Vacation Rental Companies Prefer Property Management Software
We’ve covered the vacation property management market previously, a sector dominated by Airbnb, VRBO and Hostfully. The growth of the sector has been phenomenal which makes Airbnb’s persistent, low profitability a head scratcher.
As property management software technology has progressed, it’s allowed some landlords to try out the short term vacation rental market which is now recovering from the pandemic. The trial might prove to be short term as the post pandemic boom in vacationing might fizzle out beyond 2022.
U.S. short-term rental demand gained 17.4% vs 2019 levels, accelerating into expansionary territory in May. U.S. short-term rental occupancy rose to 63.7%, up 3.5% from April, and an incredible 20.9% higher than May 2019. Occupancy has increased over the previous month in each month in 2021 as pent-up demand has usurped traditional seasonality patterns. — From AirDNA report.
Airdna’s most recent report for the month of May shows demand has picked up. Occupancy levels should hit all time highs this summer. The sunny southern US is where occupancy rates are highest. In the north and midwest, occupancy rates remain at about 50% which will definitely impact owner’s profitability. Given pandemic restrictions are not quite lifted yet and vaccinations not complete across the US, some regions may miss the peak of this season entirely.
How to Manage Short Term Vacation Rentals?
Short term rental management solution providers offer their own vacation rental software platforms. It’s unlikely that landlords focused on the traditional rental market are going to abandon their more robust current platforms to adopt them. They could however, augment their current solution with one focused on short term bookings.
Instead rental owners and managers will likely rely on their current landlord software while they sample the returns and management challenges of the vacation rental market. This market tempts with its very high rent prices, yet it has many risk and cost disadvantages too. For most landlords, the toil of daily/weekly property management might be too much to bear.
Airbnb and VRBO who operate in the US, Canada, Australia, Germany and the UK had reputations for low price vacation rentals, but the post pandemic period is seeing huge demand as Americans, Australians, Canadians and Brits begin to venture out again, eager for a refreshing interesting holiday. Prices have been rising fast, but as the years pass, the question is whether traveler demand will wane and prices fall.
Review of Hostfully’s VRMC Report
A new report from Hostfully has found the number of vacation property management companies has risen from 110,000 to 140,500 in the last 3 years. That breaks down into 33,000 management companies operating in the U.S., 80,000 in Europe and +24,000 in the rest of the world.
The report found that property management platforms are the preferred technology for almost half of service providers followed by about 20% of others using property management apps/tools. It said that Vacation Rental management companies spend about $50 per property per month on technology including a property management system and other software. They manage about 79 properties on average which translates to a total cost of $4000 per month.
Respondents said the $50 per property per month number was a good price given the productivity gains enjoyed.
Property management software is still the preferred choice of property managers according to the Hostfully report. That software of course includes a variety of specialized solutions. Vacation property managers are challenged to make a decision about how robust their solution needs to be.
Although these solutions focus on the marketing side with advertising, pricing tools and analytics, it remains to be seen whether their management of accounting and maintenance services is at a professional level.
Certainly, the vacation rental market is more daily and weekly intensive, with messaging focused on handling booking inquiries, amenities questions, and booking on a daily or weekly basis. Issues of security, managing fraud risk, property damage, and orchestrating more frequent repairs due to heavy duty usage (appliances, flooring, fixtures, furniture) and cleaning services required.
What’s never covered under these studies is the full cost (repairs, wear and tear, legal) involved and how much that weighs on profits.
Managing a collection of short term rentals is certainly possible within a more robust property management solution, while management of hundreds of units might be done via vacation rental management solutions such as Hostfully. There is nothing preventing landlords from using both side by side, and bringing financial information across for accounting purposes.
Property rental management software is a bargain given the increase in productivity, profit and financial reporting tools. Smart landlords want to look at different investments today, and property management companies are interested in the short term vacation market and using technology to leverage opportunities there.
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