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Coronavirus forced the world to grind to a halt, immediately impacting the travel industry from airlines to lodging companies. The short-term rental industry was, of course, no exception, as reservations on major platforms such as Airbnb, Booking.com and Vrbo quickly declined this spring.
As we move toward summer and look to when the industry will rebound, Guesty, where I’m COO, decided to conduct a survey in April 2020 of nearly 400 property management companies worldwide to understand the current and future short-term rental ecosystem — from business impact to revenue projections to future predictions. With a platform that automates and streamlines hosts’ daily operational tasks, we are at the center of this ecosystem. Thus, our global database encompasses insights that the larger travel community can benefit from when planning for recovery.
What we found showcases the true impact of the pandemic on this community, along with the resilience those affected are showcasing while navigating this trying time. The trend is clear: Though severely impacted, property managers are confident that rental businesses will rebound from this crisis.
Revenue Loss Catalyst For The Flexible Rental Model
It’s sadly no surprise that nearly all respondents suffered significant revenue loss when comparing Q1 2020 to Q1 2019. Only 5% of respondents reported experiencing revenue loss at a rate of 10% or less. Nearly 30% expected to see a 51%-75% decrease in revenue this year over 2019, and 27% anticipate a 26-50% decrease.
With their bottom lines significantly hit, property managers and hosts have needed to quickly look to new strategies to mitigate COVID-related revenue loss. One of the most common means of adapting is offering extended stays, rather than just short-term lets, to cater to the new travel personas that have emerged due to the virus — such as displaced travelers and those looking to self-isolate. Property managers and hosts may do well do offer 14- and 30-day rentals, considering a recent study by Rentals United found an increase in the average number of nights booked per stay from the same booking period in 2019.
Hospitality company D. Alexander was among the first I saw implement this strategy, launching its “Destination Isolation” campaign in April, with retreats of two weeks to three months at lower rates than normal in beachfront, desert or mountain area properties, giving anyone looking to isolate alone or with family a rare combination of quality, comfort and open space. Packages emphasized professional cleaning and a portion of the proceeds going toward virus testing.
Adapting To The New Normal
Property management companies are also implementing new procedures to comply with changing health regulations and travel restrictions, as well as updating policies to cater to guests dealing with uncertainty.
Specifically, more than half of short-term management companies surveyed reported following more stringent cleaning protocols in light of COVID-19. There’s even discussion of robotic cleaning becoming standard as experts wonder if cleaning is the new amenity. And when asked which strategies had the greatest impact on business stability in light of coronavirus, the most successful tactics respondents cited were flexible cancellation policies and reducing their daily rates.
I’ve seen our users firsthand promote all three of these strategies in their listing descriptions and titles in order to market themselves differently to attract bookings. Many are also incentivizing guests who’ve canceled to book future stays by offering discounts and coupons. The other key change I’ve noticed is hosts making an effort to limit human interaction between hosts and guests by utilizing tech tools such as keyless entry and automated messaging solutions, which can include sending emails with check-in instructions as well as noting all the amenities guests can enjoy on the property.
Springing To Fall With Renewed Optimism
Despite the aforementioned challenges and business loss over the last few months, short-term rental property management companies are and should remain positive about what’s to come. More than two-thirds (67%) of respondents are optimistic about the future of the short-term rental industry, and nearly as many (65%) are optimistic about the future of travel. This is not surprising considering 61% of respondents said that less than 10% of fall reservations had been cancelled, and a Skift survey reported by the New York Times found that a third of Americans hope to resume travel activities within three months of travel restrictions being lifted.
In fact, I predict that short-term rentals will become a popular choice once restrictions fade and travel gradually returns to normal, considering guests will likely be wary of common areas that come along with traditional hotel stays, such as lobbies.
Reality Coupled With Optimism
Despite the harsh reality of the impact this pandemic has had on property management companies and hosts, we can still observe what’s so special about the short-term rental community: It is innovative, fast-changing and adaptable. While the immediate impact of coronavirus shocked the travel ecosystem, the future looks bright, and travel will eventually return to normal.