It’s hard to believe that only two years ago short term rentals were widely considered the "alternative" accommodation option - something a bit different for the more adventurous traveler looking for a more authentic travel experience perhaps?
The pandemic came along and fundamentally changed this perception. It altered the way we travel and re-shaped our lodging needs and expectations.
In 2020, the short-term rental industry experienced an unprecedented boom in popularity as pandemic concern and travel restrictions saw the traditional annual overseas summer getaway replaced by domestic vacations.
Families turned to short-term rentals in their droves - appreciating them for their ability to provide a safe refuge at a time of uncertainty and anxiety.
Then in 2021, the trend for flexible living and working took hold. It was clear that remote working was here to stay - in some shape or form. And this brought aspiration for travel and adoption of a more nomadic living and working lifestyle.
A staggering 90% of respondents in a survey by short-term rental booking platform, Leavetown, planned to take trips over the next 12 months combining work and vacation. And over half of respondents (51%) said that they anticipated being able to enjoy more time traveling over the next 12 months because of the ability to work remotely.
So travelers now needed a "home away from home."
Demand for short term rentals soared even higher. The industry responded quickly with tech innovation to better serve new guest needs and expectations - once and for all, cementing short term rentals as the number one accommodation option.
But what’s next for the growing short term rental market in 2022 and beyond? Is the boom set to continue?
Here I'll consider the factors driving the continued growth of the sector and explore changing guest expectations and how the industry can respond to better serve their needs.
What’s driving the continued growth of the short term rental industry?
1. No fuss, no friction
With concerns over safety still very much front of mind on the global travel scene, today’s guest expects a contact free, frictionless stay. This is where tech steps in.
Just as in everyday life, guests now expect a high level of technology automation to fulfill their "basic" needs.
Recognizing this, and the operational efficiencies afforded by tech innovation in property management, the short term rental industry continues to lead the way in adopting smart home automation into their property operations - from access control (smart locks) to connected thermostats, and much more besides.
And, as a result, they’re able to provide the desired frictionless stay. And this is fast becoming a basic expectation.
2022 will bring further innovation in this space with greater emphasis on enhancing the stay with amenity insights (think digital guidebooks and restaurant recommendations) as well as making sure tech is seamlessly integrated into property operations to help property managers better serve their guests.
2. Longer stays and "bleisure travel"
Longer stays - defined as trips of 28 days or more - are set to stay. Driven by remote working and the consequent trend for flexible living, people are taking the opportunity to travel for longer periods of time, combining both business and leisure (increasingly referred to as "bleisure travel").
AirDNA data
revealed a rise of 16% in longer stays in 2021, suggesting the trend for longer stays will continue. Such trips require better amenities and resources, and travelers will continue to turn to short term rentals rather than hotels to deliver against their "home away from home" needs.
But what are these needs exactly? Here’s my take on the must-haves:
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Tech connectivity: High speed internet is a must for all long-term travelers combining work and leisure. Property managers must ensure that their rentals are suitably connected and wifi accessible.
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Appropriate work zones: Set up an ergonomic workplace with appropriate charging points and good lighting. Providing large screens would be an added touch. And, importantly, work zones should provide privacy for work-related Zoom calls.
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Access to outdoor space: When not working, guests will want to be able to immediately enjoy their vacation experience. The most popular short term rentals will have the great outdoors on their doorstep - whether this be a beach or a well-maintained garden area.
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Home comforts and amenities: Comfort is key when it comes to long-term stays. Guests will expect the same standard of amenities as they’d have at home. Kitchens should be set up with this in mind. Consider laundry facilities too. Add good quality furniture, mattresses, pillows, linen and towels. Quality and comfort are key. Furniture staged primarily for photos is not enough for the longer-term guest.
3. It’s all about the experience
Vacation lodging is no longer simply a place to lay your head. It’s an integral part of the travel experience.
A large part of the appeal of short term rentals in recent years has been the unique access it gives to a different way of life in a different town, city, country.
But as the industry has matured, and guest expectations too, we’ve seen a professionalization of the space with higher operational standards across the board - all intent on creating the perfect guest experience.
From a greater emphasis on comfort through to decor and even branding, the short term rental market is focused on delivering a first class experience to its guests.
In a surprising turn of events, just as hotels are looking to follow the short term rental model by integrating kitchens and other in-home amenities into their rooms, short term rentals are looking to mirror parts of the hotel-like experience in terms of consistent branding and the professional touch.
2022 will likely bring further convergence of the short term rental and hotel space as both markets strive to deliver the optimal lodging experience.
4. The direct booking trend
It’s been a turbulent couple of years now for the travel industry - with uncertainty around travel restrictions and countless cases of trip cancellations and refund sagas.
Direct booking sites have emerged as the shining exemplar of how to respond to uncertainty in the marketplace. Short term rental property managers with a direct booking site in place were able to respond to market changes and reschedule bookings rather than cancelling them, thereby keeping their revenue and maintaining good guest relations.
We’re now seeing considerable growth in the direct booking space. Bookings through direct booking websites doubled between 2019 and 2020, and saw
a further 3% increase in 2021
.
We expect to see further growth of the direct booking trend in the short term rental space in 2022 as property managers realise the potential for higher profit margins without the
fees incurred by OTAs
.
Savvy travelers are also navigating away from OTAs, recognizing that they can enjoy significant savings by booking directly.
An evolving short term rental marketplace
Demand for short term rental accommodation has soared beyond imagination over the past two years.
And it shows no signs of slowing as we look to 2022 and beyond.
But as the marketplace matures and guest expectations evolve, it’s vital that the industry continues to adapt and innovate as it has done so effectively over the past few years.