An interesting article came across my desk today highlighting the growing vacation rental market in San Francisco.
Here is an excerpt of the article:
San Francisco has been a mecca for tourists and business travelers for more than a century, and to meet the demand a vital hospitality industry has sprung up. Scores of high-end hotels and corporate apartments, hostels and bed and breakfasts all compete to attract the city’s yearly 16 million visitors and get a portion of the over $7 billion they spend. But in the past few years, with the rise of the Internet’s free market enterprise, the city has seen another sort of accommodation crop up: the individually owned vacation property.”
“Indeed, according to a quick and dirty survey of a dozen Web sites which list San Francisco vacation homes, more than 700 houses, flats or apartments in San Francisco are being primarily rented as temporary crash pads. That doesn’t count those properties that exclusively use Craigslist.org as their sales portal.”
For visitors this is great news — especially as hotel rates escalate through the roof. Renting an individual apartment or house can mean a lot more space and luxury for a fraction of the price.
The Good and The Bad:
The emergence of urban vacation rentals is a great win for consumers. Consider, New York City, where average hotels prices exceed $300/night. If you perform a quick search for vacation rentals in NYC you can find accommodations for ~$150/room/night. – a 50% savings boost compared to the average NYC hotel…
I have hands on experience with urban vacation rentals as I used to rent my Boston condo as a vacation rental. Last summer I was able to command ~$1,500/week. Most of my guests left wonderful notes thanking me for the unit and suggesting I charge MORE (true story).
The problem with urban vacation rentals is the increased unpredictability and potential legal concerns. Last summer, most of my guests required I “prove my identity” before they would send me payment. Luckily, I have a number of online profiles that helped.
An additional challenge faced by urban vacation rentals pertains to zoning laws and condo/co-opt bi-laws. Most urban vacation rentals are facilitated via apartments/condos that are accompanied by specific rules/regulations for how an owner/primary-renter is to maintain their unit. In many cases, the owner/primary-renter may be taking legal risks in turning their unit into a vacation rental.
The Urban Vacation Rental market is a real opportunity in cities such as, San Francisco, Boston, and New York but there are valid trust and legal concerns that need to be addressed before this segment of the vacation rental market will emerge as a mainstream lodging option. In the interim, it’s great to see the concept gaining momentum and I look forward to helping provide urban vacation rental accommodations via FlipKey.com in the near future.
On Tuesday FlipKey released a press announcement highlighting the health and growth the vacation rental industry (see full release below). Typically, public relation efforts are focused on a single product or company. At FlipKey we, of course, are interested in promoting our service publicly, but we also feel the underlying vacation rental market has an interesting story to tell.
Moving forward FlipKey will begin to focus a portion of its marketing investments and efforts in broader industry awareness. We will soon feature a story highlighting an emerging industry group we feel will be a powerful advocate for the vacation rental market – Discover Vacation Homes
Discover Vacation Homes began as a collaborative effort amongst vacation rental managers in the Orlando, FL market to promote vacation rentals as a mainstream lodging option. Rather than focusing their marketing efforts to compete against one another, they agreed collaborative industry marketing to “increase the pie for all” was a more beneficial approach.
If you’re interested in learning more, visit them at www.discovervacationhomes.com. Next week we will feature a more in-depth profile on the organization.
—-FlipKey Recent Press Release—–
BOSTON, MA – May 20 2008 – Despite the dark U.S. real estate market, individuals that own a second home and make it available as a vacation rental are seeing pure sunshine. In March, the Vacation Rental Management Association (VRMA) announced that the vacation rental industry saw a 17.4% revenue increase in 2007. The $80B domestic vacation rental market continues to benefit from rising hotel prices and second-home owners looking for additional sources of income. Vacationers are quickly discovering that renting a vacation home often provides a more spacious, personal and economic lodging experience when compared to hotels.
According to Steve Trover, President of Discover Vacation Homes, the industry’s public awareness organization, “Anyone who stays in a vacation rental will tell you they will never go back to hotels. Renting a well-kept private home, in a beautiful destination, affords families a more personal experience, ideal location, more space and extra amenities simply not offered by hotels, such as private pools, a backyard and full kitchen. Vacation rentals are a win-win for vacationers and second-home owners alike.”
In 2007, hotel rates in major U.S. cities increased an average of 9%, and the average nightly rate for a room in Manhattan saw a year-over-year increase of 12%. In response, consumers are seeking alternative accommodations, which bodes well for the vacation rental industry. However, many consumers have been confused by the booking process and discouraged by fragmented listings, inaccurate calendars, unverified hospitality and management services and the potential for fraud.
New services, such as FlipKey.com, are focused on taking the guesswork out of vacation rentals by verifying the legitimacy of vacation homes listed on its site and publishing reviews from real guests. According to a recent FlipKey.com study conducted in partnership with Compete, Inc, 78% of vacationers indicate they are significantly more likely to rent a vacation home if they can read a review of a prior guest and have some level of guarantee that a manager is within driving distance to assist with any maintenance issues that might arise.
“Transparency and confidence are the crucial elements to successful vacation home rentals, and as hotel prices escalate, vacation home rentals are becoming the lodging option of choice,” said TJ Mahony, CEO of FlipKey. “The FlipKey study, backed by Compete’s web analytics, reinforces our belief that the vacation home rental market will see continued growth as FlipKey guest reviews and service verification are made openly available, bringing the same level of transparency and confidence to renting a vacation home that other websites have brought to booking a hotel.”
With the introduction of new reputation-based services like FlipKey.com, the industry is enjoying strong demand. In fact, VRMA reports that 88% of its member companies (management companies who oversee the rental of owners’ homes) experienced an overall gross income increase between 2006 and 2007. Summarized by Steve Trover, “Despite the real estate market, despite rising fuel prices and despite rising hotel rates, vacation rentals continue to prosper, offering second-home owners significant sources of income and vacationers superior and more economical lodging options.”
It’s a small world after all… In 2005 I attended a small party in Vail, CO to celebrate a good friend’s wedding engagement. There were 10 of us and we all decided to go in on a vacation rental in the heart of Vail. Among the group was a gentleman by the name of Michael McFadden – who I had not previously known. By the end of the weekend we had all had a great time and Michael and I had become friends.
Fast forward three years…. By pure chance Michael and I started two vacation rental services at basically the same time. I, of course, helped create FlipKey – a community driven travel site that helps consumers find trusted vacation rentals throughout the world, by providing real reviews of verified vacation rental properties – and Michael started TheSociety.
About the Society(Taken from thesociety.com) At The Society, you’ll discover only the finest in luxury vacation rental homes in beach, mountain and desert destinations. Unlike typical online vacation search sites, The Society ensures that each vacation home meets quality standards established by experts in the luxury real estate industry. Also, members and guests of The Society have access to The Society-rated concierge information including the best golf courses in an area, nearest ski resort or popular restaurants. Planning an unforgettable luxurious vacation just got easier. The Society. A symbol of luxury.
As described in their company profile, TheSociety focuses on high-end luxury rentals. With a keen focus on high-end properties, TheSociety goes a step further by aggregating information on nearby golf courses, ski options and restaurant choices.
Recently, TheSociety announced a partnership with LuxuryRealEstate.com. As explained in TheSociety’s press release, TheSociety will be the exclusive provider of vacation rentals on LuxuryRealEstate.com. Click here to read more.
Congratulations on the progress Michael…. One question, the home we stayed in Vail three years ago was quite nice – would it have met TheSociety’s standards?
FlipKey is focused on helping vacation rental managers collect and manage guest reviews and is constantly developing new tools to help maximize the value of this powerful social asset. Today, we are happy to announce the launch of FlipKey Alerts.
What are FlipKey Alerts? Research shows 81% of vacation rental reviews are positive, 16% neutral and only 3% are of a negative nature.
The fact is, consumers love the vacation rental product; however, there will always be a few voices you simply can’t satisfy. In some situations these negative reviews are justified, but in most cases the second side to the story gives a more accurate picture.
With the Response feature, FlipKey allows managers to respond to all reviews and provide context or more information (such as maintenance improvements) to a guest review. Now with FlipKey Alerts, FlipKey sends an alert message as soon as a negative review is submitted to help managers efficiently respond to negative reviews.
Benefits of FlipKey Alerts:
Immediate email notification of negative reviews
Direct link to the FlipKey Response tool to allow managers to post a public response to provide more context to the guest’s opinion
FlipKey customer service outreach within 48 hours if the review has not been responded to
Scrolling to the bottom of the page, we see the first review is not positive. However, the manager’s response highlights Carolina Mornings commitment to quality, responsiveness to guest feedback and counter opinion. Suddenly, when put into context this first review does not seem particularly negative and provides credibility to the four subsequent positive reviews.
If you are an existing FlipKey user or are considering using FlipKey and you have any questions regarding FlipKey Alerts, feel free to call us at 877-FLIPKEY.
Carrie Hill of Blizzard Internet Marketing recently wrote a great post highlighting some Do’s and Don’ts for responding to negative reviews online. Among other great tips, she encourages managers to acknowledge the problem or issue presented in the review and publicly respond, thus allowing future customers to see your proactive approach. (Read Carrie’s post in full here)
Your need to know. If your products or services are crap, then you need to know about it. It’s better to hear it from your customers-so you can fix it-than never know about it and wonder why your sales suck.
Build credibility. As Goodman points out, negative reviews add authenticity to your reputation. Consumers are smart-mostly-and they know that if you have 1000 customers, a few will be upset over something. Take a look at the hotel industry. Just about every hotel has a review that mentions dirty sheets, cockroaches, or rude staff. Yet we still stay in hotels. We just look for the ones that have the best overall reviews.
Fix the problem. Research suggests that a customer will tell ten people about a negative experience with a business. However, if you fix the problem to their satisfaction, they’ll tell twenty people how happy they are! Look for negative reviews and fix the problem!
Show you care. Potential customers look at how you handled the situation. If you do find yourself with a negative review or critique, rectifying the situation publicly will demonstrate to potential customers that you care about your reputation-and your customers.
Learn from competitors’ mistakes. Don’t just read your negative reviews, read those of your competitors. If you learn where your rivals keep slipping-up, you can fine-tune your offering to make sure you don’t make the same mistake. Better still, how about reaching out to an unhappy customer of one of your competitors and fixing their problem-you could win a new customer for life!
For vacation rental mangers, collecting verified guest reviews is an excellent first step, but more may be needed to solidify your company’s online reputation. The guest reviews you collect must be managed. Whether it be thanking a consumer for a great review or addressing a consumer who had a bad experience, the review and your response together will create an image of your company and the homes you represent to future consumers. Negative reviews should be seen as an opportunity rather than a nuisance. Companies that embrace this philosophy will instill confidence in potential guests. This confidence will lead to increased conversion rates, higher occupancy and the ability to charge higher nightly rates.
FlipKey is a vacation rental marketplace with more than 240,000 rentals around the world. Find the perfect place to stay for your trip, and get great value along with the space, privacy and amenities of home.