This article was originally published in the VRMA Arrival
The topic of internationalization and the vacation rental industry is an interesting one. There are huge dichotomies at play here; because although the vacation rental industry is truly global in nature, at its roots, property management is fundamentally local.
Leisure guests travel primarily because they want to visit a place. They want to experience something that is specific to the location that they are visiting whether this is a theme park, a beach, a culture, seeing family and friends, participating in an activity or just for the good weather. Property managers grow by knowing their destination and by offering the most attractive solution for owners within that destination. If they are expanding and don’t know an area, the fastest way for growth is to acquire another property management company in the desired location. Local knowledge and connections are everything.
We learned at the 2018 VRMA International Conference that one in four global lodging stays are now non-hotel and that the vacation rental/secondary residence piece of the lodging pie is annually worth a huge $110 billion. The alternative accommodation and private accommodation market is now outpacing the broader travel market in many ways. Shaun Aukland from Google, a conference keynote, told us that Google searches related to ‘vacation rental intent’ are now in the billions with significant growth in the last couple of quarters.
The unique touch points along the online travel booking journey has increased from an average of 39 in 2017, to 45 in 2018.
More and more guests want to stay in vacation rentals, and to quote Google again, travelers are increasingly more curious, demanding and impatient. The unique touch points along the online travel booking journey has increased from an average of 39 in 2017, to 45 in 2018. There seems to be little brand loyalty but lots of opportunity to connect at those touch points. Rather than competing over those who have already converted to vacation rentals, how can a property manager create new customers, gain cut through and really grow? I’m a big believer in looking outside of your industry vertical to help solve your challenges. Sometimes you just need to look across the landscape to get the insight you need.
Recently, I’ve had the pleasure and opportunity of listening to two founders of hyper-growth travel startups outside of the vacation rental bubble and heard their value proposition: Kris Naudts, founder and CEO of Culture Trip and Eric Gnock Fah, chief operating officer and co-founder of Klook.
Culture Trip operates in the divergence between travel, media and entertainment. The platform attracted 18 million visitors in 2018 by creating and sharing stories that reveal what is unique and special about a place, its people and its culture. It has its sights set on becoming a new-gen content-led OTA. This is not just ambition and wishful thinking. Culture Trip has been awarded $100 million in funding to make this a reality. It seems that content really could be king.
Klook is a travel services, tours and activities platform that has so far been predominantly Asia focused but is now looking beyond. Klook just announced a partnership with Shangri-La Hotels and Resorts to offer enhanced services and a digital concierge. To date, Klook has secured a whopping $300 million in funding. It seems that experiences also really do matter.
What can the vacation rental industry learn from these ‘other travel industry’ international players? In an industry that is growing and changing at such a pace; but has many intrinsic challenges to overcome – perhaps one of the wisest words of wisdom to come out of Vegas was again from Google’s Shaun Aukland. He said that vacation rentals really have an advantage right now by being locally relevant. By knowing (and showing) where the best place to see the sunset, to buy the tastiest local pastry and which is the most authentic company to book that day’s cycling tour, property managers have an opportunity to use this insight to not only increase visibility to create new customers, but to increase additional revenue in an environment with ongoing margin compression.
The success of both Klook and Culture Trip shows that if you can harness that knowledge and those connections, you have the potential to create a new innovative vision for your little corner of the wider global travel industry.