Welcome to our second March newsletter, that replaced the weekly “Smarthosts” newsletter. Our first newsletter was very well received and we are happy so many found it interesting and hopefully useful.
What’s happened this month?
If you wanted one month in which to see the revolution that is rentals this is it.
Global warming, poverty and the homeless, three big problems that need addressing worldwide. As Vacation Rentals and wealth from real estate increases the disparity between rich and poor also increases, the housing crisis deepens and in particular the lives of those who live on the streets! “Donations made via OrientV” which is a homily to this problem are growing and is our favorite article/idea this week. Read more here.
An endless supply of money?
There seems an endless supply of money ready to throw at enterprises in the rental space! Just this month we have seen a couple of very interesting investments and an acquisition.
- PlumGuide (an Airbnb Plus competitor) raised $18.5, now totaling $29m. An interesting one, following in some ways the footsteps of OneFineStay.com, acquired by Accor but later written down. In light of Airbnb’s slow growth or potential pause on its Plus product, and lack of property contract control, city licensing demands and challenging distribution options, this looks a tough journey. Or can we not see the acquiring target clearly?
- Guesty raised another $35m making the total now $60m. With M&A’s ongoing in this space in the US underway, the Guesty proposition is aligned to those equity expectations too and that this could be a money spinner. All it needs is enough properties, low churn and OTAs who don’t dominate and offer up the same services for smaller owners and small managers as part of a listing deal (think Bookingsuite or the Airbnb app). Large managers may balk at fees.
- Airbnb (again) pays $400m for Hotel Tonight. Half is in pre-IPO stock, which would have been interesting as a fly on the wall. A lot of speculation on this one, but it does focus the mind on their long term ambitions. Airbnb may be losing the love however and once shareholders are able to enter the fray, expect a much more corporate beast to exist. Expect more however as there is plenty of cash in the war chest. As the press has been saying, what is Airbnb anymore.
How many of you attended any or all of the mad March rush for conferences. The most notable have been ITB in Berlin, the Short Stay Show in the UK, the VRMA in Prague, there are also no end of local ones globally and more tech supply ones coming up. This week in Barcelona is the Kigo Conference. There are more in the year, with Guesty producing its own event, GuestyVal, the VRWS again in fabulous Lake Como and the new big event in London, for October: Host, (which is free!). We will be speaking and offering advice on technology selection for your rental business, big or small.
This is the tip of the iceberg with many other local events globally such as “Vrtech” (The next one Barcelona 1st April) or the big US one and its regionals, the VRMA. They often provide great networking opportunities but are sometimes too high brow for the new renter and too low brow for the seasoned business managers. We also have witnessed the growth of “rental influencers” whose agendas and opinions may be aligned according to their own commercial interests, especially the global players.
Many attendees are now questioning the volume and expense of these events. Do we need so many and what does everybody want from them? Answers on a postcard, please
A new generation of traveler and worker
The generations are demanding new travel and stay cultures: We are really interested in the changing space and how this aligning itself to the new world of the young, mobile, adventure and memory creating demographic. It may be surprising to note that on the report linked above, the fastest-growing demographic of Airbnb hosts in the U.S. is hosts over the age of 60. This would seem to indicate that mobility is not just for the young and investment in property is still continuing as an income stream. The older benefit from the boom years and the younger, chase a more “experiential” life.
You only have to look at the changing work environment and space with companies such as WeWork which has 90% occupancy and growing rapidly. There is a trend for corporations to become members as this provides ideal flexible work options for the mobile world. How often have you had a Skype, A Google hangout recently and no-one was actually in the official office? This mobility, however, often needs accommodation. Sure you can use booking.com or hotels tonight, but how much better to have a similar model in an urban environment and hence the WeLive type concept.
The CEO of 25hours Hotels (which has an Accor investment) and an “innovation lab” would disagree and project the importance to boutique hotels, going that extra mile, rather than a workspace offering accommodation. Quote:-
As for homesharing, Hoffman said “I think it is dangerous for hotels who don’t offer a real, proper, nice hotel experience where you get really nice F&B [food and beverage], where you have a nice bar, where you have great service by people who are attentive, and where you can also build up a relationship, because if you go to a homesharing place, eventually you will become lonely.”
He may be missing the point and is only focussed on his income streams. Great and standardized accommodation is part of an equation, connected to mobile and frictionless everything, where the younger generation consider themselves citizens of the world (until it comes to a football match!).
Getting the branding right
Platinum Equity who acquired the European rental business from Wyndham for $1.3bn has now rebranded the company “Awaze“. With over 110,000 properties this is a monster with several sub-brands and will take some time to get into shape for sure. Whatever your take on the name this is an M&A space and there are a number of other companies that would fit their purpose, but may just be too complex right now to acquire. We also noticed Platinum Equity have a hotel investment, now there’s a thought!
Hot off the press, HomeAway’s new version of its most successful US brand, VRBO (Vacation Rental By Owner) has been launched and is pronounced Ver-boh, which many people use already. The whole story can be found here and the agency who created it, here. The site is still very popular with US travelers, over here in Europe, the HomeAway brand has been well established for many years.
These companies are acutely aware of the influence of a well-projected brand on a changing customer demographic.
Reported last month, we see more news and pressure on increased legislation and reporting in various EU countries. Let’s take Spain, one of those countries with significant tourism and rentals! Firstly the right to rent in communal blocks has changed. Think before you buy now. Also if you have bought and are considering how to minimize the tax, especially if you live abroad, think again. Not all regions are the same either, Valencia, for example, requires a license and this is not just an application, it involves initial and regular inspections, paying of taxes, and more.
As we would expect in this consolidated EU (not) the rules are different everywhere. Lanzarote, for example, insists that any intermediaries need to report several things to the authorities, every quarter:
- The address and cadastral number of the property
- Name of the owner and management company / online booking platform
- The date of the start of each booking and the number of days
- The price paid
- The method of payment
It is chaotic, but as data management becomes more centralized, (APIs are already available in certain areas for guest arrival information) expect the local government to check and tax accordingly. Perhaps the hotel lobbies are assisting the trend, but is this not a good idea? A guest needs to know they are staying legally and be assured its got standards. Managers need to comply.
Unique Products & Services
What do guests really enjoy when they are away? A good nights sleep! We thought that a few products could add a few review points and provide a great marketing message! They may also help improve the sleep patterns of stressed owners and managers!
- Weighted Blankets! These are blankets that provide not only warmth and a feeling of greater security but a study from the Journal of Sleep Medicine and Disorders found it easier to settle with increased sleep duration, decreased movements and more “refreshed” feeling afterwards.
- White noise machines. If your rental has noise issues, then you will certainly have guests who complain. White noise devices may well help. Check out this advice site. There are many on the market and they are not expensive! Or offer up disposable earplugs!
- There has been a lot of press about how light affects our circadian rhythms. Buying bulbs that can help guests sleep or even feel more alive (winter days in Scandinavia for example) can be part of the marketing message and improved guest experience. There are lots available, but this article explains and gives examples.
- If you want some background on sleep, the what’s, whys and wherefores then check out this book.
There is also no substitute for a king size bed and a really comfortable mattress. An investment that will repay itself over and over again.
Quotes we’re pondering
We have chosen one from a customer this month, that reflects a very common problem as the accommodation sectors merge online.
“I booked these properties specifically because of the lenient cancellation policies and now a couple of days before arrival, they don’t apply. This is disgusting, I always booked hotels I can cancel last minute. Unless you refund me, my only recourse is to make recharge on my card”
Enough said, note the “hotel” even though it was a rental! Maybe a pop-up box, making sure these terms on rentals are really seen, not just in the fine print at the bottom of the page or a tick box.