Professionalizing Short-Term Rental Sector Offers New Opportunities: New Skift Research

The short-term and vacation rental industry has been professionalizing for some years now. This means that we increasingly see rentals being operated by professional managers, while the share of small hosts going at it alone is decreasing. It appears the pandemic is further speeding up this process.

In our recent report Impact of COVID-19 on the Short-Term Rental Market we size the short-term rental booking landscape, and provide our estimates for the size of bookings made through the five largest platforms. We also discuss the impacts of a professionalizing sector, and highlight how the property management tech landscape, which has seen considerable investment in the past years, is changing as a result of a stronger demand for professional tech.

The professionalization not only means growing opportunities for tech providers, it also means that the sector as a whole becomes more mainstream and is attracting more interest from travelers and booking platforms which before might not have seen rentals as a viable option. In the report we highlight two key growth areas which have opened up as a result of the continued professionalization: transient business travel, and global distribution system (GDS) connectivity.

Business travel remains on its knees, and while it might never return to pre-pandemic levels, we are bullish that it will come back in large parts. As more transient business travelers have experienced rentals during the past year, and businesses will be more open to offer it to their employees as an alternative to hotels, our conservative estimates show that this might open up an $8 billion market for short-term rental operators to tap in to.

Changes in channel distribution form another opportunity. Global distribution systems (GDS) form an important part of many hotels’ room sales, where most travel agency and corporate travel bookings come through a GDS. So far GDSes have focused predominantly on hotel inventory, but we have heard of negotiations to add more rentals on their systems, to increase the ability of travel agents and corporate travel bookers to offer rentals to their clients.

Again, we have provided a conservative estimate to size this opportunity. If rentals could take 5 percent of the estimated hotel bookings made through GDSs, this would provide a $2.4 billion opportunity.

Impact of COVID-19 on the Short-Term Rental Market

Short-term or vacation rentals are being touted as the winners of the pandemic, and in many ways the sector is taking big steps to becoming mainstream. But losers are emerging, too, and the impact of the pandemic will reverberate for years to come.

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