Ad Firms Migrate From Hotels to Alternative Lodging Along With Consumers During Pandemic

Consumer interest in short-term rental apartments and vacation rental homes sped up during the pandemic. For instance, about 40 percent of Booking.com’s new reservations in the second quarter were for alternative accommodations. So the tech firms that have provided software tools to hotels to help with distribution and marketing are now branching out to cover the emerging segment, too.

A case in point is Koddi, an advertising technology company focused on hotels, which revealed to Skift on Thursday that it was expanding its services to reach owners of alternative accommodations, specifically operators managing more than 50 properties.

It’s not new that short-term rentals appear on travel price-comparison search engines like Google, Tripadvisor, and Trivago. Skift has reported for years on the saga of Airbnb and Booking.com appearing and then disappearing from Google’s results, for example.

Yet hotel owners remain more advanced at optimizing their marketing budgets than managers of vacation rentals because they have a multi-year head start.

Koddi, based in Dallas-Fort Worth, aims to help vacation rental managers spend their marketing budgets on travel price-comparison platforms more cost-effectively.

Some problems in optimizing the marketing for vacation and short-term rentals differ from those for marketing hotels.

“On the marketing side, sometimes you’re paying attention to 10 times as many variables for rentals as for hotels,” said Nicholas Ward, president and co-founder of Koddi.

One challenge is how to decide what other properties are in a vacation rental’s competitive set. The mathematical modeling for that doesn’t carry over from the less-fragmented hotel world.

Booking patterns, such as the mix of reservations made far in advance and those placed at the last-minute, can vary a lot between rentals and hotels, too.

“These problems can be tough because the logic you use to make recommendations is going to be radically different,” Ward said.

The complexity mounts. Metasearch brands have pretty much settled on how they display hotels, but they’re still experimenting with how they display alternative accommodations. Marketers have to race to keep pace with frequent updates as a result.

In some ways, vacation rental management companies are taking the same journey hotel companies took 7 to 10 years ago. The tools hoteliers used a decade ago to connect for online distribution, called channel managers, were clunky. Today, the similar tools that vacation rental management companies are using are glitchy. A property’s inventory may not appear correctly or else may appear on different sites at different prices or with inconsistent availability, mainly because of lousy tech.

Today’s strategic decisions for rental management companies also have echos with past ones made by hotel companies in the past.

“Several years ago, we were having conversations with hoteliers who were trying to figure out if being on Google and metasearch was good for them or bad for them,” Ward said. “Now, many of the vacation rental brands or aggregators who are marketing hundreds or thousands of properties are having the same questions.”

One of Koddi’s offerings is an enterprise service that aims to help vacation rental management companies figure out where they should spend their next dollar on metasearch for the greatest revenue gain.

“The dynamics among publishers like Google, Tripadvisor, and Trivago change back-and-forth all the time, and this sits on autopilot,” Ward said.

Rentals Tech Playing Catch-up

The short-term and vacation rental sector doesn’t have robust revenue management software the way the hotel industry does. This point was underlined at the Vacation Rental Data and Revenue Management Conference held online last week.

The sector has several pricing tools, such as Beyond Pricing and Wheelhouse, and these automation services can give a boost over rule-of-thumb rate setting. But, to squeeze out more gains, revenue management tech needs to get woven into all parts of data collection at property management companies, experts said.

“The fundamental difference between hotels and rentals is incorporating the different owner contracts and expectations,” said Cara Goodrich, the vice president of sales and revenue development at Castle Hospitality Group in Hawaii, at the conference.

“For example, the typical hotel will have one or two major owners and maybe an asset manager to communicate with and get direction on for revenue management,” Goodrich said. But vacation rental companies may have contracts with a large number of property owners with varying expectations and levels of sophistication.

Koddi sends data on demand for properties that vacation rental managers can feed into their pricing tools, helping them fetch top rates for their units.

Koddi’s offering at launch has some gaps. It doesn’t work yet with HomeToGo or Holidu, which are probably the most-visited metasearch brands focused on rentals.

But as a start for taming the data monster, new tools from Koddi and others may help vacation rental management companies make the most of the travel recovery.

Rental managers have a chance to avoid mistakes hoteliers have made, too.

“The pandemic has demonstrated that we can turn forecasting into an obsession that gets in the way of strategizing,” said Kelly McGuire, managing principal of hospitality for ZS during a conference session. “The cautionary tale for vacation rentals is that I’ve seen hotel revenue managers get so obsessed with the forecast, teaching their owners and leadership to obsess over the forecast, that they forget that the point is to set a strategy and execute against the strategy.”

That lesson can apply to online distribution planning, too.