With the outbreak of the COVID-19 pandemic, economies have faced massive disruptions, and businesses, SMEs in particular, have faced significant shrinkage in demand. Nonetheless, the impact of COVID-19 on short term rentals has been incomparable. Many successful vacation rental businesses responded immediately and realised that their survival is at stake unless they accept some modifications in their mode of operation.
Considering the importance of learning from experience, Zeevou gathered a panel discussion of representatives from a few leading businesses to share their experience in facing recent challenges regarding the impact of COVID-19 on short term rentals. The panellists generously shared their experience about the inevitable changes they have witnessed, as well as strategies they took to cope with the crisis. The webinar proudly presented Karolina Saviova from ALtoVita, Pablo del Valle from Minty Stay and Minty Host, Jaime de La Torrede Yasasi from Badi Homes, and Matt Hughes from WheelHouse. Here we are looking at some shared trends that our panellists reported and the kind of practices they implemented to cope with the new situation.
The vacation rental industry has experienced notable shifts in rental demand since April 2020. On one hand, as a result of travel restrictions, bookings were cancelled in large numbers, and guests were requesting refunds. At the same time, travellers who couldn’t return home due to travel bans had to make their journey longer and extend their stay but were significantly restrained by their budgets. In addition, there was a new market taking shape quite quickly, featuring mainly those who were looking for self-isolation units ranging from keyworkers to those looking for a space for work.
The change in demand factors led businesses to revise their supply-side strategies to be able to get through this difficult phase. Some of these major changes are listed below.
- Many started to consider moving away from short-term to mid-term rentals to have their units occupied and prevent losses.
- With the rising concern over hygiene and safety of units, they shifted their supply to providing private apartments and en-suite flats rather than shared-room properties and ensured that guests’ health and safety is fully guaranteed.
- Considering the higher demand for isolated areas, providers moved toward offering properties located in areas far from the city centres.
Many businesses were forced to accept modifications in their business model and reacted by changing their sales and marketing strategy to not only survive but to optimise their business models for good. These modifications were applied based on the clients’ concerns, state of the market as well as market demand. Starting with clients’ concerns they started:
- Offering well-prepared accommodations and professional services
- Implementing inspection forums
- Providing high-speed Wi-Fi, and TV
- Preparing home-office featured rooms
- Performing electronic plugs for check-ins instead of using keys
- Offering accommodations with parking space
- Performing high-quality cleansing
- Exerting 24 hours buffer before next guest’s arrival
- Introducing deposit-free rooms
- Asking insurance companies for covering the deposit
- Easing restricted terms of the tenancy agreement
- Considering no penalty for termination of the contract in specific conditions
They also tried to become flexible and creative in realising new market segments to work with rather than relying on traditional channels and expect them to work at all times. Here are some examples of the markets they looked at.
- Focusing on domestic travellers once international travelling is restricted
- Making a partnership with companies that had to relocate their employees constantly
- Working with the health department to relocate medical doctors and nurses
Finally, they became more sensitive to bottlenecks of operations and found the following solutions useful in overcoming them.
- Evaluating the current state of the market
- Analyzing related data, such as occupancy, pricing, market dynamics, and international movements
- Using dynamic pricing engines
- Facilitating the booking process
- Revising the amount of commission
- Using PMS to optimise the operation
- Applying remote security for empty properties
- Gathering a specialized group
- Considering the approaches of other relevant businesses
Regarding the market trends it was also shared that even though the Average Daily Rates (ADR) has remained relatively static across most markets, destination markets have witnessed higher ADR in 2020 than in previous years. Except for some markets, occupancy has generally decreased from last year, and metropolitan markets are experiencing the slowest rate of recovery. In addition, price changes have remained almost steady in vacation markets.
To sum up, the main challenge vacation rentals are facing even now after these many months is mainly keeping both guests and landlords, satisfied. Keeping up with the market was only possible through continuously improving services. Managers need to be flexible in facing precipitate changes coming from unstable market conditions and coordinate their team wisely. For them to be able to make the right decision, it is crucial to gather a group of specialists who can analyse market data and closely monitor market demand. Besides that, evaluating the work of other relevant companies, and using technology as well as suitable software are key elements in recovering from the consequences of the COVID-19 pandemic.
