When Small Is Tall (There’s Room For All) – VRMB
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When Small Is Tall (There’s Room For All)

Investors Looking to Cash In On the Vacation Rental Trend are Finding Innovators in the Most Unusual Shapes and Sizes

I was a really small kid growing up and my mother used to always read me a book called, When Small Is Tall. It was about how you don't have to be big and powerful in order to succeed. And when I was visiting my parents last month, I found the book and read it again several times. It's a really fantastic book.

“The cutting edge” of many industries is characterized by technology and innovation and advanced-thinking visionaries with radical, world-changing ideas. This cutting edge is where the influencers congregate. And it’s where the big money flows in order to align itself with more power.

The cutting edge is NOT typically comprised of people who are set in their ways. In fact, it's almost the antithesis of doing things the old-fashioned way.

But something very interesting is happening in the vacation rental industry that venture capitalists and big corporations are having a very difficult time digesting.

According to a report by Phocuswright[1. A Market Transformed: Private Accommodation in the U.S., Phocuswright, Douglas Quinby, Analyst], in 2016 vacation rentals grew twice as fast as the total U.S. travel market. “Traditional vacation rentals have transformed into one of online travel's hottest and best-funded segments. The segment will continue to outpace the overall market through 2017.”

The little industry that could! This is why we love vacation rentals so much!

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With Growth Comes Change​

With such explosive growth, the once-homogeneous vacation rental niche is splintering into two camps.

1. Commodity: Commodity vacation rentals fulfill a certain baseline of standards such as cleanliness, amenities, and security, thus eliminating much of the unpredictability that lies in staying in a vacation rental for the first time (a trend[2. More and More People Who Use Airbnb Don't Want To Go Back To Hotels, Bloomberg, Julie Verhage] that is voraciously gaining on hotels right now).

Because Commodity vacation rentals resemble in many ways the traditional dynamics of a hotel, they have become the natural focal point of big corporations such as Wyndham, Accor, and Marriott, looking to cash in on this profitable trend. And they will likely succeed in commoditizing an once-seemingly uncommoditizable product. When and how this will happen is relatively straightforward.

Lynn Gallimore, Sinya on Lone Man Creek

2. Limited edition: Limited Edition properties fulfill the basic commodity standards, then almost piggyback with an added injection of personality, authenticity, and sustainability that humanizes the property and the destination, thus separating themselves from the commodity market. A perfect example of Limited Edition as first featured in VRMB's 2017 Trends Course is Lynn Gallimore, who's property Sinya, an African-inspired safari tent just outside Austin, comes with personal welcomes, s'mores kits for the campfire, and bee-friendly toiletries.

To understand the Limited Edition vacation rental, consider great boutique hotels that are not affiliated with any big hotel chains. The small hotels that offer world-class experiences and sway travelers to forego earning points in exchange for something radically unique. The ones who have laid the groundwork, proven it’s possible, and appeal to increasingly discerning travelers.

The Cutting Edge Surprise

Investors looking for the cutting edge in the vacation rental industry — the prototypes that represent the truest, most unbreakable essence of the vacation rental movement — have to zoom in on Limited Edition properties. However, these Limited Edition vacation rentals are not familiar entities. They are by nature small-scale, ultra-personalized, and in a lot of ways, inimitable businesses. In a lot of cases, they were started accidentally without any business plan. In most cases, built on passion as opposed to business savvy.

Most hilariously, the very people pioneering perhaps the most innovative travel trend of our lifetime happen to be simple, empathetic, almost anti-corporate moms and pops who are unlikely to ever sell out. In fact, this "David" has very little concern for "Goliath" in general, as long as he consciously goes counter to (or better, totally away from) the behemoth's rules of the game.

What Does This Mean?​

Building a ​Limited Edition vacation rental business requires a lot of time and commitment and there will certainly be a wave of owners and managers turning their properties over to property managers (or even closing up shop) in the coming years because that's not what they signed up for.

But those who do see the value of doing something special will take comfort in knowing that few of their competitors will follow suit. And perhaps more importantly, that their future is in their own hands.

Both commodity and limited edition rentals certainly have their own place in an industry that is growing so fast. When small is tall, there's room for all in this incredible movement. But to identify precisely where it’s heading in the future, considering the battle of David versus Goliath. When the terms of the playing field are shifted, David can win every time.


About the Author Matt Landau

Matt Landau is the Founder of the VRMB and the Inner Circle, two online resources dedicated to helping vacation rental owners and managers generate more bookings.


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