Be Our Guest(y): Adapting Your Business Model to Ensure Longevity Post-Pandemic
On June 18, we met up with key players from the global short-term rental ecosystem in an online meetup to share tips on adapting your property management business to ensure longevity post-pandemic.
Our very own President & COO, Vered Schwarz, shared the stage with an all-star panel of industry leaders — including Simon Lehmann, Co-Founder & CEO of AJL Consulting; Pierre Becerril, CEO of Transparent Intelligence; Tim Speicher, Co-Founder of Buoy — to discuss predictions and best practices for incorporating the hybrid business models emerging from COVID-19, such as flexible inventory management.
Vered kicked off the event by introducing the latest data from Guesty’s industry report showing an increase in demand for longer stays and how property managers have incorporated extended stays into their existing portfolio by automating their guest communications, offering tailored rental agreements and more. She then went on to discuss an uptick in reservations for fall and winter and how countries around the world, including Italy, have started to show signs of improvement when it comes to bookings in May as compared to April.
Up next, Simon presented his insights on where the industry is headed and the future consolidation of the short-term rental landscape. He described how complex the property management value chain has become as more technology companies have entered the market, resulting in high industry fragmentation and margin compression. Simon suggested that we will now see these tech solutions start to consolidate due to COVID-19, as the demand for vacation rentals increases and our industry becomes more competitive.
Pierre then followed by displaying the current state of vacation rentals globally and the shift in new reservations this year as compared to 2019. After analyzing the major online travel agencies, he revealed which of them have been able to recover faster in terms of new bookings and which are better suited for domestic travel. Pierre also mentioned Transparent’s new Coronavirus Resource Center, which provides more information on how the pandemic is impacting short-term rental markets globally with regard to occupancy, cancellations, pricing and demand.
Rounding out the virtual event, Tim explained the importance of responsive revenue management and making sure property managers “think like a guest” and “trust their gut” when it comes to their pricing strategies. Because of the global crisis, it’s now crucial to look at the current market environment rather than relying on historical data when setting rates. He recommended lowering rates in the near-term while raising rates in the longer term to yield the best results during this time.
Following the presentation, we addressed questions that had been submitted by our audience in a Q&A session. Here are some highlights (edited for clarity):
Q: What’s your number one tip for property managers looking to diversify their offerings during the post-COVID-19 era?
Simon (AJL Consulting): It really depends on what type of short-term rentals you have. If you’re an urban short-term rental business, you should look into incorporating longer stays and diversifying your portfolio. However, overall, I would spend more time on business strategy and maximizing profits.
Pierre (Transparent): At the end of the day, you have to focus on what you do well. This is a crisis of demand, so you can find new sources of demand that you haven’t looked into in the past, like incorporating mid-term rentals or corporate stays.
Tim (Buoy): My recommendation is to take this time and get rid of anything that isn’t making your business more efficient by consolidating your operations as much as possible.
Q: What do you think will be the biggest change for the short-term rental industry pre-and-post-COVID?
Simon (AJL Consulting): Standards — I truly believe we need to focus on cleaning and proper guest expectation management. We need to become closer as an industry and build standards to provide confidence to guests that short-term rentals are a viable product.
Pierre (Transparent): Our addressable markets will change. In the longterm, we will benefit from what has happened as we are seeing short-term rentals are the highest-value option for travel at this time, so a lot of people who haven’t used these types of accommodation before will now consider them in the coming months.
Q: How do you highlight to guests that you are implementing cleaning procedures and how do you take pricing into consideration when it comes to investing in cleaning?
Pierre (Transparent): Nowadays, having a high cleaning fee shows that you care, and I think you should include your initiatives in your descriptions or photos to show your dedication to meeting those cleaning standards and ensuring your staff is safe.
Simon (AJL Consulting): One thing we need to be careful of is raising rates, as that will backfire heavily. I would provide sanitation materials in the property and share your checklist that your cleaning staff have completed for your guests to see upon arrival.
Q: How do you recommend diversifying marketing strategies as a result of this situation?
Tim (Buoy): We can actually manipulate the online travel agency algorithms just by changing our rates, so that’s more powerful rather than direct marketing. In general, for people who want to be efficient, focus on the booking sites, and change up your rates.
Vered (Guesty): We saw success in our clients when they marketed to a different audience, such as by reaching out to local communities and events on social media and taking a more domestic approach to marketing to meet the current demands.