Have you ever heard the expression "It's like herding cats"? Well, if you've ever tried to herd cats you'd know exactly what the expression means... as much as I love cute little kittens, you just can't seem to get them to work together for a common goal.
The same can be said about the vacation rental market. As a legitimate competitor to hotels, the vacation rental industry has grown to reach $24 billion U.S. in annual bookings. Not too shabby for an industry that's mostly comprised of individual second homeowners and about 7,000 vacation rental property management companies that either own their own vacation rental houses/condos/villas or represent the properties of private homeowners. Trying to standardize practices in a fragmented market niche such as the vacation rental niche is like herding cats.
Nevertheless, several intermediaries and technology providers are working hard to add a common set of business practices and processes to move vacation rentals into a mainstream lodging option that competes with hotels. Here's an example of what I mean.
This is Fleet Week in San Francisco. This weekend we have the pleasure of welcoming more than 1.5 million tourists into our city to watch the amazing Blue Angels fly over the San Francisco Bay and through the Golden Gate while the deftly maneuver their $500 million fighter jets within mere centimeters of each other. A quick scan of Craigslist shows that there are still several vacation rental condos and homes available for this weekend - some with an asking price of $3,000 for two nights. If I were a traveler that could afford this rental I would be asking myself, "how do I book this place." Travelers have become accustomed to booking hotels online. Yet, when it comes to vacation rentals, PhoCusWright says that only 15% of vacation rentals can be booked online.
If I wanted to book the San Francisco vacation rental home I would have had to bring a suitcase full of cash or find a way to overnight a large deposit to the property manager. Both of these options are more hassle than they're worth, so most people opt for a hotel.
Back to my original point, most vacation rental properties are marketed by homeowners or the property management firms they hire. The current recession means that these homeowners and property management firms are exceptionally motivated to find ways to increase their bookings. Several sites have sprung up that offer homeowners and property managers with exposure to travelers that might want to book their vacation rental homes. The most noteworthy site is HomeAway.com and their collection of vacation rental sites (including vacationrentals.com and vrbo.com). These are noteworthy not just because they drive more traffic to their sites than any other vacation rental intermediary, but because they have received more than $500 million in venture capital from several big time VC firms. That's quite an endorsement of their business strategy and market opportunity.
Anyhow, HomeAway has recognized that the vacation rental market niche is the next frontier in online travel. Given the relative under-development of the intermediary portion of the vacation rental value chain, there's plenty of room for competition. The intermediaries that can herd cats by offering homeowners and property managers solutions that drive bookings and simplify the process of managing a vacation rental home will ride the growth wave that is likely to follow.
Sherpa will drive standardization of business processes through providing an innovative online booking model for homeowners and vacation rental property managers that will enable them to earn extra cash and compete with hotels.
Looking forward to reading your thoughts and ideas.
Russ
Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102
415-997-9925 Google Voice
russ.hearl@staysherpa.com
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