Escapia Blog - Vacation Rental News and Trends

Vacation Rental Data Suggests that Hawaii Is On The Mend

By Bill Furlong, CEO



During our recent vacation rental breakfast seminars in Oahu and Maui, we presented a summary of vacation rental trends for bookings done in 2009.  The past 12 months have been rough ones in Hawaiian travel business.  More than anywhere else in the country, bookings have been incredibly slow in Hawaii since the country entered the recession.  A few of the takeaways from our recent analysis:

• Bookings have been on a steady recovery from the lows of early 2009.
• The recovery has been broad-based rather than narrow.  In other words, the steady improvement through the year isn't drive by a few management companies doing well.  It is a trend being felt by many of the companies in our survey.
• Most managers reduced rent in 2009 versus 2008.  Discounting accelerated as the year progressed, probably because more and more managers turned to pricing as a way to fill empty homes.  In July 2009, 93% of managers in our survey averaged a lower rent per booking than a year earlier.
• Lead times, which have shrunk in recent years, have shrunk even faster in the past 12 months.  The average booking lead time is up to 25% shorter than it was a year ago, averaging roughly 80-90 days.
• Weekend bookings appear to be smaller dollar value bookings.  And Monday and Tuesday appears to be when the long-range vacation planners book.

 The slides below have all the details.  In a few weeks, we'll be publishing our 3rd quarter 2009 vacation rental trends for the whole country.

Hawaii Vacation Rental Trends 2009

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Escapia Research Shows Last-Minute Rebound for Critical Summer Vacation Rental Bookings

Escapia® releases second quarter vacation rental market analysis packed with data on trends in the U.S. vacation rental market.

Call it a respite from the recession, a rebound or an early sign of economic recovery.  But whatever you call it, the 8% increase in June 2009 vacation rental bookings from a year ago is a welcome relief to managers weathering a very difficult economic climate.  The increase in June bookings is one of hundreds of statistics on vacation rental trends included in Escapia, Inc.’s (www.escapia.com) vacation rental industry market trends report for the second quarter of 2009.  The report is available for free download at Escapia’s web site at www.escapia.com/market_trends.html.

The trends report, the most detailed and broad-based analysis of vacation rental activity, is the second quarterly report released by Escapia, the #1 provider of web-based management and marketing solutions for vacation rental managers.  The report examines actual vacation rental booking data from hundreds of millions of dollars of annualized bookings across the nation. 

Topics addressed in the report include:

• Year-over year changes in total vacation rental bookings, showing the steady strengthening of bookings during the second quarter.
• Changes in the average vacation rental booking size and how the recession is impacting rental rates.
• The average length of stay for rentals and whether or not consumers are responding to the recession by shortening their vacations.
• The dramatic acceleration in the trend towards shorter booking lead times.
• Monthly cancellation rates and whether managers saw a surge in cancelled bookings during the financial crisis.

The Q2 market trends report is the second report released from Escapia’s vacation rental booking data this year and includes results both on a nation-wide and regional basis as well as comparisons to hotel results. 

“We received incredibly positive feedback on the first quarterly report we released in May,” said Bill Furlong, CEO of Escapia. “We heard from managers that providing information and analysis on the overall vacation rental market gives them much needed context when understanding their own business results and making the right business decisions in the current economic climate.  And travel industry analysts recognized the value of having reliable data on one of the most dynamic segments of the travel business. ”

Rates on the run: recession pushing down pricing

 

 By Bill Furlong, CEO

As you've seen in previous posts, booking dollars for vacation rental managers are down significantly in 2009.  We took a deeper dive into the numbers to see how much the decline is from a drop in dollars per booking instead of the number of bookings.

The first thing we looked at was the average booking size.  As you would expect, the dollars per booking have declined this year.

 

As the chart shows, average dollars per booking were just about flat in January and April and down in February and March. 

But the average booking size tells only part of the story.  So we looked next at average length of stay to see if guests are taking longer or shorter trips this year.

What we found was a mixed bag.  Bookings were longer in January and April, shorter in February and the same in March.

But what is interesting is what you see when you combine the two -- average dollars per booking and average length of stay -- to see what has happened to the average daily rate.

 

Now the picture looks a little more like you would expect.  Average daily rates are down a consistent 7-9% versus 2008 for each month so far this year.  So what we see is that a bit less than half of the decline in booking dollars so far this year is from a decline in rates with the remainder attributable to a decline in the number of bookings.

Up next...are lead times getting longer or shorter?

April regional booking data shows that guests are going South and West

By Bill Furlong, CEO

There have been a few shifts in which regions are faring relatively better and worse during the current recession.  Some of the trends are consistent -- particularly the challenges faced by managers in the Rockes and Hawaii and the relative success of managers in the south.  But what was good news for eastern agencies and bad news for western ones is now the reverse.

Remember that a few months ago, when we looked at the regional data, the west was down 21% year over year and the east was down 15%.  As the chart above shows, now the west is performing better than the east.

Up next...how has pricing been changing in recent months.

April Bookings Look a Little Stronger

By Bill Furlong, CEO

Bookings in April held close to the same year-over-year decline that we saw in March.  Dollars from April bookings were 14% lower than a year ago.

Looking at 12 months of results shows what a year it has been.  Booking dollars have declined in 11 of the past 12 months with 8 of the 12 months showing double-digit drops.

Does a 14% decline from a year ago sound about right to you? I’m willing to bet that for most of you, it doesn’t. That’s because the underlying data shows a remarkable range in results over the past year.  A 14% drop is the average; but what the typical agency is experiencing is all over the place. The chart below shows what percent of agencies are seeing results in a variety of ranges.

Instead of seeing a large number of agencies with results within a few points of the average, we see a wide range of results. Yes, a bit over a quarter of agencies see booking dollars down 25-50%. But your agency's results could be down even more or even up a lot.

To us, that demonstrates a few things:

1. First, the vacation rental management business has a diverse set of agencies pursuing different strategies and have widely varying results. This isn't a business where everyone is doing equally well or badly. The diversity of operating approaches is matched by the diversity of results.
2.  Second, there are ways to buck the trends and succeed in the current economic environment. It is worth noting that one-third of the agencies in our sample have managed to increasebooking dollars year-over-year. A quarter of all agencies have increased bookings by over 20% since last year. And as many agencies are up by 50% or more as are down by 50% or more.

Next up...what the results in April look like by region.

Escapia Research Releases Data-Rich Report Tracking Vacation Rental Market Trends

By Kris Lande, Product Marketing Manager

Escapia Research today released a comprehensive market trends report on the vacation rental industry, compiled from hundreds of thousands of vacation rentals bookings across the nation. The report details the state of the vacation rental industry for the first quarter of 2009, in particular as it relates to the current economic climate.

Topics addressed in the report include:

• What has been the percentage change in vacation rental bookings during the current recession?
• What regions of the country are doing better than others?
• How has the recession impacted fly-to compared to drive-to vacation rental markets?
• Are travelers reacting to the recession by booking closer to their travel date?
• What are the top sources of bookings for vacation rentals?

The data provided in the report helps vacation rental managers make business decisions based on real time information and industry trends.  This data is particularly helpful for vacation rental managers dealing with difficult economic times.  “I hear frequently from vacation rental managers looking for help putting their own business results into a broader context.  We’ve created the Escapia Research reports as a way for vacation rental managers to discover how their own experience compares to what is happening across tens of thousands of homes and hundreds of thousands of vacation rental bookings.  We are excited to empower vacation rental managers with this data to help guide their business decisions” said Bill Furlong, CEO of Escapia.

Escapia Research™ regularly publishes new reports on the vacation rental industry, vacation rental bookings and stays.  To download the latest reports, visit www.escapia.com/market_trends.html.

Double your bookings in a flash

By Bill Furlong, CEO

I spent some time this weekend looking for a vacation home in Austria for some friends who are planning a vacation (they apparently think I am their "personal shopper" when it comes to vacation rentals).  As I powered through a lot of vacation rental listings on Friday night, I could see a clear pattern about how I was making instant decisions -- filter as much as possible to get down to a manageable number of possible homes and then make instant decisions based on photos.  With hundreds of homes to look through, my brain was looking for three things: 1) are there enough photos, 2) does the place look nice and 3) is the photo quality decent?

Given that, I thought it would be interesting to go to the data and see if there is any corellation between the number of photos a unit has and the number of bookings a unit gets per year.  The results are a lot clearer than many of the photos you see for vacation homes!

 

So, are you interested in doubling your bookings per unit per year?  Well, then you might want to get out your camera (or even spring for a professional photographer).  As the chart above shows, vacation homes that have 0-4 pictures get less than half the bookings as those that have 20 or more photos.

Sure, getting those photos done is a hassle.  You have to drive all over the place.  You have to invest in some equipment.  You have to learn iPhoto or some other editing software.  Or you have to hire a photographer.  But think through the napkin math.  How much would it be worth to average 14.7 bookings per year instead of 6.4?  If you have 100 homes under management and get $1,400 on average per booking, then we're talking about $1.2 million of incremental booking revenue per year.  If you keep 25% of all booking revenue (including fees), then we're talking about $291k of incremental revenue to your agency.

How many agencies put the effort into having a lot of photos for each unit?  The top two categories above -- units with 15 or more photos -- represent 20% of all units in our sample.  At the bottom end, units with 4 or fewer photos also represent just over 20%.  Agencies with a fifth of the units out there have a clear opportunity to improve their listings and their bookings by increasing the number of photos.

Sure, photos alone might not drive your bookings per unit from 6.4 to 14.7.  But it is hard to argue with the clear corellation in the chart above.  If the reality is even a fraction of those numbers, investing in a large number of high quality photos is almost certainly worth it.  If you have any doubts, then spend next weekend shopping for a vacation home in some place you don't know like I did.  And stop to see how much you rely on the photos to narrow down from hundreds of options to a handful.  I think you'll find that your experience matches the results above. 

Escapia Research: Lead Times...Are They a-Changin' (or Not)?

By Bill Furlong, CEO

When you talk to any group of vacation rental managers about how the business has changed over the past few years, one theme you’ll regularly hear is that booking lead times are shrinking.  In the midst of this severe recession, we often hear that bookings are happening later than ever. We thought we would go to the data to see if that is really happening.

The first way we looked at the question was by analyzing February bookings to see if a higher proportion of them were for rentals happening sooner rather than later. The change in the timing of bookings from a year ago is less than some might think.

The chart above shows that 25% of bookings received by managers in February were for rentals with February arrival dates. A year ago, that percentage was 22%. So there was a small shift toward booking for trips taken in the same month. Is that 3% shift significant? On the one hand, it is a 14% increase (i.e. 3% as a percentage of 22%) in the share of February bookings that were for immediate trips. But still, going from 22% to 25% isn’t a dramatic change, and as the chart above shows, when including March the numbers shift back the other direction a bit.

So then we flipped the analysis around and looked at the timing of when bookings for rentals that had arrival dates in February occurred. This confirms the general conclusion above – there is a slight shift towards last minute bookings but not a dramatic change.

As the chart above shows, in 2009 31% of February rentals were booked in February; a year ago that number was 29%. But expand that to January and the year-over-year numbers are the same with 62% of February rentals being booked in either January or February both in 2008 and 2009.

Looking at the chart below, you can see how the economic crisis impacted the pace of bookings.

The dark area in the chart above shows how bookings for February 2008 arrivals built over the course of the 12 months preceding that date. The yellow line shows the same number for February 2009 rentals. As you can see, bookings for February rentals were actually doing slightly better for 2009 rentals than 2008 rentals until October. As we all know, the financial crisis kicked into high gear in October, and as the chart above shows, the bookings for February arrivals began to suffer.

While we like to think that travelers were just waiting to book until the last minute, what we see really is that bookings did not recover in the first two months of the year and in fact continued to slide, resulting in February 2009 arrivals 13% lower than the year before.

Escapia Research: February Bookings Show What a Difference a Year Makes

By Bill Furlong, CEO

Can you remember what it was like a year ago? It seems like a lifetime ago to most of us. From the perspective of vacation rental bookings, it was a lifetime ago. Last February was the last month in the past year with very strong year-over-year increases in vacation rental bookings -- an 18% increase in February 2008 over the year before. What a difference a year makes. Escapia Research just completed our analysis of monthly bookings for February 2009 and found that overall people continue to react the the recession by putting off vacation plans. As the chart below shows, February 2009 bookings for vacation homes in our sample were down 25% compared to a year ago.

 

Looking at the regional results (booking dollar % change from February 2008) shows a few changes from last month:

• Hawaii -43%: A significant drop off versus where they were last month (-22% year over year).
• East -38%: Also a big drop from last month. In January, vacation rentals in the East seemed to be doing relatively well ("relative" meaning down less than 20%).
• Rockies -29%: A bit of improvement for rentals in the Rockies. Last month they were looking at a year over year decline of just under 40%.
• West -23%: No change over the January results.
• South -17%: Just about the same as last month, and still the region where the impact of the recession seems least severe. Only in 2009 could someone look at a 17% drop in bookings and feel relieved that it could be worse!

Escapia Research: Bookings go south (but less in the South).

by Bill Furlong, CEO

The decline in vacation rental bookings in January did not make itself felt evenly across the country.  While agencies from Cape Cod to Kauai all saw declines in January, the trend was clear -- being west of the Mississippi wasn't good for business.

The results, of course, are also consistent with our earlier analysis on the relative softness of "fly-to" and "drive-to" destinations.  With more western agencies relying on plane rather than car travel, it's no surprise that they felt the greatest pain.  Still, the sharpness of the decline -- particularly for rental agencies in the Rockies -- was dramatic.  As the chart above indicates, rentals in the Rockies trended down by just under 40% versus a year ago.

Surprisingly, the data shows that Hawaii agencies overall had the lowest decline in average dollars per booking.  Digging into the data suggests that the story isn't quite that clear.  Many agencies did have a big drop in their take per booking.  But some of the agencies with particularly high rates held their own in the period, pulling up the overall average.