At the start of the new millennium, a new type of accommodation was born, and within a couple of decades this new form of accommodation called “vacation rentals” changed the dynamics of vacation stay and has brought a new dimension to the hospitality industry. Vacation rental platforms such as Airbnb, VRBO, HolidayKeepers, and Booking.com become increasingly popular and are some of the major platforms allowing people to list their vacation homes for a better return on their investment.
So, why are vacation rentals becoming so popular, and are vacation rentals really outperforming traditional stay like hotels? In this blog, we will try to analyze and bring forth some relevant statistics that will shed some light on the existing and future trends in the hospitality industry.
How and Where It All Started?
Vacation rentals have been around for centuries, but the version of modern-day vacation rentals became famous during the second world war in Europe. A vacation system called “Vacation Home Sharing” became popular wherein European families would purchase a vacation home jointly. They rotate every season so that every family would be able to enjoy the vacation. In the 1950’s the concept of vacation home rentals began to appear in the USA, and the listings were placed in the newspapers.
After the advent of the internet, the new-age vacation rental was born that offered vacationers a variety of homes that were managed by owners.
Why is the Once Thriving Hotel Industry Lagging Behind?
There are several factors that played critical roles in the hotel industry’s abysmal performance in the recent past and it seems to be continued in the future. Here are some of the major reasons why the hotel industry is lagging behind vacation rentals.
Location
Unlike hotels, most vacation rental homes are situated in desirable locations, surrounded by wonders of nature like lakes, forests, rivers, mountains, etc. offering a more relaxed and comfortable atmosphere. Plus, more often than not, these vacation rentals are located near major tourist attractions. Whereas, hotels are slightly out of town and attractions, making it difficult for the guests to visit without paying extra for cabs or other means of transport.
Privacy & Space
Booking vacation rentals ensure privacy, meaning the chances of you running into other guests or sharing a common space is impossible. On the other hand, in hotels, you will always get disturbed by the frequent movements of others. Space is another aspect that hotels simply can’t match what vacation rentals have to offer. Vacation rentals come in varying sizes and shapes, allowing guests to select according to their requirements, whereas in hotels you have to cram yourself.
Affordability
We usually take a break from city life to relax and enjoy time with our loved ones, which also means not stressing out about going over budget. A day or two in a hotel costs far more than what you will be paying for a vacation rental stay, especially when you factor in other costs which include but are not limited to food, transportation, and other amenities. Booking a vacation rental also allows guests to prepare their own food, as all the vacation rental homes are equipped with a fully functional kitchenette, thus avoiding unwanted costs on food & travel.
Amenities
Hotels do offer fun amenities like pools and hot tubs, however, having a private pool, hot tubs, and many other luxurious amenities like a fireplace, mini bar, private theater, and a game room can only be experienced in vacation rentals. Plus, if you are a pet lover, then leaving your pet at home is difficult, but luckily vacation rentals are pet-friendly too.
Lack of Guest Experience
A definite lack of guest experience and personal touch is visible in most hotels, on the other hand in a vacation rental home direct involvement of the owners provides a personal touch that makes things smoother for everyone involved.
Vacation Rental Growth
According to Grandviewresearch.com, the vacation rental market share is expected to reach $82.63 billion by the year-end, and by 2030 it is expected to reach $119 billion. So, what are the factors helping vacation rentals’ rapid growth?
Other than the aforementioned features, one of the key factors of this rapid growth we are witnessing in the vacation rental business is the growing tourism Industry. We have almost completed three years of the Covid-19 Pandemic, and tourism is slowly coming back to the pre-pandemic level, consequently, most countries have opened up and this has increased the demand for unique vacation destinations. An increase in the number of tourists led to the high demand for vacation rental homes.
Here are a few statistics that might help you understand the intensity of the growth in the vacation rental industry.
- The vacation rental Industry’s market value increased by more than 22% from 2020 to 2021.
- The rate at which the vacation rentals were booked increased by 240% from 2011-2021.
- The expected compound annual growth rate from 2022 to 2026 stands at 8.49%
- Globally, 86% of guests plan to book vacation rentals sometime in 2022
- 23% of Americans are already engaged in the vacation rental platform.
Travel Trend of Generation
When it comes to adventure and unique travel experiences, it is true that millennials account for a major share of online booking. However, are they the only ones on this list? Let’s find the travel trend of each generation.
Baby Boomer (1946-1964)
Though the oldest member on the list, they still believe in an offline mode of booking. But, most baby Boomers want to try an adventurous trip. According to stats available, on average they spend $6000 annually on travel. Though they are more inclined towards hotels for accommodation, however, this trend is slowly changing. According to iPropertyManagement, only 6% of baby boomers preferred vacation rentals, however, this number will likely increase in the future, mainly because boomers love spending time with family and friends. According to another survey conducted by Tripping.com, multigenerational travel is a major trend today, so this will most likely increase the percentage of baby boomers opting for vacation rentals over hotels.
Gen X (1965- 1980)
They take the fewest vacation in comparison to the other two generations due to many factors, such as busy schedules, bearing many expenses, etc. However, the silver lining is that they prefer family vacations over solo travel. Also, budget is another factor that influences their decision, making them more suitable for vacation rentals than hotels. According to iPropertyManagement, 9% of Gen X prefer vacation rental homes.
Millennial (1981-1996)
Vacation rental market is majorly driven by millennials. According to data by Copyrise, close to 200,000 million global tourists are millennials and they spend around $180 billion on travel annually. As per the data from Airbnb, 60% of bookings are done by millennials on the Airbnb platform.
Conclusion
The future of hotel accommodation looks bleak due to several mentioned and not mentioned reasons, however, on the other side vacation rentals are growing rapidly and the future of the vacation rental business seems promising. If you are planning to enter into vacation rentals, then now is the right time to invest. List your second home with HolidayKeepers for the best returns on your investment.
