In response to coronavirus’s significant impact on the short-term rental industry, we brought together property management companies and industry professionals from around the UK to discuss this period of uncertainty, and understand best practices to ensure business stability as a property manager.
During this virtual event, Guesty’s own Sheli Grumet (Business Development Manager) — along with our partners Tom Caton, CRO of AirDNA; Anurag Verma, Co-Founder of PriceLabs; Merilee Karr, Chair of UK Short Term Accommodation Association (STAA); and Jeremy Gall, CEO of Breezeway — led us through a discussion on how property managers can assess current implications of coronavirus, mitigate revenue loss, encourage new bookings and prepare for the future.
Sheli kicked off the event, introducing Guesty’s new Coronavirus Infocenter, a comprehensive resource center for anyone in the short-term rental industry who is looking for actionable advice, guidance and information on how to make smarter business decisions amid this global health crisis.
Tom then took the audience through a discussion on “unpacking” COVID-19, dissecting the data available to us to try to understand what the future will hold. He explained that cancellation data indicates that sentiment among travelers is still positive: bookings for the summer are currently holding and people are optimistic about the future of travel after coronavirus.
Anurag then spoke to the impact of coronavirus on bookings trends, and provides pricing strategies and tools for property managers who are currently hosting guests. Since mid-term and long-term bookings, especially last-minute ones, are on the rise, Anurag suggested that property managers offer discounts, implement a flexible cancellation policy and reduce restrictions regarding length of stay.
We then heard from Merilee, who shared a different perspective with the audience. She discussed how the STAA is representing the short-term rental industry during this crisis and shares the kinds of conversations they are having with governments to offer financial support to business owners. Merilee spoke to a variety of grants, credit, loans, and new policies that benefit short-term property managers. She also shared the NHS Homes Initiative, launched by the STAA, to provide free accommodation to NHS workers.
Rounding out the virtual event, Jeremy explained that property management companies should be placing a strong emphasis on quality of service and professionalism, both right now and in the future. As soon as business starts to pick up again, Jeremy argued that ensuring quality will be critical for a positive guest experience — hygiene in physical space will specifically have heightened importance. Guests will expect the stringent cleaning standards, and owners will demand more insight into how properties are cleaned. He recommended that property managers focus on what they can control now — auditing and enhancing housekeeping protocols and property operations procedures.
As always, we invited those tuning in to contribute questions throughout the virtual event, which we then addressed in a Q&A session following the presentation. Here are some highlights (edited for clarity):
Q: Do you foresee authorities implementing a cleaning standard certification to be met by short-term rentals in the near future?
Jeremy Gall: I don’t think we’ll see this from authorities, but it could take a couple of different forms. As part of increased regulation, there will be increased pressure for cleanliness standards that will focus on safety. What we’ll likely see is local associations taking this seriously and setting up their own types of standards for associates to follow to help raise the bar for professionals in their network.
Q: What is the reduction in ADR (average daily rate) as stays get longer?
Anurag Verma: What we are seeing is a 50% reduction. This is not all stemming from longer bookings, but it is also coming from the decreased demand in the market. Aggressive discounts on a weekly and weekend basis are also playing a factor in ADRs, as property managers are accepting whatever bookings they can get.
Q: What if this issue continues until the end of the summer period? How should we (property management companies) plan for our business in the future if this would mean going from a low-season to a low-season?
Tom Caton: If you are an optimist you can think about the pent-up demand that we’ll see once quarantines are lifted and restrictions are relaxed. If there will be more domestic tourism, then you can be hopeful that your low season won’t be as low as other low reasons. Nevertheless, you have to try to conserve capital based on if there is no high season. Be ready for a boom during high season next year, but for now there’s really no way to tell — it’s likely this summer will be highly affected.
Q: Which new technologies will arise after this COVID-19 crisis to help hosts run their business more efficiently (ex keyless entry, digital key locks, remote access to hosts for guests)?
Sheli Grumet: One of the most prominent trends we’ll see is technology that minimizes contact between people. Even after coronavirus, people will still practice social distancing and try to minimize interaction as much as possible, so keyless entry will be essential for that. We also predict a trend in certified cleanings. What this means is you will have a list of items in your rental that have to be cleaned or certain products that you have to use. Tools like Breezeway or other operations-focused tools will be key to making sure all your staff is aligned with these new protocols and that they are executing checklists to the fullest. This will be critical for guest experience and safety. A focus on guest experience will also be at the center of new trends. This means making sure your guests have all the amenities they may need for longer stays — grocery services, welcome packages, extra sheets and linens, even toilet paper!
Q: Can we hear some predictions about how supply is likely going to be affected by COVID-19? What level of shrinkage do you expect?
Jeremy: In the immediate future, as travel comes back, we’ll see a number of individual homeowners pull supply from the platform — this could be the end of shared room or home rentals. We’ll also likely see consolidation in the market.
Anurag: Across the entire industry, there will be a bit of a supply dip, especially as owners attempt to mitigate revenue loss and shift from short-term to long-term rentals.
Tom: Let’s forget about the virus and just talk about supply during a recession. When Brazil had a small downturn 4 or 5 years ago, there was a huge explosion of supply on the market — people were looking to swap or share assets much more. There is also a shift from hotel accommodation to private accommodation during a recession, as rentals are usually more reasonably priced. Ultimately, there could be upswings in supply and demand if this virus leads to a recession.
Merilee: From an industry perspective, short-term rentals had a massive boost after the last recession and that’s where it took off. And we would expect to see something similar. What we are already seeing is landlords who shifted from long-term rentals to short-term, are now understanding the risk. If they go back to doing long-term rentals, it will lead to more capacity in the industry for others to rent out their second homes or spare rooms. This could eventually help us have more balanced regulation. There will be changes in supply, but could be a good thing for the industry in the long-run.
Sheli: It’s a balance. At first we’ll see supply is less attainable, but then it’s going to grow. We will also see a difference in supply type. We’re going to start seeing companies move to different models, not just focusing on short-term, but exploring different occupancy rates, bridging the gap between mid-term and long-term, and offering more flexible stays.
Have a question we didn’t get a chance to cover? Please don’t hesitate to reach out to email@example.com! Thank you everyone for joining, stay safe and healthy!