Welcome to our first February newsletter, that replaces the weekly “Smarthosts” newsletter. Thank you for all the kind words we received on its format demise and all for its contributors over the years. A new and more “interpretative” version is being created, which will no doubt change as the month’s progress and we get feedback from you all.
We would also welcome your suggestions on topics that give them cause for concern, wish to have discussed, are difficult to understand or are new ideas, tools or marketing concepts that you feel need to see the light of day!
What’s Happening This Month?
There is no stopping the rental trend growth, the innovative ideas, the growth of services and the tech supply conundrums and the increasing power of certain OTAs (Online Travel Agents). Anecdotally and after visiting several managers and speaking to others across Europe, then one thing is clear, Booking.com is making ground fast in the rental world and is on everybody’s lips as the urban and increasingly regional player for mid-range accommodation.
With continued investment from hotel chains, (The Taj chain just got into this space too) VC’s in bleisure (business leisure) accommodation sector and increasing acquisition there is an increasing need to distribute far and wide BUT the actual number of booking generators may well be declining, not increasing at a generic level. There are new sites launched daily attempting to compete. Some localized ones are having an effect, but Airbnb, Booking, and HomeAway are battling it out for absolute top spot dependent on location, guest demographic and property type!
The OTAs are providing what guests want, have the power to dominate search and brand and that’s the reason they are successful. It has not gone unnoticed however that there is a significant drain on local income that could well be used to support the local economies. 15-20% of every booking lost, is billions per year that are now giving cause for concern. Tourist boards and local organizations are increasingly interested in developing their own competing OTAs. Technically challenging of course, but with significant political clout to potentially cause OTAs sleepless nights. Akin to Uber restrictions in many cities! Expect 2019 to witness a growing enthusiasm for this.
Links Of Interest
- Paris sues Airbnb for 1000 illegal ads
- Money continues to pour into short term rentals, for business and leisure
- The evolution of the holiday property manager
- Marriot Hotels and Hostmaker brands its top line accommodation as Tribute Portfolio Homes
- Agoda sales practices slated by operators
- Death & Taxes
Notable Trends
Legislation is coming
The Paris link above is indicative of increasing controls across the rental eco-system and why we are seeing it. Many places in the US are under fire even at regional levels. This link to a Barcelona Flat Detector for reporting unlicensed rentals is no doubt causing more concern and in Spain in general licensing laws are under real scrutiny.
As yet, this is in isolated cities and destinations, but if all rental growth predictions are correct then we can all expect to see this accelerating, driven by local, regional and even national authorities. The merging of accommodation types will demand controls on income disclosure, guest information, and health and safety. In fact, the rules that apply to hotels! It’s not a simple equation, however! If you start to limit the rental inventory, imagine the associated issues! Prices will go up if there is insufficient accommodation, local employment and service support companies will disappear and other destinations will benefit! The knock on effects could push outward to flight destinations and airline re-routing. Make it too cheap and have oversupply and the demographic may suffer, think of Benidorm in the ’80s (or don’t).
We have written our own short summary about the challenges related to legislation and what will come to pass. Death & Taxes
#Bookdirect
This is always worth a mention and on February 7th, the #Bookdirect day was initiated. We are all waiting to see some metrics, but the cause is gaining ground with various online and offline activities promoting this concept, initiated by VRMIntel A couple of articles are linked below.
Education is expensive and educating the public is even more so, which makes this approach commendable but will require a lot of persistence and consumer PR. Hitting national headlines and keeping it there (hard) or more likely having your Amazon Alexa doing your bookings with AI and voice search is more likely to make the big difference in time!
The only real way to compete is to differentiate yourself and focus on what mass listing sites struggle to do and this means local knowledge, going the extra mile in all areas of service, working hard on all elements of your private marketing. Some alternative listing sites are focused on a charitable approach (but still on income), such as Fairbnb. Any trademark experts out there?
Booking.com are making significant inroads?
There is no market research on this, just multiple conversations with managers, but there are growth polarisations dependent on location, with both Airbnb and Booking.com, but these are the two OTAs on everybody’s lips!
Is it Booking’s business base, their PPC bidding systems, their excellent app, the massive affiliate reach, the onsite FUD and FOMO messaging and the booking journey. Or is it more simple: free cancellation (hotels predominantly), which brings in new business and simple frictionless payments and now the continual offers and being a genius booker? A very hard task for any business to follow. The only downside is that prices are often much higher with the rental inventory and only technology can combat all this going forward. You can bet that of all the players in the travel market Bookings cart abandonment is one of the lowest, as others lose billions!
Unique Products & Services
Want a gymnasium in your holiday rental, to attract the health and fitness demographic but you don’t have space? These first two products could be just the thing. With the guest experience foremost in everybody’s minds, then how can you add to this? We have identified two products below that may help you and your guests!
- An amazing workout mirror
- A wall mounted personal trainer
- Add some musical interest to your guest communication and recommend a local playlist. Spotify has a map that you can click on to listen to the preferred music of that destination. Listen like a local!
Quotes We’re Pondering
To go alongside the Airbnb and Booking.com comments above, we heard a great quote from an experienced professional:
“Airbnb killed SEO”
The moment Airbnb came in with a low commission fee, incredible market penetration, and brand development, then focussed on large inventory supply, was the moment the game could be lost!
Why bother to work at your own business brand and development when its done at such a low cost? Remember that hotels 20 years ago were paying a commission of circa 5% for booking and the Billboard effect was truly effective, plus internet booking was in its infancy (remember Netscape Navigator?) and a “mobile”, was a thing you hung over your baby’s cot. Now 50%+ of bookings are made via OTAs and commissions can reach 30%+ and your phone often does the work!
What next? We all know that new models are being tested, that align more to the higher managerial commissions and lower guest fees, however, this can only result in:
“Higher Guest Fees”
Feedback
Do you have any feedback, suggestions or topics you’d like covered in next months newsletter? If so, please leave a comment below.
Comments
What can I say? Rentivo has been fundamental to our growth and development.
Not only were the tech issues resolved, these guys know the business inside out!
Rod Fitts, AVROA
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By Richard Vaughton
Posted in: Industry News