was the rise of the internet, which has permeated into every corner of commerce today. But in its relative infancy in the mid 90s, the internet became a more popular method for clients to book rentals through web-based portals. While this worked for some property owners, it didn’t completely fulfill the need due to limitations especially in areas without adequate digital infrastructure.
As a result, third-party solutions were developed that proved challenging for vacation rental management companies that viewed it as competition(Airbnb is an example of a popular third-party app). This resulted in many property managers looking for other ways to get their rentals seen by people online, increasing their marketing dollars to rank more efficiently in search results. Around the same time, sites that allowed renters to post reviews of properties began to crop up, which further challenged rental management companies that lacked the resources to manage posts that threatened their image.
As a result of this, some vacation rental management companies learned how to pair with third-party applications to boost their profile, notes Jon Parrish. Vacation management companies are finding ways to survive and thrive in an increasingly competitive market while adopting methods to satisfy both the renters and the property owner.
Added Value To Homeowners Renting Their Space
With the market collapse in the U.S., companies like Airbnb seized on the opportunity for homeowners to turn their properties into short-term rentals, explains Jon Parrish.
Many of these homeowners adopted technology that allows them to self-manage their rental properties, from keyless entry to using marketing distribution channels to get more attention for their offerings. However, due to the desire to build a positive reputation and save time, some homeowners are turning back to vacation rental management companies to ensure the best chance at success and repeat business.
Successful vacation property management companies have added value to offer: namely, they can help with some of the less glamorous aspects of renting out a property such as following regulations and dealing with taxes. They can also offer services that help educate renters about how to best present their properties, as well as managing marketing and even offering guest services that are closer to what you’d expect from a hotel.
Jon Parrish’s Final Thoughts
The vacation property management industry continues to evolve, especially with vacation rental consolidation happening at a faster pace, points out Jon Parrish. But the core benefits of a vacation property manager remain the same as from the industry’s beginnings, he adds.
