The vacation and travel industry has been hit hard because of the new coronavirus. And it hasn't been a slow-motion punch to the gut.
An industry that has been fast tracking like a freight train across the countryside didn't ease into the station as the pandemic gained momentum in March. The $58 billion vacation and short-term rental business hit the brakes hard and didn't even skid. And on the eve of two big revenue generators - Spring Break and Easter.
“To the point that it was excruciatingly painful,” industry speaker and authority Matt Ward posted in a recent VRM Intel blog.
The booking pace of the U.S. leisure-based vacation rental industry has seen a significant slowdown that is expected to last at least through July because of the coronavirus. Occupancy at some popular destination spots has declined nearly 40 percent compared to last year. New bookings in the U.S. were nearly half in mid-April compared to the first of February before the pandemic broke loose, according to AirDNA.
Meanwhile, the industry has gotten pressure from legislators who banned short-term rentals, and many counties and cities have followed suit.
As social distancing eases and the world returns to normalcy, the vacation rental industry will find ways to rebound. For the short-term, many eyes are on the next big holidays, including July 4 and Labor Day, to get a sense of to what extent bookings pick up speed. In some parts of the world, leisure bookings are ticking up. Airbnb booking data suggests that China is on the rebound: bookings were up the first half of April by more than 200 percent compared to the previous year.
The industry will be changed, however. Some leaders anticipate a shift to domestic travel and longer, mid-term stays. Sanitation will be a high priority.
Certainly, vacation rental property owners will have to be more nimble than ever and adjust their business models to improve occupancy rates.
Here are five schools of thought on what the industry might look like after the pandemic subsides:
Adjust for domestic travel and longer term stays
As states reopen for business and international travel is discouraged, the likelihood of domestic tourism is bound to increase. And stays will be longer.
Property managers in some states that have banned short-term rentals will have to shift strategies to include mid-term stays, or those longer than 30 days but less than a year.
Airbnb and Vrbo/HomeAway have been working to extend their length of stay pricing model to more than 30 days. Booking software will need to have the flexibility of adjusting for extended stays.
Kigo's system now allows for up to 60 nights for a single reservation, which favors vacation rental operators by earning longer term, predictable and consistent revenue. Healthcare and essential workers may need long-term options to quarantine away from their families safely while fighting the pandemic.
Vacation rental managers should diversify booking strategies to accommodate guests longer.
Relax cancellation policies and play nice
Ben Edwards, CEO of Weatherby Consulting, said on a recent VRM Intel webcast about the state of the industry that property managers walk a fine line when managing cancellations and refunds. He recommends taking the high road and being good industry stewards, and consider waiving fees. The benefits will outweigh a few hundred dollars in lost revenue.
"I think if you want to maintain your business long-term, be a good guy, be a good person," he said. "I'm looking at folks around the country right now hammering down on the gas and keeping a 10 percent deposit and charging some exorbitant cancellation fees. I think you're really doing a disservice to your business and the industry by doing that. Is that really worth your reputation?"
Communication is critical
When situations are constantly changing, communication is especially critical. Property managers are leaning more on software tools that help them stay in touch with guests and automate the important business processes that keep the company running smoothly.
Reservation teams will need to engage with guests through instantaneous or scheduled push notifications and emails to stay in touch every step of the way. The mobile portal in Kigo Marketplace enables operators to send greetings, travel details, updates and more so guests have the convenience and security they need.
Keep it clean, minimize contact
Housekeeping is becoming a differentiator now more than ever. Inconsistent housekeeping standards can cause your business reputation to plummet.
Sanitizing apartments and homes is essential to guest and staff safety and is now requiring multiple steps and more frequency. A proven housekeeping system that provides checklists, monitoring, service requests and other capabilities will help maintenance and housekeeping staff create a clean and memorable destination.
Operators need to include cleanliness in their marketing strategy. Being proactive and frequently posting on websites and social channels about measures being taken to ensure guest safety may be the difference between getting a booking and missing one.
Also, check-in and check-out via mobile communications portals get properties closer to a contactless guest experience.
Bring visibility to your business
Properties that are listed on all top channels to maximize exposure will get the first looks by travelers. Up-to-date content should be maintained and include measures that are being taken to ensure guest safety and enjoyment, as well as Q&A to address questions about the property.
Also, SEO will be more important than ever, to ensure properties are ranking high as travelers search Google. Fresh website content and social media engagement - sharing tips about safe travel and how to create enjoyable experiences in these unprecedented times - is essential.
Most of all, vacation rental property managers should be smart about their businesses, which includes doing and promoting the right things as much as possible.
Debra Martin of Galax Management, LLC, which specializes in boutique rental homes in the Highlands area of western North Carolina, is cautiously optimistic about the industry’s return. The state recently re-opened hotels and short-term rentals, and the company is receiving requests for information and new bookings, though there is a long road ahead.
"We feel it is touch or go here," she said. "We are seeing some activity in information requests as well as actually receiving bookings for the opening weekend. While we believe the industry will see a major uptick in the drive leisure market, we just don't know where this virus is going to take us. If we have a resurgence of COVID-19 cases after the Phase 1 implementation we may well lose any headway we are currently experiencing."
Galax Management is taking a very low key approach to market the region's clean air, waterfalls and natural resources to entice guests. The company is sensitive to full-time residents and neighbors who may be concerned about the spread of the virus and is following stringent cleaning procedures, which are detailed in forthcoming promotional materials.
“We want to be sure that we do not step over the line providing the best outcomes for our owners in bookings while being a good neighbor in protecting our community during this trying time,” Martin said.