Worldwide: Abode PR director Jessica Gillingham explores some of the major trends in the short-term rental industry that are expected to play out in 2021 and beyond.
2020 was an interesting year for the short-term rental industry. It all began positively with the industry set to build on its exponential growth. However, as we all know – things took a different turn. Despite the uncertainty and undeniable challenges for many, the year saw record booking levels for operators in domestic leisure markets, a growing emphasis on professionalisation, a focus on operational management and the emergence of new business models.
What is very clear is that short-term rentals will continue to grow market share as the ‘lodging of choice’ for leisure and business travellers – even more so as the lines separating work, leisure and living merge further.
Here are some of the trends to look out for during 2021 and beyond:
- Acceleration of operational tech
Most growth-oriented property management companies are pretty clued up on the different technology and SaaS products available to support bookings and marketing. The PMS and channel marketing solutions are well known and widely adopted by professional managers.
However, technology that specifically supports the operations of property management, the ‘optech’ if you like – is emerging as an essential tool.
According to recent data published by McKinsey, we vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. Balancing this is a need to double down on creating efficiencies, reducing costs [time is money] and meeting increased guest demand for a more professional experience. There is operational tech out there that supports cleaning protocols, safety checks, keyless entry, managing team communications, property automation, occupancy monitoring, service optimisation and property care. Check out Operto, Breezeway and PointCentral.
- Increased focus on frictionless, seamless stays
Prior to Covid-19, there was a view that using technology to create frictionless, seamless stays for guests was something that perhaps detracted from the personal experience and host / guest relationship. However, what has become apparent is that guests want contactless, tech-enabled stays and this does not diminish the core reason they picked a vacation rental in the first place. The global pandemic has only boosted this shift in consumer demand.
Property managers that grew their businesses during 2020 embraced the technology of keyless entry, contactless hosting and digital communication in order to provide safe, secure and seamless guest experiences at a property level.
- More ‘hotel-like’ short-term rentals
This brings us nicely to a third trend – the continued supply of ‘hotel-like’ short-term rentals. At the end of 2019, we saw the likes of Sonder, Lyric, Domio and Stay Alfred burst onto the scene with deep pockets and business models based on rent-to-rent [master lease]. These ambitious companies had visions of turning multi-family dwellings into short-term rentals that all but looked and smelled like hotels [branded, standardised] but offered the convenience of apartments and homes.
The concept of turning large property assets [regulations permitting] into ‘hotel-like’ boutique apartment rentals continues to have huge potential – witness the growth during the pandemic of Casai, Mint House and Jurny – but the business model has been updated. Multi-unit owners can access the short-term rental market themselves through specialist technology solutions like Jetstream that work on a variable cost basis ensuring risks are reduced and profits maximised.
- Convergence of short-, mid- and long-term lets
There is a blurring of the lines between long-, mid- and short-term rentals. It is now more common to see urban-based property managers distributing an owner’s property to platforms that were historically for long-term rentals. The average length of stay is increasing with consumers choosing to embrace the ‘work-from-home’ mandate and translating this into a ‘work-from- another-home’ or even ‘many homes’.
Added to this – we are also seeing an increase in new partnership models emerging that are enabling traditional estate agents and institutional asset owners to combine more profitable short lets with more stable, permanent renters. [See Jetstream above]. Increasingly, we will see the players merge and the lines soften within the entire ecosystem.
- Emphasis on quality
Every year that I write a trend or prediction piece about the short-term rental industry, I talk about the industry needing to continue to pave the path towards increased professionalisation.
Moving away from the issues that can plague the less well executed parts of the industry. This is important because it increases the trust in professionally run rentals which impacts on everything: from conversations with regulators to keeping guests feeling safe.
During 2020, we saw a greater emphasis on the quality issues of rentals, not only including cleanliness protocols, but also safety and security, standardising basic amenities, association membership and ensuring guest screening.
One of the biggest barriers to the growth of this industry in the long term, is both the volume and quality of new stock entering the market. Ensuring standards are raised and issues around proper property care are addressed, encourages an increase in inventory. Vetting guests and ensuring owners’ assets are protected is equally important to the conversion of owners with second homes. Check out Safely.com for tailored solutions here.
The future of the short-term rental industry is bright with new opportunities for businesses to grow over the coming years as well as for the sector to continue to mature. In many ways, 2021 is looking to be an even more interesting and transformative year as we watch how the industry evolves.
A version of this article was originally published in the Stayjam Playbook – a free resource for short-term rental managers and owners.
You can download the Stayjam Playbook – a free resource with 180+ pages of resources and educational content for short-term rental managers and owners – here.