As we close the chapter on the last decade it is important that we take a look back in order to view the road ahead. Although many events have taken place this past decade, I will keep this focused on two major events that redefined our industry, Homeaway Acquiring VRBO (2011) and Expedia Acquisition of HomeAway (2015). Here is the impact it will have on the coming decade and how these lessons will help us become more empowered going forward.
THE PERFECT PROPERTY MANAGEMENT SYSTEM DOES NOT EXIST
Let’s start with acknowledging that no software system is perfect. For those scrambling to find an alternative to V12, there are plenty of good alternatives in the market. Before embarking on the task of evaluating your next PMS move, take the time to figure out what your goals for the business are. The goals and needs for a startup vs. established companies are vastly different. Understanding the above will set you on the right path for success.
PMS Systems are designed to keep you “sticky”. The time and strain of switching systems is built into these models. Those of you that have had to switch from Property Plus to V12 two years ago are about to experience another level of disruption to your business. This disruption is draining, it’s taxing and it’s the new normal if you don’t plan for the long term.
If you are in the “enterprise” category you can either attempt to roll your own or build functions outside of your infrastructure to remain competitive. If you are a PM with 300 properties and below this may not be cost effective for you.
WE CAN ASK BETTER QUESTIONS
The recent capital flowing into the industry is targeting property management systems and other services that serve the vacation rental professional community. For our business, whenever we consider adding any technology to our infrastructure we make certain to understand the trade-offs, as there are always trade-offs. As one example, if you have engaged a website team to build/update your site, ask them about the integrations they have with OTAs and what data is being shared. Are they being compensated for your direct bookings or just the ones through the OTA? You have made investments over the years in your content, images, etc. You have every right to ask how your efforts are being monetized.
Understanding how your vendors are funded is important to set your strategy on what can be accomplished during the relationship. If they have taken in venture capital or private equity, they have made the choice to “exit” the business in a 3-5 year horizon. Hopefully, they exit successfully, just understand your data is tied to that exit. This is not a negative on these types of businesses, just something you should be hyper aware of so you benefit on the exit as well.
Keeping your business modular makes your decision much easier.
THE FUTURE IS MODULAR
As independent brands, you must understand that the more flexibility you give your business, the better you are positioned for future changes. “Future proofing” your infrastructure should be a priority. Make no mistake, the adjustments will not be easy. However, not making them will be costly to your business both now and at the point of exit. There are plenty of tools in the market to help you grow your business. In my humble opinion, many are too early and still don’t understand what motivates the guest or the PM’s. Whether just starting out or an established PM, If you misinterpret the data it could be costly. The benefits of being modular allows you to view your business objectively and make investments based on your facts, not what a third party thinks you need.
HOSPITALITY IS THE CORE OF YOUR BUSINESS
We are just getting over the hangover of the past few years, and the insanity continues with the latest rounds of capital and acquisitions. We are the pie and everyone wants a bite. If we have learned anything over the years, it is that trusting your process is what ensures long-term viability. If you are reading this article, you are either an established, successful company navigating your way through the chaos; a company dependent on the OTAs for your survival and looking to change; or an up-and-coming company looking to learn from history.
For our vacation rental business, there is one true north that has allowed us to continue to make business decisions quickly as market conditions change. We never allowed “all-in-one” systems to take over our business. We view our property management system as part of our technology set, not the most indispensable part of our business. We favor technologies that allow us to manage and optimize our guest marketing and operational data. Technology is an enabler and not a differentiator when it comes to delivering on guest excellence. If you are a branded independent vacation rental professional, stay flexible and don't get locked into technology that does not serve your long term interest.
THE FUTURE IS BRIGHT!
The growth of HomeAway/VRBO, Airbnb and the capital infusions into our industry have lifted the demand to heights never imagined ten years ago. This kind of demand has brought challenges as well (regulatory, airbnb etc). What is undeniable is that the vacation rental industry does not have a demand problem, it has a supply issue that will remain a challenge and presents a golden opportunity for those that have worked hard to build respected brands in their local communities.
One of the trends we see is the movement towards #BookDirect The travelers are getting wiser to the fees and the lack of transparency, which leads to travelers frustrations and the high abandonment rates that continue to be a drag on the OTA’s. Independent brands have a great opportunity to fill the vacuum of frustrated travelers looking for our quality services.