SUMMER RENTALS
Internet changes the game
Erica Hagen swears by Airbnb. “With the kids, it’s a lot better than a hotel; I’ve become a convert,” she says of the website and app that allow users to rent rooms or entire homes in thousands of places. But last summer, while searching online for a beach house for a family vacation, she somehow found her way to Vacation Rental By Owner.
“I probably looked at Airbnb first, but there was very little left by spring. I’d heard of VRBO, and there were more options there.” She wound up renting a house on VRBO, and this year, she’s renting a new beach house from the site.
Renters seeking vacation homes used to rely on glossy brochures at real estate offices in vacation towns. VRBO shook up the industry in 1995, creating a platform on which homeowners and property managers could list a property available for rent. Gradually, VRBO grew and was acquired by Homeaway, which also purchased other vacation rental sites.
“There was a common theme from the beginning to today: Vacation rentals offered a great product,” says Matt Landau, founder of the Vacation Rental Marketing Blog. “More space, more privacy and a better value than a hotel.”
But not everyone knew about them. Enter Airbnb in 2008. A lot of Americans, it turned out, were enthusiastic about paying less than they would at a hotel for a space with personality and kitchen access. According to a 2016 Goldman Sachs survey, consumers who hadn’t tried Airbnb preferred a traditional hotel, but after staying in an Airbnb unit, a majority said they wouldn’t go back to a hotel.
“That was a big tipping point,” Landau said of Airbnb’s launch. “Airbnb is this wonderful gateway — everyone recognizes it, it’s increasingly accessible, with a supereasy interface.”
The site took off — as did the number of vacation rentals globally. According to a study by the Britain-based IBISWorld, the vacation rental industry grew by 3.6 per cent annually between 2011 and 2016, with a particular jump during the last two years. In some resort areas, investors are developing buildings specifically to lease them out as short-term rentals.
The number of websites catering to the industry also has grown. Airbnb makes up only a fraction of those short-term rentals; others include TripAdvisor (which has several global affiliates), Booking. com and many smaller sites.
But there’s a key difference between Airbnb and sites such as VRBO or TripAdvisor. Airbnb hosts tend to view renting their homes out as a side gig, whereas those who advertise on the other sites often treat the homes as businesses, complete with marketing plans and accounting systems. And that difference in seriousness is often obvious in the style of the unit.
“They were more like corporate apartments — more generic,” Virginia resident Eva Markowitz says of her experience in a couple of TripAdvisor units she rented in Europe. “There’s a printout with the Wi-Fi code, and nothing about nearby restaurants. The special touches were missing.”
Contrast that with Atieno Bird’s property in Crozet, Va. She and her husband regularly rent out their one-bedroom carriage house, and sometimes their three-bedroom farmhouse, on Airbnb. “We have my kids’ art on the walls. We might leave local produce and one of the local wines or ciders (for guests),” Bird said. And renters respond well to the personal touches, she said: “They know it’s your home.”
That sense of personality or quirkiness is something users enjoy about Airbnb units, and Landau said it’s a big challenge for the more professional property owners and managers to match. “How does the industry grow and preserve that funkiness, while standardizing it and building something predictable?” he asks.
The industry views that esthetic issue as a challenge, but there’s also a distinct downside to having hitched its star to Airbnb: local regulations. A lot of new legislation in municipalities across the U.S. aims to limit short-term rentals to primary residences. If the unit in question is a second home or investment property, it frequently can’t be rented for a short period. What that means is that “amateur” hosts who use Airbnb have wound up being less affected than the more professional property owners and managers.
Over the past few years, city after city has sought to limit the number of short-term rentals that can operate in their municipality. New York, Los Angeles, San Francisco, Seattle and even typical tourist destinations such as Asheville, N.C., and the town of South Lake Tahoe, Calif., have crafted legislation to reduce Airbnb listings.
Most of those efforts have been driven by residents’ concerns over local affordable housing shortages exacerbated by Airbnb or, as in the case of Ocean City, Md., residents’ complaints about noise and crime, according to the Coastal Association of Realtors.
And that’s caused considerable uncertainty in the market, says Amy Hinote, founder of VRM Intel, a news site covering professionally managed vacation properties.
“No one wants to sit on an investment property if they think they can’t rent it or won’t be able to in a year,” she said.