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Vacation rentals: Gunning for the leisure hotel shopper

November 18, 2008 | Online Travel

OTAs take notice. Hotels watch out. And online travelers… get ready for an upgrade. The vacation rental marketplace is gearing up to go after all of you, according to PhoCusWright.

This vast and complex universe of vacation rental “suppliers,” however, should not be underestimated. According to PhoCusWright’s Vacation Rental Marketplace: Poised for Change, vacation rentals accounted for more than 333 million available unit nights in the U.S. market in 2007 and nearly US$24.3 billion in rental revenue. Approximately 10% of all U.S. adults and nearly 20%1 of all online travelers have booked a vacation rental.

Hundreds of millions of investor dollars have flowed into this space in recent years, whether to rental-by-owner behemoth HomeAway (which just announced a staggering $250 million placement on Tuesday) or B2C and B2B online players such as Escapia, LeisureLink, VacationRoost and Zonder. Vacation rental management companies across the industry have identified online distribution and investment in technology among their top strategic business priorities. Wyndham’s concerted push with its Endless Vacation Rentals brand is but one of many.

But there are also hurdles. Legacy practices of the vacation rental industry—seven-night minimum stays, hefty upfront deposits, lack of industry standards for service and property ratings, low incidence of revenue managed pricing—do not merchandise well in a hotel-centric online distribution environment. A two-bedroom condo may be more expensive than a room at a comparable hotel (and thus display lower in search results), but it may offer a better value to a family of four looking to book two rooms. And even the very top-of-the-line vacation rental properties may not qualify as a three-star hotel if they don’t offer 24/7 front desk check-in.

Get the full story at PhoCusWright FYI

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