By Mike Liverton, founder and CEO of Jetstream Hospitality Solutions
For several years now, the short-term rental market has been steadily gaining on the hotel sector (since Airbnb’s emergence) in hospitality. The pandemic has undoubtedly sped up this race. Current data shows that the summer of 2021 is shaping up to be one of the best on record in the US for short-term rentals, according to AirDNA. As vaccination programs continue to accelerate across Europe, predictions are that domestic travel will boom (with bookings already strong) and a pent-up demand for international travel will burst through when restrictions loosen.
So why have short-lets stolen a march on hotels and what does this mean for property investors looking to capitalise on this change?
During the pandemic, self-contained accommodation (with individual kitchens, remote working options, contactless check-in etc) was a more popular choice for social distancing reasons. Looking more broadly, this sector has professionalised rapidly, adopted smart tech solutions and imitated hotels through their guest experience offerings and services. Essentially, short-term rentals and their property managers are upping their game and competing with hotel accommodation head on.
However, short-lets can be hard to get right. The operational challenges alone can be a barrier to entry into this lucrative space. High turnovers – especially during peak seasons – and elevated, often complex, guest demands – for families / pets / remote workers, can put off investors who want a stress-free place to grow their portfolios. Thankfully, tech automation and innovation as well as changing business models have enabled investors to access the sector more easily and begin to make inroads.
Work-from-anywhere trend – here to stay?
A large part of the short-let market consists of holiday lets in desirable locations such as Cornwall in the UK. A shift which has emerged over the past year has been the work-from anywhere trend. As our lives have adapted to the pandemic, working patterns have changed irreversibly. Remote working has suddenly become a reality for many instead of something which was avoided by anxious companies wanting employees present for office face time.
JLL’s survey (spanning 10 countries) shows a majority of office workers want to work remotely over two days a week on average – double from before the pandemic. “Three quarters of employees want to continue working from home on a regular basis.” Similarly, a clear majority (81 per cent) of respondents recently surveyed by short-term rental booking platform, Leavetown.com, think they will continue to work remotely post pandemic at least part of the time – with almost half (43 per cent) agreeing that they will continue to work remotely most of the time.
What this demonstrates is that some of us have made the leap mentally from office to remote working and however this plays out over the next few years, there will be a new breed of digital nomads wanting to rent short-lets and work in locations all over the world. We are no longer tied to one location. What this means in practice is that those who can, will rent short-lets, turn-key properties in for example London one month, moving to Dubai the next and so on.
Some workers may also demand short-lets once a month as they drop in and out of locations to meet with remote teams in ‘hub’ office spots then go back to their own homes. The possibilities are varied now that remote working has become accepted practice in some companies – a recent Financial Times article describes how businesses are coming up with creative solutions to fill the void of the office lease for instance.
With remote working as one driving factor for short-term rental demand, the opportunities for investors and managers of multi-unit properties are clear: get the formula right for digital nomads and they will book. So how do you do it?
Despite the operational complications of short-lets, investors with little prior experience are now empowered to succeed in this space thanks to tech solutions automating many of the pain points involved. One key strategy is for owners and managers to hand over the responsibility of operations and services of short-let properties.
Partnering with an experienced, tech enabled, guest facing 24 /7 professional hospitality solutions provider is an effective way of operating more efficiently and cost effectively. By handing over essential processes such as channel marketing, distribution and guest communications to all-in-one tech platforms, owners and managers can be sure that these are looked after.
We see this in action at Jetstream, when investors want all-in-one solutions to take responsibility for the whole guest journey from bookings to guest screening, responding to guest needs as well as ensuring content and pricing is optimized for conversion across all the largest global short-term rental marketplaces.
Without having to delve into the nitty gritty of the sector, investors can get involved and increase their revenue opportunities.
None of this would be possible without the rise in tech adoption across short-term rentals. Managers are using operational tech solutions as the norm, building their businesses to deliver contactless, seamless stays for guests (particularly relevant for our remote workers). A recent survey from Breezeway found that, “in 2021, 88 per cent of managers plan on differentiating their business by increasing or optimizing their tech stack.”
Building on this, digitally native travellers and workers are requiring keyless entry and smart home tech solutions as standard and owners want guest screening checks in place to protect their properties.
To meet these varied expectations, to streamline operations and to reduce financial risk, owners and managers can now take advantage of the innovative platforms to realize fully the potential incremental revenues available from flexible rentals.
A good investment?
Getting teched up is an essential part of making this sector profitable for investors. As we all continue to live and work more flexibly, I predict that the short-let market will attract new investors as well as new guests in the future. Furthermore, staying nimble as a property owner is vital to keep up with market changes. Tech solutions enable investors to keep pace with guest needs, flexible living trends and operational challenges.
As a digital nomad myself (I run my business and team remotely) I have seen first-hand, as a consumer, the benefits of renting short-lets, which are well managed and automated. Having excellent wifi, smart home tech benefits, contactless entry, 24/7 communication links, easy booking and hotel-like services are all advantages I look for when I’m choosing a place to live and work for a while. If investors tap into these factors and outsource the behind-the-scenes processes to expert solutions, there’s a profitable gap in the market here.
This post has originally been featured in Property Wire.