Driven by the phenomenal rise in demand of private accommodations over the past five years and the emerging wave of millennial travelers, urban vacation rentals have quickly carved a place in the short-term rental market — and savvy property managers are modernizing their operations to meet new expectations.
MyVR takes a look at how this trend is taking shape and what your vacation rental business can do to keep up.
Urban travel reflects changing demographics
Short-term rentals have become a significant force in the hospitality business, projected to reach $132.5 billion USD globally by 2022, nearly three times what they were in 2012. At the same time, urban accommodations specifically have gone from niche alternative to mainstream: more than one in three rental stays in the U.S. are in urban locations, up from 13 percent just six years ago.
Why the sudden popularity boost? Sites like Airbnb and Booking.com have played a big part in bringing short-term rentals to the masses, but an important factor that’s driving this vacation rental industry trend is the rise of a key segment of customers: the millennial traveler.
This isn’t just a story about millennials (aged 24 to 35) — but it is about a demographic that skews younger. Seventy percent of rental travelers in the U.S. are under the age of 44: they’re relatively affluent, spend and travel more than other demographic groups, enjoy engaging with their hosts, and prioritize experiences and culture over kicking back to relax.
This new wave of travelers has a different set of needs and expectations. If your business is going to compete, you need to take note.
Meeting modern vacation rental expectations
Millennials — with Generation Z (aged 18 to 23) closely following — are driven to travel more than any generation before. Home ownership is out of reach for many while air travel is comparatively accessible. Many haven’t started families, and word about unique locales travels fast. They’re up for an adventure, and that desire trumps almost every other budget line.
So what brings these travelers to urban areas? Here are a few thoughts:
They want to live like a local. Many millennials prefer local neighborhoods over tourist hot spots, even if that means traveling further to get to popular attractions. And they want to “go where the locals go and do what the locals do,” says Michel Karam, CEO and founder of müvTravel. Even better if they can do it in a way that’s personalized and sustainable.
They piggyback on business trips. Millennials take more business trips than other generations, and they’re comfortable mixing business with pleasure. More than half have extended those trips to include personal vacation time over the past two years, and many stay engaged with work while they’re away.
The focus on local doesn’t necessarily give short-term rentals an automatic boost, however. In fact, millennials still prefer hotels by a margin of more than 2-to-1. So what can a property manager do to get these travelers through the front door?
Focus on convenience
The vast majority of millennial travelers - over 75% - have no idea where they want to go when they decide to take a trip. And those trips tend to come together very quickly: three or four months planning ahead is typical, but a couple of weeks isn’t unusual and some don’t book accommodations until they arrive.
That may be why this generation is drawn to online travel agencies such as Priceline, Expedia, Ctrip, and TripAdvisor. On one site, they can see reviews, rates, and availability, then quickly compare options and book the best one.
What does this mean for you?
- Make online reservations easy. Enable instant bookings, keep your calendars up-to-date, and leverage multi-channel outreach — with their fragmented attention span, you can’t be sure where bookings might come from.
- Have a strong mobile presence. In the U.S., 48 percent of smartphone users are comfortable planning their entire trip on mobile — and it’s higher in other parts of the world. If your website doesn’t have a solid mobile experience, they’ll find a site that’s less of a hassle.
- Build “local” into your space. Lyric, a premium short-term rental management company, often partners with local businesses to add local flavor through locally roasted coffee, a music library, and decor. “We curate a lot of interesting things in our suites,” says Michael Quinn, lead content strategist.
- Prioritize good WiFi. From trip research, to work, to social media, staying connected is essential. In fact, 29 percent of millennial travelers will veto a potential travel destination if they can’t post while they’re there.
- Offer great last-minute deals. Like all travelers, millennials love to get a great deal and they’re not particularly local. Make it clear that you’re offering the best prices; make it easy to find your rates and special offers.
- Be responsive. Convenience means things need to move quickly, and that includes high expectations for a fast response. Leverage automated messages to confirm details and share important information with guests as quickly as possible.
Make it “Insta-worthy”
Missing the mark with social media today could literally take you out of the game. In short: vacation rentals need to look good. More than 40 percent of travelers under the age of 33 pick their travel destinations based on how “Instagrammable” it is. And that share-worthiness will only become more critical; 90 percent of Gen Z say their travel decisions are influenced by social media.
What does this mean for you?
- Marketing needs regular care and attention. Think about the broad reach of multi-channel marketing, including creative ways to leverage social media. For example, incorporate tagged photos into your website and explore opportunities to produce your own content.
- Assess everything for share-worthiness. On the Netflix show “Stay Here,” hosts Genevieve Gorder and Peter Lorimer talk about “Instagram moments” - staging part of your rental for the perfect selfie. For example, frame an amazing view with strategic landscaping and outdoor furniture, or create a focal point with a unique mural or feature.
- Encourage social sharing. Whether you want to leverage hashtags, prompt guests to share their photos, or make a point of regularly resharing posts, keep your website and social channels fresh with guest-generated photos and reviews to help stay active online and build social proof.