Introducing the Most Innovative Sector in the World
In its simplest form, the short-term rental industry is the transaction between a property owner and traveller/ holidaymaker, where the property owner rents out their home, or a part of their home, over a short-term agreement.
The concept of short-term rental has been known for decades, but the way it has been managed has transformed, dramatically over the years. What’s fascinating is that something that was initially understood as not much more than an “extra side income” has now revolutionised into the most innovative sector in the world.
Since the dawn of the internet, digital technology, and the growing millennial consumer market, the travel and tourism landscape continues to evolve and disrupt the relationship between travel agents and “traditional” hotels.
In fact, with the short-term rental industry estimated to be worth a phenomenal $169.7 in 2019 (according to a recent report by VRMA), it’s often argued that it is now miles ahead of the hotel sector, in many respects.
But such a lucrative market inevitably comes with a whole host of opportunities, challenges, and solutions. Where the short-term rental industry is concerned, there are still plenty of questions to be answered and a number of controversial conversations to be had.
With this in mind, I was excited to attend the inaugural Short Stay Show at ExCel, London on March 14th, 2019. Accurately described as the “hottest and newest hospitality accommodation event in the UK”, the show hosted hundreds of industry-experts, investors, local government representatives, household companies such as Booking.Com and Airbnb, innovative brands including I-PRAC , Be My Guest , Rentalz United , and AirDNA and of course, headline partners, HomeAway and the STAA[(short-term accommodation association).
First and foremost, on behalf of all the exhibitors, journalists, and attendees, our heartfelt thanks goes to founders, Jim Curry and Diane Lloyd for bringing such an inspirational and value-packed hospitality event, to the capital city.
We all know that the short-term rental industry is booming. To give you a little more perspective, it is reported that 89% of newly purchased homes will be rented out within the first year, according to a report by HomeAway. This comes as no surprise as we look at the bigger picture; brands that are currently dominating the sector such as Booking.Com (part of the Bookings Holdings Group) has over 5.6 million property listings in over 227 countries, with an exceptional average of 1.5 million rooms booked daily.
Airbnb which is widely referred to as an industry disruptor, has an incredible 5 million listings in over 191 countries. More interestingly, the business’s figures increased by 200% across ten cities in the UK, between 2015 and 2017.
The result of such eye-watering statistics? Well in many
cases, it’s the opportunity for property owners to maximise profits, and more
flexibility and choice for the ever-demanding holidaymakers.
Aptly described as having a “bold and
innovative future” by Lord Bourne (of Aberystwyth/ Ministry of Housing), there is however; now a need more than
ever, for the short-term rental industry to be managed responsibly. The reputable
government representative touched upon this in many ways, during his
introduction at the Short Stay Show’s Premium
Access Conference.
According to Lord Bourne (and I couldn’t agree with him more), despite its obvious profitable opportunities, the short-term rental industry should not overshadow the long-term holiday sector and needs to be regulated thoroughly, for the interest of both property owners and travellers, worldwide.
The question is, how exactly do you regulate an industry that is growing at a substantial rate (and in some parts of the world, is difficult to even monitor)?
With such a high number of health and safety concerns, fraudulent activity, and “incompetent hospitality” cases that have been reported, it’s almost as if regulators have been playing “catch up” over the last ten years.
The good news is that this seemed to be a widely recognised issue amongst the experts at The Short Stay Show; all of whom are clearly keen to represent the industry in an even more positive light.
In fact, the collective spirit of trust, safety, and security within the short-term rental sector is what really stood out for me at the Short Stay Show. Whether it was off-the-back of the one-to-one I had with Simon Lehmann ( global travel and hospitality influencer and CEO of AJL Consulting[), or the refreshing insights from the industry’s leading verification platform, I-PRAC, it was evident that I was in the company of responsible, and highly experienced industry ambassadors.
Businesses and property owners in the short-term rental industry have a lot more to consider than simply “letting out the spare guest room”, if they are to compete with mainstream hotels. Panellists including Merilee Karr (founder of UnderTheDoormat), James Lemon (growth consulting lead of InterContinental Hotels Group), and Simon Lehmann explained that factors such as innovative branding, technology integration, and guest experience are of huge importance too, during the “Forward-Thinking” panel discussion.
Another interesting observation from one of the Forward-Thinking panellists was that the short-term rental industry is not even “hospitality as we know it” anymore; and that as a result, it is forcing hotels and “traditional” accommodation providers to reinvent themselves and meet evolving consumer demands. Even so, the speakers collectively agreed on the notion, led by Simon Lehmann himself, that trust and convenience has got to be at the very heart of this growing sector.
Which takes us back to the insightful keynote delivered by psychology expert, Dr Lasana about “anthropomorphising brands”, and how successful brands in the short-term rental industry are good at “getting inside people’s heads” and building a trust-based relationship with them.
We were presented with IKEA’s classic lamp advert, where the lamp was anthropomorphised (given human characteristics), encouraging viewers to build an emotional connection with it.
Dr Lasana used IKEA’s example to explain that short-term rental businesses can use technology in a similar way, to humanise their branding and in-turn, gain the trust of their target consumers, in an ethical manner.
In hindsight, this makes us think that there is actually so much accuracy in Simon Lehmann’s opinion that “technology is a huge part of the short-term rental industry” and how it has the potential to positively transform how the sector is managed and advertised.&
Of course, the ground-breaking digital revolution also means that it is now more easier than ever for property owners to rent out their homes online. Sadly, this is sometimes regardless of the property’s health and safety’s standards, or the property owner’s understanding of basic practises, laws, and regulations.
What’s even more terrifying is that with the phenomenon of the internet, multi-purpose smartphones, and a growing demand for convenience and “instant gratification”, travellers and holidaymakers are still vulnerable to scams and fraudulent activity.
Airbnb’s respectable attempts to tackle this issue has involved the introduction of “Super Hosts”, as well as access to various support and advice about secure payment processes and identifying frauds posing as genuine property owners. The company has publicly reiterated that the reported number of scams relating to short-term holiday rentals via Airbnb, is dramatically overshadowed by the millions of positive reviews received by satisfied holidaymakers.
According to the Founding STAA Board Member, Eduord Peers (who delivered the Closing Remarks at the Short Stay Show) the short-term rental industry should not wait for the government to introduce necessary regulations. This was widely agreed with by a number of the other industry-experts present, as well as members of the audience. It’s apparent that supporting a sector that is predicted to see even more explosive growth is certainly on every hospitality professional’s radar.
In light of the “regulations debate”, I was delighted to hear further insights from The STAA (at the Westminster Ways panel about supporting a “stable future”) and Emma Mills, Managing Director of I-PRAC – a global verification platform for property owners and rental agencies.
Also one of the sponsors of The Short Stay Show, I-PRAC is on a mission to provide guaranteed peace of mind within the industry via it’s rigorous checks on property owners and rental agencies, to prove their legitimacy. The company itself was founded by Chris Maughan, who had helped a devastated family in Cannes in 2014, as a result of catastrophic holiday rental fraud. Chris claims that “We can no longer allow fraudulent listings to be present on reputable booking platforms, these needs to be prevented at source. If we don’t improve consumer confidence and eliminate fraudulent listings the industry will never reach its potential”.
Interestingly, with Chris’s thoughts firmly in mind, I-PRAC will be launching the approval process for their take on “Super Hosts”, in May 2019. A little different to Airbnb, I-PRAC will verify Super Hosts against various health and safety certifications, security checks, and thorough tests against specific industry standards. Could this mean a wider range of high-quality and more “sophisticated” hosts in the I-PRAC member’s portfolio, compared to other booking platforms? The future is certainly looking bright for this emerging industry-leader.
What’s more is that during our conversation at the I-PRAC stand, Emma Mills (MD of I-PRAC) explained that by 2022 new laws will be in place for certain countries, stating that only verified members (in-line with approved legitimacy, health and safety regulations, and specific security compliance) will be able to list their properties on booking platforms. Those who become I-PRAC Approved now, will therefore be one step ahead of the game.
To quote Shomik Panda (Director General of UK STAA), the short-term rental industry has developed “an entire ecosystem of innovation that has grown and flourished… however, such rapid growth will always pose challenges to any industry… and that is why the STAA exists”. With the help of innovative brands like I-PRAC, industry giants such as HomeAway, and the growing membership community of the STAA, it’s clear that although there is plenty of work to be done, the industry is absolutely coming together to drive-up standards and improve regulations.
During the Premium Access Conference’s Business Travel Session, Luke Bujarksi (LUFT founder) articulately covered how the future of work will shape the future of the visitor economy. Undeniably, the likes of Airbnb is barely a tip of the iceberg when it comes to how rapidly large-scale change is coming to the real-estate and even the hotel sector (who will certainly want a piece of the profitable action).
What made some of us audience members laugh is that whilst the short-term rental industry is coming leaps and bounds in terms of digital technology and innovation, there’s still some work to be done as far as the actual “hospitality” is concerned. During his keynote, Luke briefly mentioned that he had to visit the local Sainsbury’s in London, after realising that his listed Airbnb provider failed to keep bathroom towels at hand. It does make you wonder that with little issues like this still occurring (and being more common than we think), does the sector really have the potential to compete with hotels, or in the words of Simon Lehmann does it still have “a long way to go”?
Although, despite the niggles, the top-level prediction is that there is certainly a remarkable future in store for the short-term rental industry. It’s common knowledge that the new generation of holidaymakers are looking for something “different” these days. Whether it’s in the form of exciting alternative accommodation or flexibility, there’s no denying that holiday trends have drastically changed.
What’s more that in general, the short-term rental industry is economically beneficial as it drives more revenue to communities. Bear in mind that it isn’t just the short-term rental properties that create a financial profit here, but local businesses such as restaurants, cafes and supermarkets, too. This is of huge value to parts of the world that are actively looking to simulate tourism. For those who are looking to build a professional and honest career in the short-term rental industry, it’s worth looking at AirDNA’s vacation rental data insights, which provides detailed information about how the likes of Airbnb and HomeAway are performing in specific markets around the world.
Thanks to Gavin Gray’s (Senior Manager, Key Accounts, HomeAway) keynote during the “Second Home Economy” session at the Short Stay Show, I’ve rounded up how legitimate property owners can truly thrive in the short-term rental industry, in an ethical manner.
Gavin’s professional tips included:
As a writer, I’d also add in other important practises such as clarity in communication; Parry Malm (founder of AI company “Phrasee”) engagingly touched upon this at the “Say What” session. Additionally, it would be useful to get involved with industry ambassadors such as the STAA, ensure that you are I-PRAC approved and join the company’s affiliate property managers programme that will officially launch on May 1st, 2019.
We cannot deny that there are a few differences in opinion where the short-term rental industry is concerned. For the interest of valuable research, data, and government regulations, a lot of work will of course need to continue; but with the correct attitude, practises, and processes in place, there is every chance of more success and growth for the sector. With time I can guarantee that the short-term rental industry will transpire as a “movement” within the hospitality field, that industry ambassadors like you and I, can be exceptionally proud of.
A special thanks once again to Jim Curry and Diane Lloyd, founders of The Short Stay Show; as well as their headline partners, HomeAway and the STAA.
For your volunteered time, one-to-ones, and advice, a special mention to:
Simon Lehmann of AJL Consulting
Luke Bujarski of LUFT
Emma Mills of I-PRAC
Chris Maughan of I-PRAC
Gavin Gray of HomeAway
John & Tor of BlackFire Films Ltd
