Vacation Rental Marketing Blog
Shares
 

Property Management Is Dead As We Knew It

Shares

​B. Joseph Pine II

The Experience Economy (1999)

quote-left

​“Commoditized…Differentiation disappears, margins fall through the floor, and customers buy solely on the basis of price, price, price.” ​

It’s an undeniable fact that over the last five years, the vacation rental industry as a whole has experienced the most radical evolutionary shift since it’s inception.

For the first time in history the vacation rental industry has a top-of-mind position for travelers of all demographics, thanks in large part to the heroic efforts of companies like AirBnB and HomeAway/VRBO.

An increasing majority of properties are instantly bookable online, consumer mediated (via the review system), e-commerce based, and a “first option” consideration for travelers — a much needed progression for this young/old industry. But despite all these incredible evolutionary steps in the industry, the core offering has largely remained unchanged: the property.

For property managers, their core offering has not been the property however. Their core offering through history has been the service of helping guests find, book, and stay in the property that best suited their vacation needs. 

A property manager’s core competitive offering historically was their relative success (or failure) in providing these services ​compared to the other property managers in their market. Guest loyalty was largely earned by the guest’s perception of finding “a great company” to host them for their stay, rather than a company that could provide the best price.

Not long ago in our industry, if a traveler was not experienced with this property manager from a past stay, the guest largely felt they were rolling the dice with their vacation and thus repeat booking percentages with the same company year after year continued at high, unmaintainable rates.

​Part 1. Listing ​Sites are ​Driving ​Commoditization

​While having a rich and established history, the recent evolutionary strides the major listing sites have (rightly) driven in the market have also driven a very dangerous reality: commoditization of vacation rentals.

Listing sites are driving downward pressure on price as inventory continues to be added in each market that is instantly bookable.

As listing sites continue to gain dominance, drive prominence, and aggregate the breath of home offerings in one central place, consumers are less and less likely to perceive the difference between one property versus another.

As far as the guest is concerned, they are not even buying a service, but a product. As available inventory continues to grow, perceived differentiation is going to continue to plummet at an incredible rate. This means one thing, and one thing only: property managers are no longer competing on service, they are competing on “price, price, price”.

​This is literally a worst case scenario for ANY business. Commodities are always the lowest earners in any market category, the hardest businesses to earn margin with, and the businesses least likely to survive market shifts driven by players higher up in the food chain.

As HomeAway, AirBnB, and other major listing sites continue to collectively spend billions on ​further market growth and development, new inventory continues to come online, and travelers increasingly book vacation rentals as their first choice, the future commoditization of the vacation rental is going to exponentially increase.

Part 2. Property ​Management is ​Dead ​As ​We ​Know It

Dying are the days when a property manager primarily competed on their core offering, the service

In a commodity market, having a property clean, batteries in remotes, flatscreens in working order, internet up and running, hot tub clean and operational, kitchen well stocked, thoughtful touches, and the various amenities of the property up to par are no longer a competitive advantage; these are now the minimum expectation.

What once was considered a great and desirable service by the few expert travelers that knew of this hidden service offering known as a “vacation rental” is now a bare minimum requirement for any plausible business viability.

Simply being excellent at the operational tasks that go in to running a property management company is no longer enough to earn repeat visitors year after year. Heightened awareness of choice brought by the listing sites and general e-commerce prominence is driving repeat bookings to an all-time-low, as price sensitivity is racing towards an all-time high.

We see this and we wonder, ​what is a property manager to do?

Part 3. Consider the ​Humble Coffee Bean

A coffee bean is one of the least value commodities in the world. Trading recently at $0.0005 per pound, the commodity is traded, bought and sold purely on the basis of price. 

Yet, as B. Joseph Pine II rightly observed in his book, The Experience Economy​ (great book by the way), the economic offering of a coffee bean is an archetype of sorts that depicts ​one way a common commodity can reach the upper echelon of consumer demand.

Source: “The Experience Economy” by B. Joseph Pine II, Page 2, Figure 1–1

A bean as a commodity is nearly worthless. A bean bought, roasted, and now packaged as a good has a low but increased price. Coffee brewed and served at a diner or restaurant as a service, while having an increased price over the packaged roasted bean, is still competing on price, and reaping on the lower end of the earning spectrum. 

Ah, but to buy a cup of cold brew coffee at one of Howard Schultz’s Starbucks locations — now that’s going to cost you. No one argues that Starbucks is competing on price — the exact opposite is in fact true. With this experience perfected, Starbucks approaches their pricing strategy exclusively with the mindset of “how high can we charge?” instead of, “how cheap must we charge?”.

​Price-per-cup is radically different between the diner price versus the Starbucks price.

Price-per-cup is radically different between the diner price versus the Starbucks price.

​How did Howard Schultz earn this ability to differentiate himself from being the diner service provider, selling a cup of coffee for $1 with unlimited refills, to routinely earning $3.50–6.00 per cup with no refills? 


​​By usurping the service economy all together — Starbucks is an experience.

Part 4. The Future is The Experience

The successful property managers of the future are going to be forced to give up their current title — instead, they must become Experience Managers. They must excel chiefly at creating the very opposite of commodity: the uniquely personalized experiences that elevate “the stay” in every possible way.

Gone are the days of simply providing a well-maintained, clean home and addressing issues during the stay that may arise. ​As differentiation continues to disappear — this is the bare minimum requirement to enter the competition.

​​As Matt has rightly surmised in his Theory Of Limited Edition, the future of the vacation rental industry only has two core classes of property managers: Those who compete on price, and those who compete on experience. Those who compete on price (and their service by extension) are commodity managers at their core— but those who compete on Experience are Limited Edition Property ​Managers who will enjoy higher demand, higher prices, and relief from the tide shifts of the industry.

Property Managers who do not successfully cross the divide from current-state to being expert, bespoke experience providers, are destined to compete on price. This means they will continually be beaten-up by the market, watch prices/margins/profits fall — in short, they will be powerless against the whims of the listing sites and the corresponding consumer demands.

​The property managers who do however make the leap successfully, will understand rightly the need for every customer to receive the same baseline commodity (the clean, well-maintained home), and layer on-top through-out the duration of the stay incredible, unique, custom-tailored experiences that go well beyond providing a service —​these managers​ create the all-valuable memories.

When executed exceptionally, as business owners ​these managers ​have the added benefit of regaining control of their own destinies, not being constantly dragged about by the shifting tides of the big brands in the industry.

Part 5. The ​Narrative is ​Already ​Shifting

As I travel and speak with property managers from all over, I inevitably find myself having the same conversation about the changing climate of guest behavior. 

“I work so hard to make sure the property is clean, everything is working, and ready for the guest by check-in time”, they will say. “Yet, more and more, our guests have no appreciation for the effort it takes to accomplish all of this at all! All they care about is how much they paid!”

This is the reality of the vacation rental industry being well on it’s way to broad commoditization. This is also proof that the baseline expectation for the product/service is becoming a common expectation, rather than a competing benefit. 

Regardless of our ability to understand the value proposition of a 1,500 sq/ft home renting for $200/night contrasted by a 250 sq/ft hotel room renting for the same price — as listing sites and e-commerce channels strengthen their downward pressure on the market, travelers will continue to see price as the greatest differentiator in their choice when selecting a property if property managers continue only competing on service (as they have historically).

It’s no surprise ​therefore, that property managers are reeling at the recent changes by HomeAway’s pricing structure. The roll-out of the “Traveler Fee”, and this months roll-out of the “Match-back Fee” has sent property managers in to an absolute craze. 

Here's why property managers are reeling at recent listing site changes: here's why they're in an absolute craze.

Click to Tweet

Whether their anger is legitimate or not is irrelevant — the core issue is the same: If they continue to compete at the commodity level, they will continue to have zero say-so in the market changes the listing sites introduce.

It will be a long, painful battle as they continue to give up profit/margin as listing sites increase their cut from the guest.

Part 6. The ​Future Requires ​Self-​Reinvention

​I have given a lot of thought about how realistic it is for property managers to make the necessary changes and not only compete, but thrive in their local markets...markets that​ have radically shifted, will continue to shift, and ​will never ​go back — the traveler won’t let it. 

Property management is dead as we know it.

For the current property manager, this ​may mean a complete, utter, ruthless reinvention of ​the company, ​the core offering, and how ​we think about the services ​we offer. 

​In order to fetch high demand and high price, the Property Manager must significantly increase their economic offering to out-compete the variety/convenience/ease of booking a commodity property with major listing sites.

​The most straightforward solution ​suggests that​ how a property manager sells themselves to prospective owners must change. They way they think about their inventory must change. The way they describe and market the property and the stay must change. The titles they give staff members must change (e.g. Gone are “Booking Agents”, hello “Experience Directors”!).

The property manager must force a shift where it is no longer an option, but a fore-gone conclusion that guests will be booking bespoke, custom-tailored experiences through their host. 

​We must change the narrative from first touch to be less about the property, and more about the experience ​we are able to create for ​a guest's stay that no other company can. 

This, and only this, will be the new differentiating factor for the property manager of the future: those who continue attempting to compete on their service offering, and those who compete on the remarkable, memory making experiences they help create.

About the Author Wes Melton

Wes Melton is a builder of things, technology expert, and Lego fanatic. Previously a technology consultant to national brands, he now spends his days building his brand, writing code, and contributing to the broader business and technology community.

follow me on:
  • Great article Wes. Seems your entire article speaks about shifting to offer the guest a better “guest experience” which directly ties into Matt’s latest venture “A Sense of Place”. ASOP is all about the guest experience via the expertise of the host. Smart managers should read your article slowly and understand what your trying to convey as you are correct in all measures. Regards, Tracy

    • Hi Tracy!

      Thank you so much for your kind and encouraging words.

      I think Matt’s ASOP is doing a great job at highlighting the experience aspect of the VR industry. It’s so important we understand the value of creating experiences but also understanding that the typical consumer (even ourselves!) are willing to spend more for an experience than a hotel.

      Thank you again for your feedback!

  • Nancy Robertson McAleer

    Excellent article Wes. I agree 100% with your sentiments but think it will take a bit more especially for smaller property management outfits to recover from the recent changes. It will be a scramble to analyze how much more profit Expedia will be taking in each business case, then a mad dash to re-structure, explore new regional websites that won’t gouge into their profits and finding new ways to gain independence and traffic funnels.

    Definitely curating experiences will help but I don’t think it’s a case of solely changing the structure within the business that will offset the costs that will be incurred. We’re seeing more and more inquiries, interest and PM on boarding this past quarter at Florida Rental By Owners (FlaRBO.com) by PM’s looking to diversify and escape the new partner charges. I think it will be a case of a Mass Exodus due to Expedia taking too much of a piece of the pie… as a result they are forcing their core partners out of the game.

    • Hi Nancy!

      Thank you for your kind words and feedback.

      History in parallel markets have shown us that consumers on the aggregate do not care about Expedia digging in to the profits of the PM – they care about the ease & experience of booking on a meta-search provider like HA/VRBO/AirBnB/Etc.

      I think it is the same mistake for a regional listing site to try to compete on price (“no traveler fee” as a competitive advantage for example) rather than on experience that can drive demand that’s unique to their own site.

      It is always a poor business choice to focus on how cheap your offering is rather than how to create a brand that can demand the highest price the market will bear.

      If PMs continue to focus on the traveler fee instead of aggressively building unique brand experiences, they will continue to “scramble” but never get ahead and ultimately be beaten up by the constant downward pressure on price that changing consumer buying trends are creating.

      Even regional listing sites will have to understand their place as “down-stream” players from the larger listing sites. As someone running a successful regional listing site myself, I understand that the big sites are driving Adwords spend up, SEO competitiion up, and that as long as they’re driving the majority of bookings (which they are) for a lot of PMs, their downward pressure on price will mean the nightly rates that PMs charge on our site will ultimately decline over time too, reducing our cut even if we don’t have a traveler fee.

      In a game where you’re competing on price alone, you’re destined for a rocky road ahead.

      • Nancy Robertson McAleer

        Hmmm I had to go back to my comments to understand why you responded that history has shown that consumers aka: travelers do not care about price.

        Agreed they do not care about price when it doesn’t affect them, BUT it certainly is an aggregate when the costs and fee applies to them personally. “A regional listing site that does offer a competitive advantage to travelers of “no traveler fees”” is a huge benefit… unless you are not gathering that type of data with your own regional site?

        Respectfully, with an average traveler booking fee ranging between $200 – 300 there has been significant pushback whereby more travelers are looking for alternative options to the OTA’s who charge these fees. This constitutes between 5 – 12% of an entire vacation. If you think that this doesn’t affect the average household income of $57,600, then you are seriously mistaken.

        In addition, we’ve gathered data on our regional listing site inquiries verbiage such as “Hi I found your home on VRBO but wanted to avoid the traveler fees. Can I book your vacation rental on this website?”

        This is seen consistently whereby it has confirmed to us that the competitive advantage is useful.

        I never disputed that a business choice to focus on how cheap your offering is rather than how to create a brand that can demand the highest price the market will bear is nothing short of poor. Any PM or regional listing site who simply accepts the “downward pressure on price” from OTA’s is doing a disservice to their clients as well as themselves.

        As I mentioned above I agree wholeheartedly that PM’s will have to look at and restructure their businesses to engage as “experience managers”, it reminds me of a conference I attended years ago by Disney in that creating “heroic moments and experiences” were truly what made Disney so successful. My earlier comments simply state that in addition to your advice, it’s just part of the puzzle to move forward as a successful business.

        • Hi Nancy!

          Apologies if my comments came across as more hostile than I intended.

          We have run split tests across hundreds of thousands of travelers and found no statistical significance in conversion rates when a guest is shown a traveler fee vs. no traveler fee in the checkout funnel.

          I understand there are a small segment of people who are willing to seek out an alternative method to skirt the fee, but, at least in our own split-test results, we have not seen this small segment being representative of the whole. I recognize this could change market to market.

          I do still stand by my position that “no traveler fee” is not a strong enough Unique Selling Proposition to make it a long term competitive advantage, even if it is working currently. I think it’s validity as a USP has a very short horizon.

          Definitely agree we’ve got to all be creating “heroic moments and experiences” – a key to long term brand building for any company and the primary reason I wrote this article. I want to see all PMs succeed and have businesses that stand on their own footing.

          Thanks Nancy!

          • Nancy Robertson McAleer

            Very interesting how the split test data can range so differently across 2 markets so closely related geographically. Perhaps the split test designs didn’t showcase the price differences enough to your subjects to make a valid testing. There are many factors that will sway statistical analysis one way or another.

            Again, as I mentioned above, I would never recommend ONE unique selling position for any business whether in the vacation rental industry nor any other category. That is the sole reason for my comments.

            Have a great day Wes!

          • Few observations here:

            The point presented in Wes’s post, I believe, is to encourage PMs to give the user/guest a memorable experience. Good experiences leads to increased bookings. The guest experiences a great time and we all experience an increase in profit.

            Meanwhile Expedia and all the big OTAs are the guests first drivers to that experience- and guests don’t mind the cost of the ticket.

            I feel Wes, your statement in point 1 in reference to their internet experience, “As far as the guest is concerned, they are not even buying a service, but a product” (commodity) should be our initial concern.

            I really do have more confidence in the guest shopping for a Vacation Rental online these days. They are looking for more than a commodity- otherwise the whole premise of experiential marketing is nulled.

            Maybe it’s time we make that initial VR (virtual reality- not vacation rental) experience primary. Then we can move on to the rest- welcoming hugs, silk sheets, zip-line adventures.

            Consider how far we have come- from Posters in the grocery store advertising our second homes filled with furniture we just couldn’t bare to toss out, to Craigslist, to VRBO/ABB, to even our own websites now touting great amenities and memorable experiences.

            In our biz the guests’ experience begins when they first turn on their internet in the platform of their choice (phone/ipad/PC), type in the search bar “Vacation Rentals in location of choice,” then filter on down to their desired particulars: e.g, # of rooms, pet friendly, amenities..and ultimately costs.

            So first order of business – ALL gotta get Google on our side to be sure we land somewhere high enough to be seen! But hey aren’t they trying to take over/commoditize Vacation Rentals now?

            The process finishes when the guest’s ROI in booking meets not only only their filtered needs, but also the experience of the transaction as determined by time spent, ease of navigation, confidence of buying what they expected, and ultimately costs.

            That confidence is improved when the inquirer moves beyond that “first date” experience to actually booking. It is finally deemed a complete experiential success when that 5 star review pops up.

            But, it’s that first internet impression or in this case, experience, that counts.

            Now Pine suggested ->nearly 2 decades ago, “the internet is the greatest force of commoditization ever known to man, for both goods and services” (Pine & Gilmore, 1999 pg:10).

            But I suggest we’ve come a long way in 20 some years.

            It appears to me however, we perceive the guest to be the even less than the commodity- but rather simply a set of goods showing no difference when offered a place with or without a traveler fee.

            It seems to me the trick now in 2018 and beyond is to figure out how to make sure the inquirer during that first internet interaction moves out of the ranks of purchasing a commodity (my house, managed by some PM) into becoming a website user enjoying a pleasant experience worth repeating next vacation time.

            Actually I feel it is the large OTAs with their “book now”, ease of online payment, a well promoted sense of security for the guest that has actually commoditized ALL OF US: PM companies & owners alike, while perfecting the experience for the guest.

            Basically-WE as PMs and owners all have become fungible goods to the OTAs.

            I do agree with Nancy tha the pain/excitement point of the experience for the PM ALSO needs to be factored in, especially with regard to the bottom line- the cost of it all.

            As Nancy points out smaller PMs (read Expedia’s fungible goods) are attempting to recover from the recent and costly changes. The smaller PMs are fleeing Expedia’s commodity mentality to seek “new regional websites that won’t gouge into their profits and finding new ways to gain independence and traffic funnels.”

            The trick now for the newly created Regional Site managers receiving these fleeing PMs/owners is to remember their own original pain point that caused their own flight from the large OTA. These smaller booking sites must assure they too don’t repeat history with those who list with them.

            Otherwise, they too will face a grand exodus.

  • Great article. Airbnb is making it easy for property managers to differentiate through experiences: https://www.airbnb.ca/experiences

  • Christina Holmes Thoreson

    Thank you Wes for doing the hard thinking and writing about the things that concern us all as stakeholders in this industry. Like you said, we try hard to provide what the guest wants. I certainly do NOT want us to be a commodity. We are super lucky to have an amazing variety of opportunities for experience. It is funny how things float around in peoples’ thoughts as for the past month we have been talking with someone about spearheading this role specifically (guest experience) and last evening planned a dinner for Thursday night. Thank you again.

    • “last evening planned a dinner for Thursday night” — incredible! Keep it up. It will be undoubtedly exhausting at first as you’re learning what works, what doesn’t, and the cadence, but once you get the processes in place, it will get easier and you will be building brand equity that consumers seek out — a priceless asset in todays changing climate.

  • Wes, awesome work and I could not agree more.

  • Jens Bachem

    Great post Wes. 100% agree. Here’s to 2018! 🙂

  • Great work Wes! This puts the new year in perspective on what needs to done to stay on top and be relevant in the market place.

    Do you see experience based as providing in home amenities, such as, catered meals, massages, planning activities (guide tours), etc.?

    • Hi Matthew!

      I definitely think the items you mentioned will play a part in the guest experience.

      However, I think to gain the brand independence that’s needed for long-term stability, a property manager will need to think in terms of creating/curating experiences that are very unique to their brand that are not easily reproducible. I think that will sometimes be a carefully crafted combination of things that are in fact available to other companies, but will be presented in a way that’s unique and helps create lasting memories for the guests.

      • Oh my Wes- Great article to start me thinking and wondering. Thanks to Matthew for you question too. So much food for thought that I too am just chock full of questions.

        Just to be clear you stated: “a property manager will need to think in terms of creating/curating experiences that are very unique to their brand that are not easily reproducible.”

        Is it your thesis, then, that it is up to the PM to create that “carefully crafted combination of things?”

        Do you become the provider of all “experience things”for the guest?

        How to you assure all the homes you have in your PM company’s inventory (yikes did I just commoditize?) benefit from that experiential /engagement marketing?

        And when you do embrace experiential /engagement marketing how is that cost managed…or rather passed on down?

        Is it in determining the costs of the daily rent, considered an add on service(s) for the guest wanting the experience, or an increase in the homeowner’s percentage of management fees paid back to you? Other? Or all of the above?

        How will your experiential /engagement marketing show a significant increase in bookings for iMY little ol’ home? ….As opposed to the guy next door who is hoping that inquiring guest books HIS house instead.

        As a homeowner, then is it incumbent upon me rise to the experiential top too?…Just to buck the guy next door who also listed with your PM Company?

        Or failing that would I be dropped like a rotten tomato for a lack of not meeting “Real Time Value”?

        Pine & Gilmore’s (1999) Work is Theatre & Every Business a Stage suggests it’s all well crafted play (as did Disney). But how do you make sure that theatrical bit doesn’t become just another franchise? …Commoditized?

        Brings to mine my recent experience of viewing Star Wars- (how I spent my Christmas vacation!)…that franchise certainly has come a long way baby- Here’s to strong female leads..finally!

        But truthfully I’m pretty much over that theme park of a movie series..Well maybe I can be enticed by an IMAX experience with wine and popcorn while I wait 2 hours for the doors to open.

        So using that Star Wars analogy- it seems your PM Comp. is my wine with popcorn eaten outside the theatre, while my stale home is just another miserable sequel in an already over done/over rated theme.

        But now that I’ve already had the experience.(twice!) …and really that wine choice leaves much to be desired..NOW what do you as PM and I as home owner do?

        Guess it then behooves you & me to go back to the drawing board and do something new?

        And last-
        My concern in all this guest experience designed by the property manager is it becomes something unique done TO the guest, forgetting doing something FOR the guest.
        When the experience is defined “in terms of creating/curating experiences that are very unique to their brand … not easily reproducible” I fear we forget the whole point of the exercise- the guest.

        • Hi Donna!

          Let me think on some of the questions you’ve posed here as it’s definitely a big topic in terms of the “how”.

          To respond to, “When the experience is defined “in terms of creating/curating experiences that are very unique to their brand … not easily reproducible” I fear we forget the whole point of the exercise- the guest.” though:

          The absolute point is the guest – I’m more meaning that the point is to create experiences for the guest, that makes the vacation more memorable/impactful in a way that another company cannot easily replicate.

          This will take many shapes and forms, but the focus is absolutely on the guest experience and the PM as the host showing them an unforgettable time.

  • Theodore Pagiavlas

    Dear Wes
    I agree completely with your article.
    Unfortunately, there is not yet any platform or site providing a very personal range of offers for an ideal holiday home adapted perfectly to guest very personal behaviour and taste.
    As you are a code writer and builder of things, I would like to suggest a revolutionary new idea to fill this need.
    Can you get in touch through my FB profile ?

    • Matt Landau

      Theodore, I would argue that you haven’t embraced the essence of Wes’ article. Wes is not saying (or at least, I don’t think he is) that the current listing sites are commoditizing the industry and so a new platform should come and de-commoditize it. Wes is saying (I think) that property managers need to make a mentality shift, away from the idea of playing the commodity game all together. Once you flip the script, a new world of revolutionary ideas is diverse and formless. But until you flip the script, everything revolutionary idea looks like a listing site 🙂

      • Theodore Pagiavlas

        Correct . But in order to make a mentality shift, for the owners of holiday rentals, some stimulus may just come from a medium whatever may this (site,blog, facebook group),which will provide them with the basic tools to unfold their own personality their own way of hosting …(sorry for my poor english…)

      • Yeah, I’m definitely saying I think PMs need to flip the script, rethink their brands from the ground floor, and start making huge strives towards creating experiences that make it possible to be Listing Site non-Dependant (LSnD). Listing sites are still a very valid marketing channel. Concern is over dependence on the listing sites as evidenced by the waves of outrage that sometimes follows changes the listing sites make in their pricing/financial policies (warranted or unwarranted).

  • Really well written and accurate, Wes.
    One key thing to remember is that the meta-search sites are selling an experience as well. Theirs just happens to revolve around an experience full of massive volumes of inventory to choose from, a brand that is trusted in the eyes of the consumer, a simple and painless checkout experience, etc.
    So in essence, they have beat most managers to the punch and are already trying to sell “experience”….albeit a different one than we can sell as property managers or “Experience Directors”.
    My point being that time is of the essence, as we are already playing from behind.

    We’re seeing some major traction with telling our stories via social channels for the VR managers we work with. There’s no better place to let a Starbucks-type experience model have it’s story told and retold by guests to other people than via the social channels where everyone hangs out. And as you mentioned, the Airbnb/HA/VRBO’s are dominating the AdWords landscape and the web traffic sphere. They are still figuring out the social channels, though, and it’s a fight we are winning when we have a manager who is innovative and ready to push in that direction with some immersive story-telling.

    Hope your post serves as a wake-up call to managers, that the time is now to begin shifting how we provide the “experience” and also how that story gets told and perpetuated in all of our messaging.
    I was speaking with a large VR CEO just this week and we both agreed that this shifting landscape will be good for the industry over time. The brands and managers who are innovative and savvy will grow and adapt. Sadly, however, this will weed out a large number of companies that are slow to move and afraid to innovate. They won’t be around in a few years.

    Again, a very relevant piece of writing and worth the read for any VR manager. Kudos!

    • “One key thing to remember is that the meta-search sites are selling an experience as well.” Exactly! Everything you outlined in your first paragraph is so on point – the listing sites are selling a product, that product just happens to be exactly what the typical traveler wants: all the available options in one place and represented accurately. Competing as PMs in the future will mean very different things than it once did.

  • Richard @ Rentivo

    An extremely well thought out piece Wes and evidenced daily. It started with the high commonality, 70% of the market and is now creeping into higher end, luxury and multi-occupancy destinations and properties. It is also compounded by “promises” and “trust” messages that oft carry little weight but have a positive impact on the booking journey and loss of owner and manager margins.

    The need to pivot as a manager is fundamental to their future but needs resources to do all the hard work and develop a new strategy. It is a road too far for many small managers as the workloads increase and through commoditisation margins shrink and hence the recent M&A’s

    We will see super managers compete with OTA’s now and this can also result in less focus on service and experience and more on the mechanics of margins. It is clear some however some have got the message and are assimilating the marketing power to contend.

    What used to be a small, personalized service industry with welcoming hosts in hidden away places is now an image, a price and a list of contents on a nameless site, with the profits repatriated to foreign lands. The local communities also suffer as there is less re-investment, a much unnoticed element.

    • Hey Richard!

      Great feedback! I definitely think looking at retail and what’s happening in brick and mortar outlets currently is an area we can learn a lot from. Ecommerce giants have driven price sensitivity to an all-time high with the experience of going in to the physical store become so much more rare that even giant retail brands are having a hard time keeping their B&Ms profitable.

      Big days of change are ahead for our industry – we need to all be proactive to get ahead of the tide.

  • Hey Wes!

    I totally agree that I’d rather be an experience than a commodity! It’s how I’ve run my vacation rental (FourSeasonsLodge.com) for 25 years!

    Yes, my home is clean and well maintained but more than that, infusing my personality into how I write my blogs, wording on my website and not having any “book it now” buttons on OTA’s or my website have made a huge impact on my dependence on booking sites!

    A few years ago, 95% of my inquiries came from OTA’s and now, 95% come from my website. I am listed on a few listing sites and run ads on local travel sites but inquiries are very few and far between. (wish my property was in FL – I’d definitely be listed on FRBO!!)

    I made a commitment to myself several years ago that I would become the Southwest Airlines of the vacation rental industry. I’m well on my way!

    I’m a little stymied how a PM could reinvent themselves as Experience Managers. To me, it’s like saying a teacher can be a surrogate parent to all their students. I can tell you from years of experience, it’s a TON of work on the front lines to be really different and shine!

    Thanks so much for writing on this topic. I fell its a really important concept for folks to think about…

    Sign me,
    Teena from gorgeous NH

    • “A few years ago, 95% of my inquiries came from OTA’s and now, 95% come from my website.”

      That is incredible! To achieve that, you’ve clearly built a brand that has it’s own footing. Congrats and keep it up!

      • I have built my own brand… my own brand of crazy! 😉

  • This is a great article! So many property managers are up in arms about the changes yet have don’t anything to create even the slightest bit of independence from HA/VRBO. Many are going to Airbnb that were not on there before despite being the same exact model HA/VRBO are trying to emulate. Then as new sites arise they want to only pay commission and stay again in the exact model that has taken so much control of their businesses. When owners and PM’s need to be spending time and money to invest in diversifying their advertising channels and marketing strategies. I run into this daily where PM’s complain about the situation, we present them with an option giving them all the tools they want back, they hesitate, or ask for a commission model which would again put them right back to square one.

    They need some hard truth right now, and a kick in the pants to go out and become marketers and provide a better overall experience than any website can.

  • Thank you Wes! Your article is very timely for me as I’m interviewing PMs now, to place a couple of our homes. With the new changes coming, I’m fearful for Property Managment companies and their ability to keep afloat as well as being able to rent my homes. I have a new battery of questions to ask, thanks to your publication.

  • Great article Wes.

    I’ve been saying this for years.
    Gone are the days when we ask ‘What can a guest do for me’? (ie, book my property).
    We need to be asking ‘What can I do for my guests’?

    This doesn’t only apply to managers though. The same can be said for individual owners.
    The impending shift toward a guest centric model affects all sectors of the VR business.
    As with all paradigm shifts this will take some time to become established as people don’t accept change easily.

    I gave a presentation on this very subject at this years Vacation Rental World Summit.
    I’d love to know your thoughts

    https://vimeo.com/249110804