With 2022 swiftly approaching, the air is full of anticipation for what’s to come. This year, the vacation rental industry has gained momentum in many different markets around the world – and while we still face plenty of challenges, the promise of the New Year has got everyone excited.
So what can we expect from 2022? What trends will shape the industry? What challenges will property managers face, and what technology will be crucial to success?
To find out, we interviewed 9 vacation rental industry CEOs and asked them to share their predictions for the New Year.
We gathered insights from a variety of perspectives, including two of the world’s largest property management companies (Interhome Group and Evolve), two channels (Holidu and Hopper), four vacation rental tech companies (Hostfully, Guesty, Wheelhouse and Rentals United) and a data intelligence provider (Transparent).
Let’s see what the CEOs of these leading companies had to say!
As uncertainty around travel continues, guests still want the option to cancel their bookings and get a full or partial refund should their plans change.
According to Margot Lee Schmorak, CEO at Hostfully, guest-friendly cancellation policies put property managers at more financial risk. However, the standards encouraged by OTAs around flexible cancellation have solidified.
“Property managers will need to find ways to be more nimble and be able to handle last-minute cancellations and fill them with last-minute bookings,” Margot said.
Pierre Becerril, CEO at Transparent, agrees that flexible cancellation policies, combined with low-touch operations, should help drive bookings. “Don’t forget to equip your properties for key demand types,” Pierre said.
Holidu has also noticed the demand for flexible cancellation options, and, as a result, they have been rolling out new cancellation models with their partner portals and vacation rental companies.
“Half of all providers now rely on this concept, and we are working to increase the number even further. Vacation rentals with flexible cancellation policies generate up to five times more bookings. With this, we anticipate a strong and extended summer for next year,” said Holidu CEO Johannes Siebers.
The competition between vacation rentals and hotels is at an all-time high.
As Andrew Kitchell, CEO at Wheelhouse put it, short-term rentals “will continue to win market share from other hospitality options as the category continues to transform how people think about the places/spaces they travel to and live in.”
Interhome Group CEO Jörg Herrmann agrees that travellers will increasingly consider “apartments and vacation homes as an alternative to hotels”. Johannes Siebers, CEO at Holidu echoes this thought, stating that guests continue to perceive vacation rentals as the “safer alternative”.
According to Amiad Soto, CEO at Guesty, “hotels and short-term rentals will exist in parallel”, as travellers seek variety and flexibility when it comes to accommodation type. While Amiad predicts that hotels will see a “complete rebound and sky-high occupancy”, this won’t be at the expense of short-term rentals, which are now “a mainstream accommodation choice”.
“The short-term rental renaissance can be seen in our data, which shows continued growth in domestic and international bookings, with volume through December and into 2022 exceeding pre-COVID reservation numbers in many parts of the globe,” Amiad said.
Both hotels and vacation rentals will benefit from the increase in demand and the convergence between the two industries will continue. Amiad expects “legacy hotel brands to incorporate apartment-style offerings into their portfolio, with short-term rentals increasingly adding digital concierge services and upsells that hotels offer.”
According to James Burrows, CEO at Rentals United, the past couple of years have proven that vacation rentals have clear advantages over hotels – and 2022 will be the year to leverage those advantages.
“We already have the attention of travellers: now we need to build trust to gain their loyalty. In the coming years, the focus will be on responding to changing guests needs and improving the guest experience through in-demand services like flexible cancellation, contactless stays, more digitalisation and exceptional customer support,” James said.
While business travel may take many years to get back to pre-2020 levels, 2022 may be the year that it finally starts to take off.
Hostfully CEO Margot Lee Schmorak is optimistic. “Now that many more people have stayed in vacation rentals compared to pre-COVID, vacation rentals will get some of the share of business travel that has never been available to them before,” Margot said.
If property managers want to attract these types of travellers, they need to make sure their rentals are prepared to welcome them.
“Vacation rentals will need to respond with more business travel-friendly amenities and guarantees, such as wifi and easy transportation, as well as properties that can accommodate more guests at a time,” Margot said.
Attracting corporate guests will be one of the best ways for urban property managers to regain their foothold. According to Guesty CEO Amiad Soto, apartment managers who cater to digital nomads and lifestyle travellers “will increasingly gain corporate business travel contracts, with longer-stay amenities that traditional hotels lack.”
2021 saw a series of mergers and acquisitions that reshaped the industry. In addition, property management startups around the world received significant injections of capital to fuel their growth.
Consequently, the “rapid consolidation” we’ve been seeing for years will continue into 2022, as Wheelhouse CEO Andrew Kitchell noted. Others share his opinion.
“More capital is being poured into technology and acquisitions, leading to a standardisation of the end product (the rental unit),” said Amiad Soto, CEO at Guesty.
“Property management companies will continue to acquire additional inventory to meet the surging consumer demand for short-term rentals, purchasing smaller hospitality brands and updating the units design-wise, while also introducing automation and technology into their operations,” Amiad added.
As traveller behaviours have changed, certain property types and locations are better positioned to attract guests than others.
“While overall short-term rental reservations and even international travel will continue to slowly recover, longer, domestic and low-touch stays will continue to drive core revenue for property managers,” said Pierre Becerril, CEO at Transparent.
So what does this mean for property managers?
“For those looking to shape their investment and growth into the new year, larger houses in more rural locations are seeing more demand and higher ADR relative to 2019,” Pierre said.
Evolve CEO Brian Egan also believes that “2022 will be another huge year for destinations with outdoor adventure offerings”.
“We recently surveyed over 5,000 travelers and found that 58% are interested in exploring the outdoors and 68% are planning trips around wellness and relaxation next year,” Brian said.
Increasing sustainability has been an important focus for the tourism industry since before COVID-19, and it has become even more pressing with the pandemic, as the UN climate change conference in Glasgow proved earlier this year.
As a growing industry, vacation rentals have a responsibility to take part in the fight to save our planet. Moreover, guests are increasingly looking for sustainable travel options – this is expected to be a major trend going into 2022.
According to Johannes Siebers from Holidu, “Sustainable travel will only continue to grow in importance. In a customer survey conducted by Holidu, 85% of participants indicated that sustainability is important to them when it comes to vacation.”
With this in mind, Holidu has created a new “eco” label that allows travellers to quickly and easily find environmentally-friendly accommodations.
“Holidu is also climate neutral, meaning all CO2 emissions generated by our operational processes and essential travel by our employees are compensated for,” Johannes added.
A challenge that property managers will need to address in the New Year is making sure that guests have all the information they need to book and enjoy their stay.
“Given that it becomes harder and harder to make plans, travel purchasers are going to need to know even more about the listing before they book. Expect more intense focus on photos, amenities, and guest communication as differentiators,” said Hostfully CEO Margot Lee Schmorak.
She’s not alone in thinking that property managers need to step up their guest communication.
“One challenge that I think has plagued property managers is that their tech stacks don’t always make it easy to facilitate guest communication,” said Frederic Lalonde, CEO at Hopper.
Since guest communication is a key ingredient to ensuring that guests have an enjoyable stay and want to repeat that experience, both Margot and Frederic look forward to seeing improvements on this front.
Automation is where these solutions lie. According to Interhome Group CEO Jörg Herrmann, “for me, the keyword here is artificial intelligence with chatbots”.
“Guests and also owners want to have a competent contact person 24/7 the longer the more. This will be possible in the near future with the help of artificial intelligence at chatbots,” he added.
While property managers are by no means new to navigating legal regulations, this challenge will be top of mind in 2022.
“The increasing legal regulations will continue to keep us busy in the future,” said Jörg Herrmann, CEO at Interhome Group.
With this in mind, engaging with policymakers and actively taking part in conversations with local governments may become more important than ever.
According to Brian Egan, CEO at Evolve, “property managers have a huge role to play in helping communities navigate these discussions.”
There are many ways to do your part. For example, “by joining forces with advocacy groups, dedicating time and money to collecting data that gives lawmakers a factual basis to inform their decisions, or leveraging our partnerships to educate, align, and mobilize individual homeowners,” said Brian.
The fact that demand for vacation rentals is increasing is great news for the industry, but it also presents a challenge. How do you capture that demand, especially knowing that supply is also increasing in certain markets?
“Driving demand across all stock types will be the prominent challenge for short-term property managers through 2022,” said Transparent CEO Pierre Becerril.
According to him, the key will be to take a proactive approach and optimise your strategy to market conditions.
“Demand may have shifted within your market, but it still exists in all segments – it’s just a case of positioning yourself to capture it. Make sure your prices are aligned with demand and market competition every day and across your property types and locations, and you will see your revenue rise,” he added.
Pierre also noted that aligning your prices with demand is “also important for your direct bookings strategy”, and you should try retargeting old guests with “attractive, tailored offers.”
Rentals United CEO James Burrows believes that the biggest challenge for property managers in 2022 will continue to be: How do you get more money for the same booking on your properties?
“This is a complex task that requires a profound understanding of your market and the quality of your listings so that you can improve your rankings and conversions on OTAs,” James said.
“The greatest competitive advantage you can have is to base your decisions on rich data insights. As a result, I believe that in 2022, having a data-driven distribution strategy will be more important than ever,” he added.
Other CEOs also see revenue optimisation as a major area of focus for 2022.
According to Jörg Herrmann, CEO at Interhome Group, “rising distribution costs with falling margins and the increasing demand for a wide range of services for owners and customers” will pose a challenge for property managers.
Add to this the continued market volatility, and revenue managers will have their hands full in the New Year.
“Strategic revenue management has gone from a nice-to-have to a necessity in order to capitalize on unpredictable demand patterns that I think we will continue to see due to ongoing COVID impacts to market metrics like occupancy, lead time and RevPAR,” said Andrew Kitchell, CEO at Wheelhouse.
For actionable revenue management tips that you can implement in the New Year, check out the Rev Bytes podcast by John DeRoulet (Wheelhouse) and Doug Truitt (Rentals United).
Contactless solutions had been on the rise before the pandemic, but their adoption and development have greatly accelerated in the past two years. This trend will continue into 2022.
“Technology adoption will be focused on optimising property management operations and performance in the face of altered demand,” said Transparent CEO Pierre Becerril.
The solutions that will see increased engagement include low-touch and remote technologies such as keyless entry.
“IoT and digital access are poised to continue simplifying the process of remote operations, enabling more and more cost-effective management solutions,” said Andrew Kitchell, CEO at Wheelhouse.
“On this front, I’m excited about how 5G networks and continued developments in hardware can/will enable a new type of automated stay… and I’m excited to know that some very smart people in our industry are working on those opportunities now,” he added.
In the past couple of years, data has become an essential tool to help property managers take the guesswork out of their decisions.
As a result, an increasing number of companies are turning to data providers for rich market insights. In fact, in Transparent’s most recent survey, 60% of property managers indicated that they plan to increase their investment in data over the next year.
“Data is always helpful to gain competitive visibility over your market, but in a recovering travel industry, pinpointing a relevant and effective strategy has never been more crucial,” said Transparent CEO Pierre Becerril.
While market insights are indispensable, so is having transparency of your own portfolio’s performance.
According to James Burrows, CEO at Rentals United, “data intelligence tools will be the property manager’s holy grail” when used in a way that combines distribution and revenue management data. This approach helps you optimise your listings for conversions and maximise revenue from each booking.
“At Rentals United, we are at the forefront of driving a new, data-based approach to distribution through our Revenue Success department and Data Studio product and we will continue to give our clients all the tools they need to improve their performance on sales channels in the New Year,” James added.
In the past two years, OTAs, metasearches and niche channels have all made changes to their platforms to accommodate emerging traveller needs.
In line with some of the trends we discussed above, in 2022, sales channels will focus on making the search and booking process even easier and giving property managers tools to earn more from their listings.
For example, next to the new eco-friendly filter mentioned above, Holidu has made it easier for travellers to book flexible stays.
The company has been “working to offer a flexible date search to provide a smooth and transparent search and booking experience”.
“Not only can this help customers save more money by finding their perfect vacation rental, but it also allows property managers to potentially sell ‘gap nights’ on Holidu which otherwise might not show up in searches and remain unbooked,” said Johannes Siebers, CEO at Holidu.
Furthermore, channels are adding additional services to their platforms that help attract new guests and retain existing ones.
For example, Hopper is taking advantage of the emergence of fintech for the travel industry.
“Our team at Hopper has really been at the forefront of the travel fintech space,” said Hopper CEO Frederic Lalonde.
“Almost 60% of our app customers purchase at least one fintech product when making a booking. And, these fintech products increase travel average order value by over 10% on average. This means that customers are dropping an additional $40+ per travel booking,” he added.
Given the impact that they’ve seen fintech drive for their flights and hotels business, Hopper believe that there’s a huge opportunity for similar solutions in the vacation rental space in 2022 and beyond.