COVID-19 has sent the hospitality industry into a state of flux. With flights grounded, bookings cancelled and employees laid off, travel is on pause. The pandemic has left many short-term rental companies concerned about their survival. To ease concerns, we reached out to some of the industry’s lead experts for insight. We asked them about how the hospitality industry is responding to COVID-19 and what the future may hold.
The future of hospitality events
The spread of COVID-19 has caused the cancellation or postponement of the world’s largest hospitality events and conferences—everything from the Trip Circus to the VRMA Spring Forum. Along with being major revenue generators for short-term rentals, these events provide networking opportunities that allow property managers to air problems and find solutions. As key resources, these events are needed now more than ever as some property managers face the possibility of bankruptcy.
One of the events that’s been affected is Short-Term Rental Legends (STR Legends), an educational retreat co-founded by Eric Moeller in January 2019. The goal of the event is to gather the industry’s most ambitious operators for an expert knowledge exchange. This year, the event was supposed to take place in San Diego, Calif. from May 14-18. Eric, however, has had to pivot, moving the event 100% online. “It’s pretty devastating,” he says.
STR Legends is one of many events that are quickly regrouping to bring clients a different type of value proposition. The Trip Circus, a global conference for hotels and short-term rentals, has cancelled this year’s event only to put all of their efforts into making next year bigger and better. Other companies, such as Guesty and Rentals United, have recognized the loss of networking events and are devoting their efforts to pushing out educational content through blogs and webinars.
Eric is also taking this approach, shifting his attention to educational material. “We have a community called the Short-Term Rental Profit Academy Inner Circle,” he says. This online community of operators is provided with weekly training, content and resources, much of which is currently aimed at how to be profitable during the pandemic.
These kinds of online events and resources will likely be in place for the foreseeable future. The virtual event hosting platform Hopin saw its client list grow from 10,000 to over 100,000 after the pandemic hit, with no signs of slowing down. Eric is still optimistic that in-person events will eventually return, but he says there will only be a fraction of the number there once were. “I don’t think we’re going to see as many events as we did in 2018 and 2019,” he says. “And I don’t think they’re going to be as big as what they were either.”
Uniting short-term rental operators
When Dave Krauss, founder of Rent Responsibly, surveys the current hospitality landscape, he sees a fragmented front. “The left hand has a solution and the right hand has a problem,” he says, referring to the lack of communication between property managers. “We need to make sure that the left hand is talking to the right hand.” Like hotels or airlines, short-term rentals need to lean into their associations and governing bodies to provide resources and guidelines.
The lack of coherence is what allows illegal operators to take advantage of the system, giving short-term rentals a bad reputation. These issues have become augmented since the outbreak of COVID-19, including a spike in fraudsters trying to take advantage of operators desperate for bookings. As a result, regulators turn to limiting the types of guests short-term rentals can accept, and some buildings have gone as far as shutting down short-term rentals entirely. “In the time of COVID-19, we must step up to the challenges and take the lead on issues important to the moment. Short-term rentals are providing an essential housing option and we should be proud,” Krauss says.
Previously, hospitality events and conferences served as a forum for industry professionals to address these kinds of issues and craft a coherent message as a collective community. But with events being cancelled, many operators are feeling rudderless, unsure what kind of rights they have and how to address these shut downs.
That’s where Rent Responsibly comes in. They work with short-term rental stakeholders to help organize advocacy efforts. Dave argues that if short-term rentals unite under a cohesive front, they will bounce back faster from the pandemic.
“When we get to rebuilding our economy, and travel and tourism slowly comes back, people will be able to vote with their dollars,” he says, specifically when choosing their type of accommodation. “If we can make those travelers more aware of the value of short-term rentals and feel comfortable with the fact that short-term rentals have a high standard of cleaning and standard of hospitality and standard of care, then we should succeed beyond all measure.”
When will short-term rentals bounce back?
“I am a strong believer that vacation rentals will be the first vertical in the tourism industry to bounce back,” says Simon Lehmann, the CEO of AJL Consulting, a leading consultancy firm in the online vacation and travel industry. “We’ve seen that in any crisis,” he continues. “911, SARS, you name it. Vacation rentals always bounce back the fastest and they bounce back domestically.”
One of the first things people will do when travel restrictions are lifted is book local vacation rentals. “Once you’ve been locked up in your apartment for six to eight weeks, the first thing you want to do is get out,” Lehmann says. “But you don’t want to go in a hotel, you don’t want to go on a plane, you definitely don’t want to go on a cruise ship, so where do you go? You go to another home where you can be away and be with close relations.”
These will likely be seasonal vacation spots, such as the Hamptons and Napa Valley, which are used to surviving the slow seasons. The urban market, on the other hand, operates all year round at 70 to 80% occupancy with lower margins. They’re less likely to have weathered the pandemic successfully, and people won’t be looking to travel to urban centres any time soon.
“It’s clear,” Lehmann says, “that we will not have international travellers for 12 months.” He points to the European Union as an example. “A German this year will definitely not go to Spain on vacation. There’s no chance Spain will have recovered enough by then to be safe. And if you did go, then you come back from Spain on your summer vacation and the government will tell you, ‘It was nice you went on two weeks for summer vacation, but now you have to spend two weeks in quarantine,’” he says. “People will stay at home and do vacation rentals in their own country.”
Keeping the conversation going
During these uncertain times, it’s imperative that property managers continue to communicate. Having conversations with the right people can open the door to new opportunities and provide necessary solutions. They also allow us to stay connected, crafting coherent regulations and messaging around how we want to be viewed as an industry.
For more information on weathering COVID-19, check out our other blog where these leading experts provide advice for struggling operators.
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