Andrew McConnell discusses 3 reasons why it looks like now is the time to work with a professional vacation rental manager.
Remember when the internet (and the listing sites that came with it) flipped vacation rentals on their head? Gone were the days when property managers could charge fat fees, put all the financial risk on the owner, and shield themselves from being transparent with everything from operations to pricing. With the dawn of the internet and the many OTAs (online travel agents) like VRBO (Vacation Rental by Owner), Airbnb, and Booking.com, the age of DIY for the homeowner was upon us—and it was glorious.
Unfortunately, it looks like that’s all changing. With homeowner grumblings seeming to be ubiquitous with the HomeAway brand, a class action lawsuit in the works, and more and more companies (including hotels and possibly Google) trying to gain a slice of the “sharing economy” pie, it looks like the golden era of self-managing vacation rentals as investments is over.
That being said, it looks like now—more so than ever—is time to work with a professional vacation rental manager.
Here are three reasons why:
1. Instant booking
One of the many reasons self-managing homeowners used to love VRBO and self-managing was all of the power it put in their hands. With a desire for full control and the belief that they could do a better job than any professional property manager, self-managing homeowners could easily spend countless hours each week answering the phones and pouring over every individual guest that tried to book.
With VRBO’s most recent pushes to normalize instant booking, however, homeowners are left with little to no control. Unlike professional managers (many of whom can instantly vet guests and scrape the internet for anything that might trigger a warning), self-managing homeowners are left with little to no ability to screen guests.
What about workarounds though? From a brief look at VRBO, it’s easy to see that many displeased self-managing homeowners are attempting to evade VRBO’s instant booking and guest fees by encouraging guests to book offline or through another booking site. Could that be a solution?
Unfortunately, because of our next reason, not exactly.
2. Best Match
With VRBO’s “best match” algorithm, if and when a homeowner tries to “work around” instant booking or the guest fees, the listing will only drop lower and lower in rankings.
Low conversion rates that result from extreme, arbitrary vetting or slow response times, or a complete evasion of VRBO’s booking process will only render a listing more irrelevant and move it lower in VRBO’s “best match” algorithm. Sure, a homeowner can take days to screen guests or openly encourage guests to book offline, but once a home appears on page 30 and is barely relevant to VRBO, there will be little opportunity to screen any guests at all.
And even for those homeowners that do allow BIN (“Book It Now”), there is no guarantee of performance within the algorithm. After all, from a business perspective, who do you think OTAs like VRBO would be first to recommend: a homeowner’s one listing with no guarantee of professional care, or one of the hundreds (or even thousands) of a professional property manager’s listings?
3. Current Bookings
Don’t take it from us, take it from the many self-managing homeowners who are reporting a sharp decrease in bookings and inquiries. With 94% of homeowners reporting a decline in bookings and 40% reporting that they are “not at all likely” to renew their HomeAway/VRBO subscriptions, homeowners are joining fora and communities to discuss solutions, strategies, and alternate listing sites.
Luckily, the solution doesn’t require as much labor and time as many would have you think.
What can homeowners do to increase bookings?
There are several options for homeowners looking to increase bookings. While not all may not be time efficient, here are some options:
1. Build your own site
With services like Rentivo designed to build vacation rental websites for owners (and managers), provide payments and marketing tools, it’s possible for these homeowners to maintain listing site independence in order to retain control of marketing and vetting of guests.
While this can help synchronize your website, marketing, calendars, and payment processes, it can also be difficult to dedicate the time and resources needed to market a website to the same degree as some of the giant OTAs. With companies like Airbnb and HomeAway spending hundreds of millions of dollars to drive traffic to their websites, it can be understandably difficult for a standalone website to compete.
2. List on an owner-only site
Exclusive owner-only sites are another way for homeowners to gain independence from traditional listing sites. As they are more aggregated than individual websites, they will generally drive more traffic to your listing. While some guests also prefer to rent from homeowners, 70% percent of travelers who have rented from homeowners and guests prefer to rent from a professional management company as opposed to an owner. With professional managers providing consistent experiences and travelers and guests voting with their checkbooks, listing on an owner-only site may also alienate many guests.
3. Use professional management
With nearly 90% of self-managing homeowners dreading the things they need to do to deliver a great vacation rental experience, 68% of guests preferring professionally managed homes, and 94% of self-managing homeowners reporting a decline in bookings from VRBO, it’s more beneficial than ever for homeowners to use a property manager.
And with self-managing homeowners reporting that they spend an average of 8.4 hours per week managing their vacation rental, not only does using a property manager appeal to more guests and save time—it also is the more cost-effective option for anyone earning minimum wage or more.
In the end, however, OTAs like VRBO are not only disrupting the operations of self-managing homeowners; they’re also shaking up professional management. Average property management fees have dropped from 40-50% to 25-35%. The quality of management has gone up as they acquire better technology and resources, and new entrants are driving innovation and improvement in customer service.
Now is the perfect time to search for new management, and if you are, my company, rented.com, offers a better way to find, compare, and choose local professional management. If you want to see what professional managers can offer, try letting a professional do the work, so you can: