Worldwide: Over the last decade, the hotel and hospitality industry has seen “seismic” change, according to the latest Megatrends report for the short-term rental industry from Skift.
This includes an erosion of typical ideas of hotel brand loyalty, the rise of online and tech-based solutions for most business segments, a rise in sharing economy and, arguably most importantly, the rise of short-term lets as a major competitor for the traditional hotel brand.
The last decade saw the popularity explosion of Airbnb, the superstar sharing economy short-term letting platform, and with the new one comes its potential IPO, a confirmation of its right to a seat at the table among the other hospitality giants. With a new decade, new types of travel may come into play, as the younger generations get older and earn more, their wants and needs will become more important to the industry as a whole. And as always, technology will keep racing forward, changing the way that people travel, stay, and holiday.
With this in mind, Short-Term Rentalz is delving into some of the projected trends for the industry based on Skift’s Travel Megatrends Report 2020 to analyse the current state of the market and the direction it is heading to.
Winners and Losers according to Skift
It goes without saying that in hospitality, the 2010s was the decade of short-term rentals. With gross bookings in the sector nearly tripling over the decade, the rise of sharing economy sites like Airbnb as well as the continued success of traditional holiday rentals show that the short-term rental market is here to stay. With Airbnb coming to the public market as well, the industry is looking to see what they can take from that major spotlight being shone on them.
While big players like Airbnb, Vrbo and Sonder may be getting all the attention, the traditional vacation rental market is chugging along strongly. Skift’s trends identify that these properties are managing to outperform their urban counterparts due to a shift towards larger luxury units. Investment is also growing steady here – rising startup OYO purchased @Leisure Group in 2019 to join the market, and on a smaller scale, UK industry leader Sykes Holiday Cottages in continuing to consolidate their market share.
Innovation, however, is always key, and the rise of the branded home manager may be the most important innovation the industry will see. While the sharing economy model of Airbnb may have led to an explosion of access, the unification of the quality branding of a hotel with the convenience of a rental unit, seen with companies like Sonder and Vacasa, show that there is still a market for the customer communication and service standards of a hotel. Skift predicts that these rising standards may lead to this style of business becoming the industry leader.
Protecting destinations (Sustainability and Travel)
Travel is no longer just about going somewhere and going home, taking with us the memories we found there – it is also about making sure that place is still with us in the future. Sustainability is becoming a key question for the average tourist – whether their holiday will be good for the locals and good for the environment as well as being unique and engaging. This brings new challenges for the industry as a whole.
Skift predicts a major shift in the way destinations operate: a move towards shielding the communities and environments of the places that see significant numbers of tourists and greater management of those visitors. The strategy has already been adopted by tourist boards in places like the Netherlands, who chose to stop promoting tourism earlier this year in an attempt to reduce strains on infrastructure and housing.
Tourism boards cooperating with locals in order to improve their impact is on the rise as well: in British Columbia a tourist association began re-investing its money in development and in the first nations community.
Eco-travel is predicted to continue rising alongside that, with travellers taking greater concerns as to the sustainability of the places they stay or choosing brands which promote environmental initiatives. This can impact the short-term rental sphere as well, as Airbnb has noted that travellers are beginning to choose more eco-friendly destinations.
For holiday lets and short-term rental property owners alike, focusing on sustainability will be a strong way to improve both personal branding as well as social responsibility over the upcoming decade. Skift predicts that tourist management is going to become the key word in 2020 and beyond.
New decade means new people get older, and for the 2020s, the Generation Z group will be coming into adulthood and starting to seriously spend on their own hobbies- chief among which is travel. Skift has noted that Gen Z-ers already have an impact on travel as most are travelling at similar rates to their millennial counterparts, and most across the US, UK, Australia, India and China are all paying for their own travel.
Social media is more important than ever with Gen Z, but what truly separates them is the type; rather than Facebook, the stalwart brand for most millennials. Gen Z overwhelmingly prefers shorter, more visual social media such as Instagram, Snapchat and YouTube and therefore, brands looking to capture this market should look to capitalise on these sites.
The digital forward approach, used by many sharing economy short-term rental sites such as Vrbo and Airbnb, fits neatly with the sensibilities of Gen Z-ers as is, but holiday lets and other short-term rental sites may be able to benefit by further implementing technological solutions for their major issues.
However much information Gen Z has already given us, the future is still to come. Gen Z will let us know more and more about who they are and what they want as time goes on. Skift says that companies wanting to get ahead need to keep their eye on this generation now.
Skift covers a wide variety of tech trends that it believes will be the future, from global payments software to smart design solutions. Skift also believes that the mentality of tech companies will truly impact the hospitality world with Google stepping massively into the industry as well as with the rise of startups disrupting corporate travel.
New technology is always going to impact on how we process the world, but the rise of digital payments is changing processes across the industry. However, it may have the biggest impact on small operators who may have their number of tasks slightly reduced.
Skift quoted the operator of the adventure ski property The Mustang Lodge as saying: “It made it a lot easier this October to have automated processes to field less calls and spend less hours on handling invoices.”
The rise of smart solutions, such as self-check-in, facial recognition for hotels and rooms, AR tech in advertisement, and smart locks, are all being tested by rising hotel groups like OYO and RedDoorz. These may be even more important for short-term rentals, who may not have large staff numbers like a classic hotel, allowing the owners to focus on providing a more complete hospitality experience.
Innovation in the region is now focused on providing unique solutions to small- and medium-sized businesses, namely attempting to disrupt major corporate travel providers. The startup mentality that new firms are bringing to the area may be carried over to help link that corporate travel in with short-term rental platforms, especially those that primarily function online.
Skift believes that through its massive data collection ability, stranglehold on the search engine market, and its new focus on its own travel advertising services, Google promises to become a major player in the travel industry. This may prove costly to services like Booking.com, who may fall into direct competition with Google, and to Airbnb who rely on fair display on search engines to be uncovered.
According to the publication, the future is either defined by tech, or defined by those who make it, which is something we agree with. For short-term rentals in particular, given the important role both start-up culture and tech solutions have had in its growth, technology’s impact on society may end up being the most important trend of all.
Legislation- the unsaid trend
The largest trend of the decade may be the popular and legislative backlash to the short-term rental market. We have already seen one of the largest pieces of legislation put in place already, as Scotland last week announced sweeping regulations over the industry. As cities across the world put in place new planning regulations, there is a clear concern within urban communities that the rise of short-term lets has led to a change in their own standard of living.
The key question that will decide winners and losers is how they navigate these new rules, and whether or not their business models can quickly adapt to shifting legislation, while staying acceptable in the public eye. It is here where companies like Sonder may meet their match; with the “investment property” becoming a target for cities seeking to quiet public concerns, companies whose business models require the mass purchase and redevelopment of urban housing may either have to seek loopholes to continue working, or go under new legislative standards.
For more information on how to view the full Skift Travel Megatrends 2020 report, visit the website here.