COVID-19 And What It Means For Vacation Rentals

There are two types of places in the world: 

1. Those impacted by COVID-19/Coronavirus

2. Those who will be impacted by COVID-19/Coronavirus 

The point being that even if you are lucky enough to have avoided the negative consequences of the global hysteria surrounding this new potential pandemic so far, it is only a matter of time before you will be impacted as well.

Let’s start with what we know. People are traveling less. Airlines are cancelling flights, and projected to lose more than $100 Billion this year due to the virus. Conferences are being cancelled on a daily basis. These last minute cancellations impact airlines, hotels, and of course short-term rentals, as well as the local economies scheduled to host said conferences. 

As an industry, we have seen dips in demand before. There have been recessionary periods where people feeling less flush cut back on discretionary spending, and travel is one of the first to go. We have also been hit by “black swan” events like September 11th, when global travel took a hit for a prolonged period.

 In almost every instance, the short-term rental industry has been fortunate to be insulated from some of the most negative consequences of these down periods. Even as people cut back on spending on travel, they looked for more economic ways to do so. It is no accident that Airbnb and Vacasa both started in the shadows of the 2008 recession. People were booking fewer hotels, but they still wanted a break when they could find one. Alternative accommodations provided a great option.

 The same was largely true after September 11th. While fly-to destinations were no doubt heavily impacted by the decrease in travel after the terrorist attacks, drive-to destinations were able to capture some shifted traveler demand. This softened the blow of lower spending on travel generally.

It is still early days, but COVID-19 appears to be different. While the number of reported cases and deaths remains tiny when compared to the seasonal flu we manage to cope with each year, the fear and the response thus far shows we are dealing with something new. As a vacation rental manager, what are you left to do when bookings plummet, cancellations spike, and there is no end in sight?

 At Rented.com our job is to help managers make more from their homes. We have no panacea for COVID-19, but we have been wracking our brains for how we can help. Below are some of our ideas, and rather than share them only with our clients, we wanted to make them available to anyone and everyone who might be interested. I would also encourage you to PLEASE weigh in in the comments section with any additional ideas you have and/or are testing out. We are in this together. Together we can make it through stronger. 

Stimulate Demand 

As Rented.com Partner Success Manager (and former vacation rental Property Manager) Kristin Goulet has said:

“Working in this industry during the last recession showed me that people will always travel…inventory just needs to be priced right to capture the super limited demand. I’d argue that in the event the corona virus epidemic does start to really impact domestic travel, managers need effective and hands-on pricing and revenue management more than ever in order to effectively capture the limited demand. Travelers will be avoiding cruise ships and hotels rather than stand-alone vacation rentals homes, I think. It’s a matter of when, not if, corona starts impacting the local communities.”

Pricing is certainly critical. It is not that there is zero demand. For the right price, people will book. Even as scary as cruises may seem to some, I was recently with a bunch of friends who were busy booking $40 cruises. At that price, they felt they couldn’t afford not to book a cruise!

At the same time, it must also be about more than price. Dynamic pricing is a component, but there is far more to robust Revenue Management. As Rented.com Senior Revenue Manager, Valerie Clagett, shared:

Atlanta is one I'm watching closely because the NCAA tournament is supposed to be held there in just a few weeks. If the NCAA makes changes to how those games are run it'll have a huge impact. It's something I've been talking about with all of my clients to let them know we're aware and that we're watching. All of that said, there is still going to be some demand out there, some people are taking advantage of lower costs because of this and if we're priced right we could pick that up. One of my clients [on a lake 30 minutes drive from a big metro area] mentioned they thought they might actually see a bit of an upswing from people trying to get out of the city or people coming to the remote lake instead of going to a resort or hotel. While there's no data to support that yet, those are the kinds of things I'm watching on my end. 

So what, aside from pricing can you do to stimulate demand and grow your revenue in these uncertain times? One suggestion is a marketing campaign to past guests. An example would be something that incorporates the following points:

1. You likely just had a conference and/or work trip cancelled, so have some unexpected “free time” on your calendar.

2. Airlines are providing steep discounts to encourage people to fly.

3. Our area (if true) has had 0 reported cases of COVID-10/Coronavirus Virus – we may be safer than staying home.

4. Why not take a break from it all? Book now for this special deal.

The specifics may vary, but the point being that you do not have to passively sit by as the world crumbles around you. Can you build a better world for your business and your market? 

What if there is Coronavirus in my area?

The sad reality is there are many out there, and likely to be more soon, whose local market has been hit with COVID-19/Coronavirus. In such a situation what can and should you do? Again, we would encourage you not to sit passively by and cross your fingers hoping for things to change. Even if people are unable and/or unwilling to travel for business or leisure to your destination, are there others who might need to come?

One example would be family members of those personally impacted by the virus. They might need to come visit and take care of loved ones. When they do, they might need a place to stay. Could you provide discounted and/or donated accommodations to these travelers as a potential tax write-off or goodwill gesture?

Conclusion

There is no way to avoid being impacted by COVID-19/Coronavirus at this stage. What it comes down to is making the best out of a bad situation. It will take creative thinking, but that’s part of the fun. 

Offered here are just a few ideas. We would love to start a more robust conversation about others you might have and would be willing to share. Let’s work through this together!