This article was originally published in the VRMA Arrival, Issue 3, June/July 2019
Minimizing risk, by definition, is not a very sexy topic. At least at first glance. Yet once you delve more deeply, take a good look around at what is happening in the industry in this area, you realise that on many levels this topic has actually got real depth. We can look at minimizing risk not only on a property level but also from the perspective of ‘future-proofing’ both for individual businesses and the industry as a whole. By ‘future-proofing’ I mean ensuring that the vacation rental industry continues to be successful in the future; as and when situations change.
Firstly, on a management level, there is strong anecdotal evidence to suggest that one of the primary reasons why a homeowner would not rent out their property, is due to a lack of trust and concern about allowing guests to stay in their home. This makes sense – as I think all of us would feel queasy about letting strangers stay in our homes without a fairly robust guarantee that a property manager has procedures in place to take reasonable care of our assets and minimize risk.
I’ve had conversations in the past with insurance providers that are doing phenomenally exciting things with data. InsurTech is a whole category of technology solutions that are taking insurance to another level – not just in vacation rentals but in all areas of life and business.
Insurance providers can today use a combination of data analytics, background checks and other information triggers in order to weed out the ‘bad guests’ that are likely to be the big trouble makers when booking and staying in a property. And these aren’t just the younger guests and party crowd – but the kind of guests that cause other unpleasant and time-consuming sources of friction.
On the market today, there are also several ways in which a property manager can monitor potential risk factors within a property in real-time and therefore be able to take appropriate action if and when is needed. Keyless entry systems with unique codes let a property manager know, with some degree of certainty, who is accessing a property and when someone is in a property – even if they shouldn’t be.
Add anonymous data from noise level monitoring and CO2 level detection to the mix, and an accurate picture of activity within a property that might be deemed ‘risky’ either to guest, property or neighbours can also be detected. Smart home tech that monitors temperature control remotely ensures that potential risk factors involved in changes to cold and heat are minimized. These elements can also now be managed remotely via a dashboard connected to a PMS, meaning that there are many accessible options for addressing the owner’s concerns over the care of their property.
Looking beyond risk factors that impact a property management business on a property level, there are aspects that both property managers on a case by case basis, and the industry as a whole needs to consider in order to ‘future proof’ and ensure continued sustainable growth.
We’re highly confident that the appetite for vacation rentals, which is globally voracious at the moment, isn’t going to die away anytime soon. However, there are several very pertinent issues to think about here.
Firstly, and most obviously, perhaps the biggest ‘threat’ to the vacation rental industry certainly seems on the surface to be about regulation, or perhaps it’s better to say, ‘non-regulation’ issues. Regulation has the potential to change the course of the trajectory of the vacation and short-term rental industry, especially in urban centres, but it also has the potential to provide an opportunity for healthy discourse, good relationships and sustainable growth.
Regulations per se really aren’t the big bad wolf, but it is vital that the professional vacation rental industry is an active partner in the ongoing conversations to ensure that private accommodation as a lodging option works for everyone in a community. Rentals can then become a welcome part of the hospitality ecosystem and no longer seen as the problem.
Future-proofing always demands ongoing improvements, and so ensuring that inventory levels keep up with demand, not only in numbers but also in expected quality, is a big topic for the professional property management industry to address.
Satisfying owners’ concerns about trust on a property level, being actively concerned about the impact rentals have on a community on the local level, and ensuring that standards continue to rise to meet guest expectations on a wider scale – are all factors that need to be considered and addressed in order to ensure vacation rentals continue to grow as a lodging option of choice.