The vacation rental industry experienced strong growth over the last ten years up until early 2020 when the Corona Virus caused a global pandemic. This solid growth was due to the influence of major platforms (i.e. VRBO, Airbnb, etc.) that have developed the technology, enhanced the security of the user and promoted the lucrative outcomes associated with their use.
In the year 2019 the vacation rental industry’s total revenue exceeded $57 billion with a market growth rate of 6.9% and over 297 million vacation rental users. The revenue is calculated from the rents and fees from the 115,000+ vacation rental companies worldwide including everything from rental platforms (i.e. Airbnb) to small management companies with at least one property in their portfolio.
The majority of rental vacation home guests are millennials, with this demographic accounting for 40% of all users. Their spending habits show that they prefer short term holiday rentals over hotel stays when travelling and are more likely to choose the more expensive options when selecting their accommodation on holiday rental platforms.
Generation Z is the second largest demographic of users that use vacation rentals and prefer to travel with friends to city destinations. Vacation rentals normally offer larger spaces than hotels, which is favourable for this group as they can fit more occupants.
Gen X and Baby Boomers still make up a significant portion of travellers however their travel habits are slightly different due to family commitments. Families travelling with kids prefer to be able to cook their own meals, so this is a primary influence on their preference to stay in vacation rentals instead of hotels, which can become quite expensive when ordering room service or eating in their restaurants.
In 2020 the Corona Virus pandemic took a huge toll on many industries, especially the travel industry, which accounts for 10% of global GDP. A sharp increase in unemployment rates, varying travel restrictions and lockdown rules throughout the world had a significant negative impact on the travel and tourism industry, however the short term and vacation rental homeowners have responded by shifting their strategy.
The short term and vacation rental industry originally relied on domestic and international travellers travelling for either leisure or business, however the industry is now shifting focus towards catering for longer term stays of up to six months to maintain an income from their properties. Homeowners have also taken advantage of the spike in the number of people enjoying holidays (‘staycations’) in vacation rental homes that are in their local town or within driving distance from their home.
Throughout 2021 and 2022 the industry has remained flexible in its approach to securing guests and maintaining revenue, with the goal of eventually returning to catering for a mix of domestic and international travellers in the future when the travel and tourism industry recovers. The major driving forces of the industry’s’ growth up to early 2020 were the changing behaviours of travellers, introduction of new rules and regulations, mergers and acquisitions from large companies in the travel industry.
The development of micro-management tools (i.e. software and check-in/check-out tools) and smart technologies such as smart locks, advanced security tech and home automation has also played a significant role and challenged the hotel industry.
New trends that are being seen are increased low-season travel, mobile bookings, pet travel and more demand for unique stays and experiences. Future trends in the industry are expected to show a revenue that exceeds that of the hotel industry with further technology disruption and more international travellers choosing a holiday rental property instead of a hotel room.
With fewer international and local travellers in the short to medium term there is a less demand for vacation rentals in certain locations. This has worked in favor of real estate photographers who offer or plan to offer airbnb/vacational rental home photography services as more importance is place on the quality of the photography to secure bookings in a saturated holiday rental home marketplace.
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This article was first published on HauzPhotographers.com.
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Header image credit: Jaanus Jagomägi on Unsplash