With current lockdowns and travel restrictions bringing short-term rental cancellations in excess of bookings across the world, short-term rental rental property managers are searching for other strategies to adopt. So, how can vacation rental operations pivot to mitigate these losses?
In circumstances such as these, data can lay breadcrumb trails for strategic opportunities; indicating a change in the shape of demand. One change that the industry is currently experiencing is a significant impact to the average length of stay. In this post we will illustrate these changes and discuss what solutions exist to help vacation rental property managers to adapt their strategy and capture the existing demand.
The current state of things
Our data studio below (click for access to full interactive data studio) demonstrates the ratio of cancellations to reservations; anything over 100% indicates an excess of cancellations. From this data we can see that all corners of the globe were subject to an abundance of cancellations through the height of pandemic declaration. For a time at least, new reservations were scarce.
Indeed, we can see from the graph above (view more here) on reservations currently confirmed that 2020 is languishing far behind the numbers of bookings seen in 2019.
Both of the above data sets are relevant to short term rentals, but it is not just our industry suffering through this crisis. Hoteliers, commercial and office landlords are some examples of other sectors struggling with similar depletions or invoking force majeure. However it may be that, as somewhat decentralised and tech-based outfits, vacation rental operations are well-placed to adapt and pivot to mitigate the status quo.
How has length of stay been affected?
Our data has shown that length of stay has already more than doubled (103%) following the WHO declaration of a pandemic. The chart below shows that length of stay for check-ins on the books for 2020, compared with 2019.
This suggests that guests are booking with more longevity than previously. Some further analysis on our data for the month of March in 2019 and 2020 has identified a 140% increase in reservations exceeding 30 days year on year. Indeed, vacation rental frontrunners Airbnb have themselves declared a 30% increase in mid term reservations. So what can vacation rental property managers do to pivot their operations to a more mid-term-friendly set up? Below is a selection of mid-term platforms, for further information please visit the mid-term section of our COVID-19 tracker here:
Offering properties around the world with no host or guest fee sets rentberry apart in the field
Anyplace offer a full service model that includes them taking care of the booking process and payment.
MagicStay do not charge host registration or booking fees and offer a loyalty programme to guests.
Behere have the bulk of their offering in Europe, but extend to Chiang Mai and Kuala Lumpur. They are in the process of releasing Stateside stock in LA, New York and Austin too.
Having raised 72M USD, Spotahome boast the most website visits of our selection and over 60,000 properties. They charge hosts a percentage of the total + VAT and guests one-off fee based based on rent & length of stay.
Founded in 2009, the Housing Anywhere team is now 135 employees strong. Last month they recorded almost 1M site visitors. Hosts are charged 25% of the first month’s rent, with guests charged the same to a minimum of €150 and maximum €250.
Nestpick are site that aggregates over 1,000,000 listings from other platforms such as those listed and PM partners. Guests pay a % from partner site when booking is made.
Host fee: 7.5% and 21% VAT on each month’s rent. Guest fee: €19 one time charge. Flatio offer damage coverage up to 10,000€.
Based in Germany, Wunderflats attract guests to their 19,000 furnished properties by waiving their fees. Hosts pay 11.9% of each months rent.
With a Barcelona-based offering of mid-term options, Friendly Rentals charge guests a fee based on length of stay and price of rent ~ 21%.
HouseStay provide fully furnished properties for monthly rental in many locations across America.
Uniplaces specialise in removing the complication of renting for students. The offer listings across Europe, charging hosts a percentage of the total contract value and VAT and guests a percentage of first month’s rent depending on location.
Alto Vita pride themselves on providing superior quality furnished properties with boutique amenities, with a focus on corporate guests. 9% of accommodation charges (based on length of stay) is paid by the host, while guests cover a fee of 5% of accommodation charges.
Over 15,000 businesses have stayed in Homelike’s 50,000 apartments throughout 9 countries. While there is no host fee, guests are responsible for a one-off fee based on length of stay and rent.
With over 1,000 corporate partnerships & 9,700 curated furnished apartments in major U.S. cities, 2nd Address has a wide selection of premium corporate housing for short-term, month-to-month, or long-term bookings.
Room only mid-term
Hosts pay nothing to list their rooms for rent with Badi, who support rentals across the world. Guests pay a percentage based on length of stay, price of rent, and location.
roomfortea offer rooms with live-in landlords in London, mainly for students and interns. The host fee amounts to 5% of the total booking value, while guests pay a 10% monthly service fee.
Short-term OTAs for mid-term
Whilst we turn our attention to mid-term stay specialty platforms, our more familiar short-term offerings are also expanding theirs. As a response to the increased demand for longer stays, Agoda has recently introduced a long stay promotion option. Travellers can now book stays of up to 90 nights through Agoda, and according to their internal data, properties with long stay discounts get an average of 89% more bookings. They recommend setting your discount at 30% for a minimum stay of 28 nights.
Meanwhile, Airbnb have a page dedicated to longer stays: https://www.airbnb.co.uk/short-term-lets, making it easier to both host and stay longer as this option is up 30% on their site. They have also set up an area for hosting people on the frontline of this crisis.
If you are looking to attract more mid-term reservations, it makes sense to think about your processes and identify any small changes you can make in order to make your operations more mid-term-friendly. The most important consideration, as mentioned above, is to set up a length of stay pricing structure to ensure that you are aligned with your competition and optimised for this new type of stay.
However, there are additional points. For example, it’s sensible to review your cleaning fees, especially in these times, to cover extensive cleaning and repeat cleaning services. By extension, other mid-stay services are more feasible for longer stays. Why not explore the possibility of offering pick-up/drop-offs, laundry or catering services or tours/event tickets? It also makes sense to adjust your marketing. You can also consider which amenities to prioritise for different stay lengths.
Your website should reflect the services you offer and serve as a way of attracting people to those services. You can also make sure that any additional marketing you undertake caters to your new audience.
However you decide to adjust to this temporary downtown, mid-term stays can be a very effective solution if you take the necessary steps to optimise your offering.
For some more information on the switch to mid-term rentals, check out Rentals United‘s blog post here:
or the property manager Q&A from our webinar session:
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