The short-term rental industry landscape is continually evolving. Since the COVID-19 pandemic, it has become increasingly evident that in order to manage risk, property managers and owners need to diversify their marketing to frictionless distribute their listings to global and niche sites.
The crisis has also highlighted the need for adaptability and flexibility when it comes to length of stay. Diversification and risk management will be the keys for survival in the new world.
In recent years we have seen a convergence between traditional hospitality companies likeMarriott, Wyndham expanding into the short-term market, and on the other hand, short-term rental companies operating more like hotels.
What we haven’t seen yet – but is the next big tsunami – is the additional convergence with real estate. A furnished condominium today can be rented for short-, mid- or long-term, and it is that flexibility that makes it such an attractive venture.
Over the years, lured by the yield, real estate companies have entered the short-term space, but the complexity to do so is much higher than the reverse. Furnished short-term rentals have an undeniable advantage when it comes to mixing their business models to ride out any crisis: They already have what serviced apartments offer. Of course, research needs to be done in terms of regulations, licenses and costs depending on the location, but the foundation is there.
Property managers need to think about how to fill their properties with different types of customer demographics. The value of vacation rentals is now much bigger than just vacation rentals. It’s a new category of accommodation which hasn’t fully developed yet, but within the next five to 10 years it will become a massive revenue stream within the real estate business.”
The convergence in marketing channels is also on the cards. Where do you look for mid- and long-term rentals? Is it likely that the short-term rental online travel agencies we know today will soon cater to long-term rentals?
The answer is yes. Airbnb already allows 365 day bookings. Yet, the competition will be fierce.
Another added layer in this new chapter is the technology landscape. Will property management systems, channel managers, yield managers and operational services cater for the mixed inventory? Will they allow this flexibility?
Already, property management systems in the short-term rental world are allowing managers to sign long-term contracts, and connected various mid-term channels this year and discussed adding channels that are, today, solely dedicated to long-term.
In our view, the blurring lines between hospitality and real estate will eventually disappear altogether. Supported by technology, a clear picture will emerge: A furnished real estate business that is able to mix the length of stay is the next foolproof risk management model.