December 16, 2015
The Tale of Vacation Rentals as Told by Star Wars
With the latest installment in Star Wars all over the news, now seemed like a good time to see what Luke, Leia, Solo, and of course Yoda, can teach us about the past and future of vacation rentals. The long and short of it?
“This is a new day, a new beginning.”
Episode 1: Phantom Menace
Like the “first” Star Wars movie, this story has commercial beginnings. Whereas it was a long time ago in a galaxy far away that an interplanetary trade dispute kicked off the Star Wars we know so well, it was 30-years ago in one of Bill and Doll Jelavich’s rental homes in Monterey Dunes Colony, CA where this story starts.
While it was not really a trade war like in the movie that precipitated that first meeting, that meeting is a natural point with which to launch this tale. Vacation rentals, and professional vacation rental management, had been around for decades, if not centuries before that first meeting. What the attendees of that meeting realized, however, was that their trade, their business, the business of vacation rental management, could be better if there was more cooperation and best practice sharing. With that mission, the Vacation Rental Managers Association (VRMA) was born.
Episode 2:Attack of the Clones
Success begets success. That first meeting in 1985 had 8 attendees representing five companies. Humble beginnings for sure, but those attendees were onto something, and it was not long before “clones,” i.e., new members, began joining. Realizing the positive impact such a professional association would have on the industry in general, and their business in particular, more and more Vacation Rental Managers joined the VRMA.
Thus, in 1999 this “clone” army had grown from 5 companies on 14-years earlier, to 500 VRMA members nationwide. The movement was growing.
Episode 3: Revenge of the Sith
This was the point in the industry’s evolution that we began to see the “dark side” of increased professionalism. Professionalization and scale appeared to have obvious benefits, so what better way to take advantage of them than an aggressive roll up strategy?
As an in depth VRM Intel report by Amy Hinote found, however, all was not well. As Amy found, less than 5-years after the founding of ResortQuest: “In 2002, with falling stock prices, management discord and the aftermath of 9/11, ResortQuest International began to lose revenue and investor confidence.”
Yes, the “force” of consolidation was powerful, but if not handled properly, it could cause more harm than good.
Episode 4: A New Hope
And then everything changed. Or at least people thought it would. By the late 1990s and early 2000s the Internet was all the buzz, and dotcoms were taking off. If these pre-revenue companies in unproven industries could be worth millions overnight, imagine what the Internet could do for an industry as established, and consistently cash flow positive as vacation rentals?
Costs would come down as more and more vacation rental operations moved online. Revenues would go up as entirely new profiles of guests more easily found our homes via the web. The “new hope” in the industry was that even the smallest and most local businesses could now compete on a level playing field with the largest. The Internet was the great equalizer.
Episode 5: The Empire Strikes Back
But there is something funny about the Internet. Yes, it enables all sorts of things from advertising, to discovery, to booking on a scale that is simply impossible manually. Yes, anyone with a few dollars can create their own website in a matter of minutes. Yes, theoretically people from all over the world can find your vacation rental business with a few clicks on the computer.
But even though all of this is true, it is not the great equalizer many at first imagined. While the Internet enables everyone to get online quickly and easily, it also benefits those with scale in a way we have not seen with offline businesses since the Trust Busters of the early 20th century. Sure, you can easily create a website to make finding and booking your properties easier for potential guests, but how can you compete for traffic with the online “Empires” of HomeAway, Airbnb, Booking.com, or TripAdvisor?
Episode 6: The Return of the Jedi
Which brings us to today. There is no single “Jedi,” but rather a wave of them now entering the vacation rental space. Traditionally the red headed stepchild of lodging, vacation rentals, and short-term rentals more broadly, are now the hot place to be.
From hotel gurus like Chip Conley who recently joined Airbnb, to investments from hotel companies in the space like Hyatt’s in onefinestay, to the plethora of hotel and airline pricing experts starting companies focused on dynamic pricing in short term rentals like Everbooked, SmartHost, and Beyond Pricing, vacation rentals are increasingly being recognized as THE place to be in order to make your mark.
Episode 7: The Force Awakens
On December 18, 2015, a new chapter begins in the Star Wars story. The latest installment takes place some 30-years after The Return of the Jedi. As mentioned previously, this is the 30th anniversary of the founding of the VRMA, an organization that has seen dramatic industry changes and fluctuations throughout its existence.
So what does the next 30-years hold? Fittingly, this year’s VRMA conference had a panel discussion on just this topic. Including luminaries from the titans of the industry (Booking.com, Airbnb, HomeAway, and TripAdvisor), and moderated be me, CEO of rented.com, “The Next 30 Years: A Discussion on the Future of the Vacation Rental Industry” tackled topics large and small.
With predictions on the convergence of categories to consolidation of major players, on traveler preferences from Boomers to Millennials (oh, and what happened to those Gen Xers?), and on the tension or lack thereof between the desire for “authenticity” and the ever-present nature of digital, the discussion was a lively one.
It is clearly too early to say for certain which, if any, of these predictions will come to pass. Depending on where you currently sit, some are exciting, and some are terrifying. However, as Star Wars has taught us: “You can’t stop change any more than you can stop the suns from setting.”
As you seek to make the most of this change, may the force be with you.
Let us know what you think in the comments below!