This summer has been unprecedented for short-term rental bookings around the world.
July was a record month for bookings in the United States. With around 23 million nights spent, the industry saw an 18% year-over-year increase. Similarly, in the UK, 84% of short-term rental owners say bookings for 2022 are stronger than ever, and research shows that the number of holiday rentals in the country has increased by 40% over the past year. of the last three years.
But as the year draws to a close, inflation continues, major world events and a looming recession threaten the industry. As it stands, currently booked nights from December 2022 through March 2023 are 16% below 2019 levels, and nearly 70% of economists predict a recession will be heralded in the United States sometime in the future. next year.
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As the founder of Boostly, the leading online training provider and web design agency that gives hosts the tools to increase their direct bookings, I’ve worked alongside the short-term rental industry for years – and I know how difficult it can be to navigate the industry in unprecedented times.
Many landlords and investors have never run a short-term rental business during an economic downturn, and understandably, the concept of doing so is daunting.
While a recession doesn’t necessarily mean your business is doomed (in fact, one of the most significant periods of growth in the vacation rental industry occurred between 2006 and 2012 – throughout the Great Recession), it pays to have a survival strategy in place.
Here’s my take on how property managers can protect their wallets, weather the storm, and ensure their short-term rental business survives.
1. Leverage medium-term rentals
There’s a huge shift in the short-term rental industry right now, and being proactive means tapping into trends and using them where possible. Demand for mid-term rentals (between three and nine months on average) is increasing, and now is the crucial time to incorporate them into your short-term rental strategy.
Entering the mid-term rental space gives you access to different types of guests, from students and employees to healthcare workers, entrepreneurs and digital nomads who need to stay (and work) in more places. long time. Having guests occupying your properties for longer periods of time not only means you spend less on cleaning costs, but the management of the property is also less involved. Plus, you have the added security that your rentals are filled during tough times.
2. Invest in smart home technology
There are plenty of smart solutions on the market to help you cut costs and improve the efficiency of your short-term rental, but it’s not just your budget that will thank you – customers expect it too. Equipping your rentals with smart technology can make a huge difference to your energy bills, which is crucial in dealing with rising energy prices and the cost of living crisis.
Start with the big stuff, like smart thermostats and lighting. Investing in a Nest thermostat lets you monitor your home’s efficiency and adjust the temperature in your rental in real time, even when you’re not there, reducing your bills and using less energy.
Other small technology investments can also make a difference. Air fryers, for example, are much cheaper to run than a conventional oven, while water-efficient showerheads can save more than $70 a year on energy and water bills.
Reassessing your current appliances and energy usage is a good place to start.
3. Generate direct bookings
While there’s money to be saved on your energy costs, there’s also money to be saved on how you generate reservations. Last year, the average commission charged by Airbnb to hosts was 14%. If your real estate portfolio is solely dependent on online travel agents (OTAs) like Airbnb and Booking.com, you pay huge fees.
Word of mouth remains one of the best marketing tools there is.
Mark Simpson – Boostly
My advice is to reduce OTA commission fees by focusing on direct bookings. There are many ways to do this, but the most important investment you can make is a mobile-friendly website that provides a seamless direct booking experience for customers. With 66% of travelers saying they would choose to book directly with the accommodation whenever possible, there’s no better time than now to move away from OTAs.
When it comes to attracting customers, an email marketing list is one of the most valuable assets you can leverage to increase direct bookings. Create a referral network and use previous clients by asking them if they know anyone who might be interested in staying at your properties; it sounds old fashioned, but word of mouth is still one of the best marketing tools there is.
4. Be proactive, not reactive
At the first sign of an economic downturn, companies tend to cut sales and marketing budgets. But evidence shows that the companies that focus on sales in times of uncertainty tend to be the ones that survive and thrive.
When other property management companies pull out, I’m a firm believer in pushing through. In my opinion, a good place to start is to hire a salesperson. Parting with commission fees and base rates may make you cringe when everyone else is pocketing, but the benefits will outweigh those costs.
Having someone working full-time every week generating leads, managing contacts, connecting with past clients, and pushing direct bookings will ultimately move your business forward. Next, instruct your newly hired salesperson to contact local businesses and healthcare residences to let them know your properties are available for mid-term rental.
5. Use online communities and industry groups
Many online resources are available for property managers, from training academies to Facebook groups, like Hospitality Community. My final piece of advice is to join industry groups and communities and connect with as many other property managers in the industry as possible.
Not only is it helpful to have these connections, but there’s also a lot to learn — from pricing strategies others use to how landlords save money in their rentals. It’s a good idea to bounce ideas off, take notes, and most importantly, support each other during unpredictable times.
Take away key
With a recession on the horizon, it’s time for short-term property managers to step up their strategies. Installing smart home technology can help save your business, online resources can be used to expand your knowledge, and taking advantage of the mid-term rental trend can generate additional revenue.
I sincerely believe that with an effective marketing strategy and less reliance on big OTAs, we can all weather the storm – and the industry will hopefully emerge thriving.