Discounted deals on last-minute bookings are more than just a passing trend. It's fast becoming a market with many entrants. But it's unlikely to alarm bigger players like Airbnb and Vrbo unwilling to compromise on brand and experiences.
In the era of slow travel and quicker planning, those who wait until late might win.
In 2022, the average daily rate in the U.S. was $25 higher for stays booked more than 14 days out than stays booked less than 14 days prior to arrival ($303 vs $277), according to Key Data, which provides short-term rental market data. In Europe, it was $5 higher ($157 vs $162).
That should explain the rising number of players and partnerships in this space — Among the latest is San Clemente-based last-minute online travel marketplace Getawaygogo, which charges a fee of $10 per discounted last-minute bookings paid by the property manager. The company announced a partnership with European vacation rental management company Happy Rentals, adding over 2500 properties across 11 countries to its platform. And in January this year, it was added to online channel management platform NextPax.
“We have enough data to show that in a downturn, people tend to keep plans flexible and make bookings closer to the arrival dates,” said Bradley den Dulk, founder of Getawaygogo. “This trend is also seen in emerging markets, where people wait until the last minute to book stays.”
Dulk, who sold his previous company Beachside Rentals to Vacasa in 2018, is confident that the trend of last-minute bookings is here to stay. Getawaygogo reflects this attitude where users can book stays only 14 days in advance. “This model allows us to offer deep discounts — sometimes up to 80 percent — without hidden fees. We don’t want to lose that position in the marketplace,” he said.
Getawaygogo is not alone in this game. Two-year-old San Francisco startup Whimstay claims to have doubled the number of property managers and tripled the number of properties listed on its site within a year. The company recently welcomed a new CEO and was added as a vacation rental partner to Google’s travel search, joining a host of other global platforms including Uplisting, BookingPal, and Bluetent in the U.S. and many more in Europe.
“Right now, we are more critical to our partners, facing a real pressure on occupancy and rising labor shortages and costs,” said Whimstay CEO David Weiss. “We have 15 times the number of bookings today compared to February last year.” Buoyed by this growth, Weiss said that his company plans to spend no money on paid marketing for the next 12 months.
Your Price or Mine?
This trend corroborates with property managers and owners. At London-based hospitality and property management company Altido, 30 percent of the bookings are made within a month of stay. While savings depend on the sort of inventory available, Altido CEO William Parry noted that it’s not unusual to see discounts of up to 60 percent on last-minute bookings.
Typically these bookings tend to be shorter stays, not very high in value and standard urban properties, where property owners and managers are looking to maximize occupancy.
“An unbooked night is zero income,” said Parry. “For property management companies that have taken out massive leases, every night that slips by is a massive loss. A lot of them can’t afford that – the economics have to stack up.”
Parry’s directive to his company this year is to focus on maximizing occupancy (revenue) and bottom line. “We will discount last-minute bookings with the caveat that variable costs such as cleaning fees are covered, he added.
In a study conducted by vacation rental data provider Transparent in collaboration with Getawaygogo, there is a 15 and 17 percent reduction in average daily rates for last minute reservations (14 days out) in Europe and the U.S. respectively.
Cut Below the Rest
For some property owners however, this isn’t a new trend, rather a tried and tested method to beat competition. Airbnb host Jim Haines, who has owned a vacation rental in Oxford Mississippi for the past seven years, has been offering rates as low as $19.99 (excluding cleaning fees) on unoccupied weeknights.
Haines prices his property $10 lower than competition one week out to fill unoccupied days. Despite having a lot of repeat customers who frequent the college town, Haines said that this year his projected income is half of what he made in 2022, and a quarter of his earnings in 2021.
“In the seven years that I’ve been a host, this is the least amount of bookings I’ve had,” Haines said. He also noted that so far he has bookings until June and nothing beyond, which is unusual in his experience. But he’s prepared to offer heavy discounts on any last-minute bookings that may appear on his calendar.
It’s worth noting that discounts on last-minute bookings depend on a number of factors including but not limited to seasonality, market and locations. For instance, AirDNA, analytics firm tracking the short-term rental markets found that the biggest savings are in midsize cities, where guests can save about 17 percent by booking two weeks in advance instead of six to 12 months in advance and in mountain/lake markets guests can save 13 percent by booking two-four weeks in advance instead of six to 12 months in advance.
Too Big to Notice
While this market is being shaped by players like Getawaygogo and Whimstay focused solely on offering discounted deals, it’s unclear if it will continue to remain an attractive incentive for many and all kinds of travelers.
“Urban markets tend to have short lead times, while fly to vacation markets tend to have much longer, larger and more expensive listings, and tend to book further out then smaller,” said Jeffery Breece, manager at revenue management platform Beyond Pricing.
During the pandemic short-term rentals were the only sector that actively grew despite global restrictions on travel. An AirDNA survey found that in Q1 2021, the average length of stay was 25 percent higher than pre-pandemic, attributed to longer stays in large and mid-sized cities.
At Airbnb, 24 percent of its nights booked were long-term stays (28 days or more), up from 14 percent in 2019.
Two years since, with global air travel showing signs of rebound, with remote work enabling the “the anywhere traveler” discover newer global destinations, and luxury hospitality reaching its peak, there are few incentives for bigger market players to lower prices.
And this is why some analysts don’t see a reason for bigger players like Airbnb and VRBO to be alarmed by these platforms yet – those going to Airbnb are looking for inventory (or experiences), not deals. Revenue management economics assert that it’s better to sell inventory at a reduced price than not at all. Be that as it may, for Airbnb the payoff for not compromising on prices might be higher.
It’s no wonder then that Airbnb is hitting play on its “Plus” and “Luxe” plans this year, showcasing its top quality and luxurious properties.
“Airbnb doesn’t want to teach the bad behavior of waiting until the last minute,” said Seth Borko, senior research analyst at Skift. “You cannot put it under the same brand. It’s like an outlet store — you don’t put Nordstrom Rack inventory in Nordstrom.”
Tags: airbnb, discounts, future of lodging, last-minute, online travel newsletter, vacation rentals, vrbo, whimstay
Photo credit: This loft-style flat next to Battersea Park in London, UK, was recently available as a featured apartment for rental by travelers on Altido, a short-term property management group owned by DoveVivo. Source: Altido.