Citing a PhocusWright study, FlipKey highlights over 350K second home owners queued to begin offering their vacation homes to travelers more frequently

January 15^th Boston, MA:  With the vacation rental market estimated at $24B, the growing and popular lodging sector motivated PhocusWright – a leading travel research firm – to conduct the industry’s first ever dedicated market study.  Co-sponsored by 14 industry players including FlipKey.com – a leading vacation rental site featuring the industry’s largest collection of verified guest reviews – the study estimates 1.26M second homes are available for rent in the U.S. for families looking for an alternative to hotels and other lodging options. 

The study identified that 56% of the vacation rental market is represented by rent-by-owners with the remaining 44% of vacation rental homes managed by professional property managers.  Encouraging for the growth of the industry, the study highlights 50% of rent-by-owners are casual renters, offering their units primarily to friends, family and through word-of-mouth.  As the economy continues to place additional financial burdens on second homes owners, FlipKey expects more of these casual renters to become increasingly active, working independently or through a property manager to offer their home more frequently and to travelers beyond family and friends. 

“Although there are 1.26M vacation homes that have been rented, it doesn’t mean they were made available to the general traveler,” stated TJ Mahony, CEO of FlipKey.com. “When we pealed back the layers of the study we estimated there are 350K casual renters that don’t necessarily make their home available beyond their immediate friend and family network.  It’s reasonable to assume the current economic environment will help motivate many casual vacation rental owners to become more active.”

FlipKey defined an ‘active’ renter as an owner that markets their home to travelers beyond their family and friends network.  Mahony summarized, “if an owner actively markets their property online and rents their unit to two or more people completely outside their personal network each year we consider them active.”

When renting a vacation home its imperative vacationers feel comfortable and confident in the home and manager/owner of the property.  Vacation homes overseen by property managers and active owners often provide strong customer support, clear check-in / check-out processes and other support services consumers value.   Mahony concluded, “Given the economy and growing support and marketing services available, there is a clear opportunity for more of these casual participants to become more active, renting their homes more often, yielding increased rental income.”

About FlipKey

FlipKey^™ is a leading vacation rental service featuring the world’s largest collection of verified vacation rental guest reviews. FlipKey believes reputation, trust and feedback from past guests are the best resources to ensure consumers find the ideal vacation home. FlipKey currently features more than 60,000 vacation homes offering vacationers the unique advantages of more personal space, superior amenities and ideal locations throughout the United States, the Caribbean, Canada and Mexico. FlipKey is majority owned by TripAdvisor, LLC, and is a member of the TripAdvisor Media Network, attracting more than 32 million unique monthly visitors* across 12 popular travel brands. FlipKey is available at http://www.flipkey.com

*Source: comScore Media Metrix, May 2008

© 2008 TripAdvisor LLC. All rights reserved. 

Press Release

Struggling Economy Driving Consumers to Alter Ski trips, But not Cancel Them

Boston, MA, January 6, 2009- Travel industry reports forecast a dark winter for the travel industry, but FlipKey.com, a leading vacation rental website, indicates this doesn’t necessarily spell a down season for the whole ski industry. FlipKey – www.flipkey.com – which markets over 60,000 vacation rentals throughout the United States, has found that consumer interest in many ski areas remains strong and has actually increased from 2008.  In fact, an informal survey of vacation rental managers in areas that draw from a more local traveling population reports year-over-year increases. Vacation rental managers are also seeing an increased interest in vacation rental properties rather than other lodging options.

According to Jeremy Gall, Chief Operating Officer of FlipKey, “Destination ski areas, such as Aspen, CO, that require consumers to travel long distances will struggle this season; however, we are seeing a boost in interest to more local ski resorts. For instance, Loon Mountain, a local draw within the New England market cited 9% year-over-year increase in pre season ticket sales.”

Similarly, Cort Roussel of Franconia Notch Vacations, servicing the White Mountain region of NH, added, “Cannon Mountain has seen a 40% increase in the volume of season’s passes sold over last year.”

Those benefiting from current traveler trends tend to be located in areas that cater to local interest and/or offer alternative lodging accommodations. Specifically, consumer interest in vacation home rentals has been bolstered by the current economy, as more people seek more affordable vacation options that do not require excessive travel. 

“We are seeing increased interest in our larger vacation homes as families are traveling in groups, taking advantage of the shared weekly rent and comfortable space afforded by our vacation homes,” said Joanne of New England Vacation Rentals.

Nick Lanza of Big Bear Vacations (Big Bear Lake, CA) cites, “Out-of-state skiers are relatively absent this year, but we are seeing a surge in interest from southern California.”

The decrease in destination ski travel is mostly a function of the economic downturn, but can also be placed on new airline policies. The introduction of baggage fees across the airline industry places further burdens on the long distance ski traveler. A family of four flying from the east Coast to the Rockies can incur more than $300 in additional fees for simply checking in their skis and boots. 

The emerging formula for this years ski family is to stay local, drive a few hours and book a vacation home rental that affords the family extra space to discuss how bad the economy is.

FlipKey^™ is a leading vacation rental service featuring the world’s largest collection of verified vacation rental guest reviews. FlipKey believes reputation, trust and feedback from past guests are the best resources to ensure consumers find the ideal vacation home. FlipKey currently features more than 60,000 vacation homes offering vacationers the unique advantages of more personal space, superior amenities and ideal locations throughout the United States, the Caribbean, Canada and Mexico. FlipKey is majority owned by TripAdvisor, LLC, and is a member of the TripAdvisor Media Network, attracting more than 32 million unique monthly visitors* across 12 popular travel brands. FlipKey is available at http://www.flipkey.com

About FlipKey

*Source: comScore Media Metrix, May 2008

© 2008 TripAdvisor LLC. All rights reserved  

Across the board the severity of the current economy has put a dent in the ability for businesses, individuals, and families to allow for excess spending.  Travel, being a luxury, is naturally sensitive to these kind of fluctuations.

Compete.com analyzed year-over-year online activity in the air and hotel industries for August, September, and October to observe trends or shifts in consumer interest in travel. What they found was a decline in overall online travel research.

Many might point out that the Y-O-Y decline in October is less pronounced than expected given the severity of the economic situation.  However, it’s worth noting that these are ‘online’ demand indicators.   As more and more consumers shift their travel research activities online there is a natural inflation of online travel behavior.  Therefore any decrease in year-over-year online travel demand spells a more severe decrease across the online and offline travel market.

Common feelings are that November 2008 has experienced similar year-over-year declines, and though the upcoming Holidays present opportunity for a step back in the right direction, trends point to further decline in the industry for the upcoming months.

Vacation rentals have often promoted themselves as a more economical and personal lodging option compared to hotels. Often these claims are backed by hard daily rate data and thus it’s not a stretch to conclude the current economic climate may have less of an impact on the vacation rental market compared to more standard travel and lodging categories. In general I would agree that vacation rentals are more insulated from the economy compared to hotels, but like most things in life “it depends.”

Aspen Feeling the Effects 

I was able to attend an educational session held by Liza Hogan of Resort Rating Specialists at last week’s Annual VRMA Conference. Liza helps VR managers institute rating programs that help accurately market vacation rental units, but also provide structure and guidance to help owners invest appropriately in upgrading/maintaining their properties. As such, Liza is a recognized expert in the space and has collected data points and case studies across the country. During her presentation Liza mentioned Aspen, CO was preparing for a “down” season and was only at 50% occupancy for the holiday season as of mid-October. Typically, premier ski destinations, such as Aspen, are nearly completely booked for the holiday by the end of October. 

With most Colorado ski resorts within a 2 hour drive of Denver, Aspen’s western location (4 hours from Denver) doesn’t play well to the regional market.  Instead Aspen is a magnetic for the out-of-state family…. Thus, tack on a plane ticket, extra baggage charges (over $100 if you bring your gear on most airlines) and a car rental and suddenly you have a pretty expensive trip, vacation rental or no vacation rental.  Destination markets like Aspen are inherently vulnerable during these times.

Regional Markets Seeing an Increase in Bookings

In contrast, I had a separate conversation with a reservation manager in the White Mountain region of New Hampshire who indicated they had seen a year-to-date 9% increase in bookings. Apparently, many of the folks in Boston and New York are still planning on going skiing, they just aren’t going to fly anywhere to do it. As such, ski areas like Loon, with its proximity to several large cities, is yielding an increase in vacation rental demand.

Ultimately, vacation rentals, in general, will fare better than most travel categories in the current economic environment.  However, for every two markets that are benefiting from a change in travel plans/preferences there is likely another market struggling.

We have previously highlighted survey based research which illustrated the exceptionally positive opinions consumers have with regard to their vacation rental experience.  We recently tested these findings against some real data. Specifically, we randomly selected 3,000 reviews collected by FlipKey and analyzed the distribution of the guests’ ratings.

The analysis took into account the distribution of how vacation rental guests have responded to the following rating scale:

As the chart below illustrates, consumers love the vacation rental experience.  Managers are often worried about “what happens when someone leaves a negative review”, but we found these instances are few and far between.   Specifically, 84% of guests recommended the home they stayed in, 12% had a neutral experience with only 4% of guests indicating they had a negative experience.

These findings are nearly identical to the historical survey-based findings we have cited in the past. What’s important to understand is that the above graph represents the ‘actual distribution of vacation rental reviews’. However, the only way to acquire the normal distribution of guest reviews is by inviting all of your guests to leave a review. If you require guests to self navigate to your site to leave a review, you are only going to attract the extremes (i.e. a select number of extremely happy guests and extremely upset guests).

To ensure you are fairly represented and yield the most from your guest’s positive comments, the FlipKey system is designed to invite all of your guests to leave reviews, so you can effectively attract new guests, at higher nightly rates, based on all the strong recommendations of your past customers.

At FlipKey we work hard to help vacation rental managers collect and manage online reviews.  We are very passionate about the power of guest reviews, as both a marketing and an owner relationship management asset.

Given our interest and commitment to bring guest reviews to the vacation rental market you can imagine my delight when I recently came across a large compilation of statistics on the power of consumer reviews on the Bizaarvoice company blog.

Below I have compiled a few of the key statistics featured in the article I feel are informative and added my two cents below the stat:

• 71% of online shoppers read reviews making it the most widely read consumers-generated content – Forrester Research

It doesn’t matter if I’m buying a book, researching a vacation or evaluating a new digital camera – if I can not find a review I move on to an option for which I can.

• 82% of those who read reviews say their purchasing decisions have been directly influenced by those reviews – Deloitte & Touche

Not only are 7 out of every 10 people reading reviews, but 82% of those people are directly affected by what they read.

• Consumer recommendations are the most credible form of advertising among 78% of the 26,486 internet users in 47 markets who responded to a global Nielsen survey – “Word-of-Mouth the Most Powerful Selling Tool”

The honest words of past guests are the most powerful marketing assets at your disposal for instilling trust and booking urgency amongst prospects.   A quality website, friendly reservation specialists and smart promotions always help capture conversion… but often a simple and honest story from a past guest can be the most effective sales pitch.

• Of merchants who adopt customer reviews, 58% said improving customer experience was the most important reason for adding reviews to their sites, following by building customer loyalty (47%), driving sales (42%), and maintaining a competitive advantage (37%) – eTailing Group, 2008

The ability to leave a review allows the guest to feel they have been “heard” – thus increasing their loyalty.  I personally enjoying leaving reviews of products and services I enjoy – it helps me a sense of empowerment beyond general ownership and use.

To read the very comprehensive list of over 100 statistics from a variety of sources on the bizaarblog, click here.

Thanks to Bizaarvoice for compiling such a powerful list of statistics from a wide variety of sources.

Compete, Inc. has been around for 7 years, but Compete’s Consumer-focused product, compete.com, is celebrating its first birthday! In just one year since TJ and myself launched compete.com, it has grown to support the business decisions of 500,000 unique visitors a month. In fact, as of September it has officially surpassed Alexa as the largest metrics service in the world:

To the right you will see a breakdown of the annual achievements of the service, as featured on the Compete Blog.
Although TJ and I have moved on to tackle new challenges, we remain enthusiastic about the value of Compete.com’s free services and we continue to advise the Vacation Rental Industry to leverage Compete’s data to help you with your web presence.

We also recommend you try out Compete’s new Search Analytics product. It is tailor-made for small businesses and represents the most cost-effective way to help promote your Rental Manager web sites via Search Engine Marketing (SEM).

Last week I wrote about the value of keyless entry systems. The analysis highlighted the pros and cons of enabling owners to go keyless. The main con cited by industry sources tends to center on the disintermediation of property managers as the point of key exchange. The basic conclusion is, “keyless entry is one more reason to incentivize owners to migrate to independent management”.

Although this is a respectable concern, we wanted to highlight data points that suggest keyless entry will not motivate rent-by-owner migration.

In a recent FlipKey study, we surveyed 22 owners who currently use property managers. The sample size is limiting, but provides some solid directional findings in their motivations to use a property manager.

Key findings:

• The primary value owners see in property management is convenience. Property management allows the owner to effortlessly collect additional income, without having to worry about marketing, maintenance or cleaning logistics.
• Key exchange is a secondary motivation.
• Focusing your service messaging on convenience is the most effective message. If enabling your owners to become ‘keyless’ supports that message, you can position it as an added benefit.

In June 2007, FlipKey conducted a survey of 277 vacation renters, owners and property managers to evaluate the current state of the market. In partnership with Compete, Inc’s behavioral targeted survey panel of 2M consumers, FlipKey contacted individuals who had recently visited large vacation rental listing services as well as owners/managers actively managing vacation rental properties.

FlipKey is happy to report that the market is vibrant, growing and economically attractive. However, we also identified a number of gaps that have not been addressed by existing logistical and marketing solutions, which are hindering the realization of this industry’s full potential.

• Despite numerous vacation rental listings services, property managers continue to seek effective and economical guest acquisition solutions
• Market growth is handicapped by the lack of reputation transparency between guests and properties/owners
• Many travelers seeking rental accommodations are defecting to traditional hotel lodging services due to the frustration of identifying available and reputable properties

FlipKey has made the report free through its homepage. Click here to request a free copy.

Google Trends (trends.google.com) is a fun and useful way to keep tabs on the search volume of just about anything. Enter a term into the search box and see a graph of the term’s search volume since 2004. The real value comes when you compare two or more terms in the same graph – this provides a great view into the relative popularity of the requested terms.

The ubiquitous example in Boston is “red sox, yankees” – as you can see the two graph lines hold very close except in October 2004 when the Sox won the World Series.

However, this site is about vacation rentals, so we will spare you from our obsession of Red Sox nation.

What is more popular, vacation homes or vacation condos?

Google Trends: “vacation rental” vs “vacation home” vs “vacation condo”

As you can see, “vacation home” outpaces “vacation condo” by an approximately 2-1 margin. The generic “vacation rental” term makes a good baseline to compare the relative popularity of “vacation home” and “vacation condo”.

What popular vacation destination is the most searched for?

Google Trends: “outer banks” vs “cape cod” vs “lake tahoe” vs “vail” vs “myrtle beach”

A bit of an upset here – I would not have guessed “outer banks” to come in dead last. Myrtle takes the crown with the Cape coming in a close second.

While all of the above data is perfectly valid, it doesn’t give you much more than a crude directional metric. We suggest you use Google Trends as a fun exploratory tool, but avoid using it for anything beyond “oh, that’s interesting” based analysis.