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What Is an OTA? Top Vacation Rental Channels

Hostaway — Sat, 30 Jul 2022 00:54:53 +0000

Understanding Vacation Rental Online Travel Agencies

In the vacation rental industry, a channel — also called an online travel agency, or OTA — is a place where consumers can find accommodation, and providers can provide a supply of accommodation. They operate as marketplaces just like Uber or Amazon do.

Most of the top vacation rental channels, like Airbnb and Vrbo, are two-sided marketplaces. No marketplace can exist without inventory to be sold, however.

This is where you come in. You have the most valuable asset for an OTA in your hands: the property you are renting out.

In addition to inventory, OTAs also need a stream of visitors. They can increase their number of website visitors by optimizing their marketing. Similarly, they can improve their inventory by attracting hosts or property owners such as yourself.

The key driver for success, however, is conversion. How many of those expensive visitors will end up actually booking a place and paying a commission to the OTA? This is where Airbnb, Vrbo, and Booking.com have excelled.

Keep in mind that the main objective of an OTA isn’t to rent out your place — it’s to increase their conversion rate, which makes their advertising dollar more competitive. You can benefit from their efforts by making sure your property has a better price, a better description and pictures, better reviews, and, ultimately, a better conversion rate than competitors.

Which Channels Are Important for Vacation Rentals?

Many hosts start by listing their homes on either Vrbo or Airbnb. Over time, and given enough effort, many other channels are able to generate better results, on better terms, and with less effort. However, just like Uber and Amazon have a huge market share, these household names will continue to stay strong.

Airbnb

In many markets, especially urban, Airbnb is a very strong player. It’s worth noting that just as Airbnb is strong in some segments, it’s weak in others. For example, business travelers searching for accommodation for shorter stays in major cities will find much bigger selections and benefit from loyalty programs that include hotels.

Marketing on Airbnb is strongly driven by reviews, and their Superhost program is mostly based on reviews. In some segments, Airbnb offers more visibility in exchange for exclusivity or other tradeoffs. For example, Airbnb Luxe is great in the luxury segment.

Vrbo

Vrbo is the umbrella term for a long series of mergers and acquisitions that culminated in Expedia acquiring the merged Vrbo and HomeAway. Vrbo is incredibly strong in vacation and rural destinations, especially in the family vacation segment.

Marketing on Vrbo is very performance-driven, and they give preference to those who pay them more. On Vrbo, you should aim for a positive feedback loop: get bookings, pay commissions, get more bookings, pay more commissions.

The top performers on Vrbo often outperform top performers on Airbnb.

Expedia

Expedia is great for hotels and aparthotels, as they have one of the widest distribution networks in the world. However, you cannot simply list vacation homes on Expedia — you will be redirected to Vrbo for those.

If you manage aparthotels, especially more than 20 of them, you’ll want to reach out to your local Expedia office.

Booking.com

Booking.com is strong in some markets in Europe and is a behemoth in the world of business travel.

It offers the traveler a lot of benefits with a choice of cancellation policies and room rates. For the host, Booking.com is able to differentiate between refundable and non-refundable rates and has a lot of flexibility when it comes to its rate strategies.

Homes and Villas by Marriott

A latecomer, Marriott offers unique properties for unique travelers. They select each property manually, so they have a curated selection for their customers. Their Marriott Bonvoy program can be used to pay for trips, although hosts are paid in dollars.

The type of clientele that would have points on Marriott Bonvoy is quite exclusive, which usually results in high-quality guests.

Google Travel

Google Travel isn’t an OTA but rather a marketing tool, just like AdWords is. When combined with an effective booking engine, it can be powerful if the properties are in a market that consumers search for.

Other Channels

It’s worth mentioning that for certain properties, locations, and types of guests, there are channels that will perform better than these listed above. However, be conscious of your time.

If a site for traveling health care professionals offers good bookings for others, don’t list there unless you actually have properties near a hospital. Pet-friendly sites are great, but you should ensure you want to allow pets before listing there.

3 Tips and Tricks for Vacation Rental Channel Distribution

Now that you know some of the top short-term rental channels, learn top recommendations when it comes to listing your property on an OTA.

1. Don’t List on Every OTA

Each OTA has a slightly different target market for your area, and the same marketing approach simply won’t work for each one. Instead, take one channel or OTA at a time. Each of them requires a specific marketing message, plus you need to collect reviews and look up the images compared to the competition.

Do not list your properties on every site in hopes of bookings. You’re better off focusing your efforts and getting really good on a few big ones before expanding.

2. Consistently Check Your Rankings

Your competition is changing all the time. So are their rates, photos, and descriptions. To see how you stack up, regularly check search engines (like Google) for your OTA listing or your own website.

You’ll be able to see how travelers can find you and which sites come up for various terms. Check the traffic and conversion, and work to improve. We suggest using “incognito mode” for this — and be sure to check both the paid ads and organic results.

Also, search the big OTAs, like Airbnb and Vrbo, and see if you are at the top. If you’re not, try to figure out why. If you see trends, adjust your marketing to ensure you won’t be left behind.

Keep in mind that the demand for a given OTA also changes. If they don’t advertise in your area today, they might be the top advertiser tomorrow.

3. Know What You Sign Up For

Review the terms of each site and compare them with your own business model. Many property managers sign agreements with their owners that force them to operate in certain ways. This can be very costly, as some ways of dealing with guests may not be allowed on a popular OTA.

Therefore, be sure you have a flexible contract with the owners, and take the time to familiarize yourself with the OTAs.

The post What Is an OTA? Top Vacation Rental Channels appeared first on Turno.

Simplify Your Business With a Vacation Rental Channel Manager

Hostaway — Fri, 15 Jul 2022 20:33:13 +0000

What Is Channel Management?

Channel management is the sheer act of choosing which channels and at which rates you want to make your properties available.

Even if you only rent out your property on one online travel agency (OTA), you are, in fact, managing a channel. This is because you are making conscious decisions about which channel to use and which price and marketing strategy to use there.

Software can help streamline every aspect of this.

When to Use Channel Management for Vacation Rentals

Remember what the key driver for a booking website is? Conversion.

Every site that you list your property on wants it to convert. How else would they make money? However, it can only convert well if it has a lot of availability and, ideally, low prices.

But listing on many channels has its own risks. For example, getting double-booked is highly undesirable.

When consumers search for rentals, they are primarily influenced by the factors that will increase their chances of booking: availability, rates, pictures, descriptions, amenities, property type, and reviews. Travelers are getting pickier and may only search for specific amenities such as beachfront or pet-friendly.

This is where technology — namely, a channel manager or property management software (PMS) — can help. These tools help ensure you market your property to the right people.

What to Look for When Choosing a Channel Manager

When looking for channel manager software, it’s worth noting that a PMS often comes with a built-in channel manager. Software that only does channel management will push your rates and availability to certain channels, while a PMS allows you to generate reports and owner statements, schedule cleanings, and communicate with your guests.

Regardless of whether you’re looking for a PMS or channel manager, below are several things to take into consideration as you’re making your selection.

Strong Channel Connections

Ensure that the channel manager in question is a preferred or elite partner of the OTAs you use or are planning to use. This will give you access to the best technology, maximize the availability of features, and get you more bookings.

Check out Airbnb’s Preferred Partners, Vrbo’s Elite Partners, and Booking.com’s Premier Partners for lists of popular channel management choices.

Reporting and Finance Management

Any decent PMS will let you create financial reports for yourself, your business partners, and your accounts. But the data is seldom accurate when it comes to resolutions, alterations, and manual changes.

Ensure you have a system that contains the correct financial data and allows you to present it in various formats.

Also, if you start managing properties on behalf of others, be sure the owner statements can be easily generated and are accurate while allowing for manual items to be added or adjusted.

Management of Cleaning and Maintenance

A strong task management system is the core of every property manager, big or small.

Your PMS should be able to account for sick days and additional cleanings. Bonus points if it’s usable on a mobile app so that you can upload photos and cleaning checklists.

Guest Communication Automation

A unified inbox that supports OTA message platforms, emails, text messages, and WhatsApp messages is critical. Having a good guest portal for verifying identities and signing rental agreements can bring an extra revenue stream through upselling.

Custom Website Builder

Any good PMS will have an advanced and customizable website builder that truly makes your site stand out from the rest. Be sure it can be customized and embedded on your existing website, uses dynamic pricing, and supports promotional coupons. You’ll need them.

Payment Processing

Once you diversify your revenue stream, processing your own payments gives you more control. That said, in order to continue scaling your business, you need a system that automates your payment processing.

No Hidden Fees

Be sure to read and understand all the terms before you sign a contract. Many systems can have hidden fees in the fine print, so be sure you know what you’re signing.

Features for Scaling Your Business

Choose a PMS with at least 100 partners in their marketplace. This will help ensure you’re able to incorporate new technology or business models, such as using smart home technology or crypto payments, when the consumer or your business needs it.

Additionally, an open API (application programming interface) lets you develop your own tools should you need to. Flexible user management allows you to manage the access levels of your team members as you grow.

Use a Channel Manager to Centralize Your Vacation Rental Listings

It’s worth exploring which channels to market your properties on, but a lot of attention and focus is needed to wisely invest the time and energy in the right places to get the optimal return. A channel manager can help you with a lot of the work.

The post Simplify Your Business With a Vacation Rental Channel Manager appeared first on Turno.

Is It Too Late to Start an Airbnb?

Hostaway — Mon, 09 May 2022 19:48:47 +0000

Should You Start an Airbnb Business or Is It Too Late?

Just like any business, there are pros and cons to starting an Airbnb business.

Because of the popularity of vacation rentals, the industry is much more competitive than it was five years ago. This means that while hosting an Airbnb can be lucrative, there is a lot of work required from you. It’s important to understand and weigh the risks and challenges before deciding in entering the Airbnb business market.

Airbnb can certainly be a money-maker, but there are also plenty of horror stories and myths about vacation rentals. Before deciding whether or not to start your own Airbnb, keep reading to learn nine important considerations when entering the Airbnb rental market.

1. Airbnb Can Be More Lucrative Than Traditional Renting

Unlike traditional rentals, Airbnb rental is often more profitable as you’re able to charge more on a nightly basis. For instance, if you look at an average apartment in Seattle, rent is $2,190 a month, and the total gross income for a year would be $26,280.

But if the same apartment was rented out on Airbnb, the average daily rate in Seattle is about $160 per night with an occupancy rate of 77%. So if you calculate $160 per night for a total of 270 nights per year, you’d have a gross revenue of $43,200. This means you’d make $16,920 more than you would through traditional renting.

In short, you can double your Airbnb income with a fully rented property. In some cases, Airbnb hosts can work full-time if their income is good enough.

2. Hosting Takes Work

In comparison to traditional renting, Airbnb takes more work and effort. With that in mind, hosting is not only a job in keeping your property maintained and in attractive condition at all times, but it also takes a lot of time and energy especially if you own more than one or two properties.

Airbnb is in the hospitality business, which requires you, as a host, to be available to respond to guests at any time — and if a guest is staying at your property, you need 24/7 availability. To be an effective host, you need to also be skilled in customer service, communications, property management, and more.

Additionally, when cleaning your Airbnb property between guests on your own, especially when you have more than one or two properties, it’s a lot of work. If you choose to use a cleaning service, be aware that this adds to your monthly costs. Not to mention, the right cleaner is hard to find.

Lastly, Airbnb is a competitive business, and the basic amenities may not cut it. If you want a lot of bookings, be prepared to spend extra money to ensure the property looks attractive to guests and also stands out from the competition.

3. Expenses May Be Higher

Managing your property could be minimal if it’s long-term and rented out to a single tenant. However, with Airbnb, not only do you need to perform property maintenance and handle the occasional emergency but you are also required to pay bills regularly, keep the place clean, and manage the property.

There are also many expenses to keep in mind, including:

High-quality furniture, décor, appliances, and amenities: To stand out and impress potential Airbnb guests, you’ll be required to invest money in ensuring the property looks and feels classy and provides a unique experience. Depending on your target niche, guests may prefer staying in a high-end unit.
Cable TV, Wi-Fi, and more: Airbnb guests ideally expect these amenities in place during their stay, so you’ll have to budget for the costs of the services and maintenance.
Welcome basket, welcome book, and snacks: Providing amenities like snacks, welcome books, and welcome baskets can go a long way in keeping guests feeling welcome and happy — resulting in great reviews.

Other than that, with starting an Airbnb and standing out from the competition, you’ll need a great description, professional photography, and an attention-grabbing title in your listings.

To save time and work, you can purchase a vacation rental software like Hostaway. These tools will handle all of these tasks by automating and streamlining every aspect of your Airbnb business, but keep in mind that they’re an added cost.

4. You’ll Have a Diversified Portfolio of Tenants

With traditional renting, you are solely dependent on a single tenant paying, which can be perfect if you do your diligence and things work out. However, you also need to weigh the risks.

What happens if the tenant loses their job? Or decides to stop paying? Your income takes a toll, and evicting tenants could take months.

If you go with the Airbnb route, you are collecting income from various tenants regularly, which is a small part of your monthly cash flow. Therefore, even if one or two guests cancel last minute, the minimal effect on your income is low in comparison to traditional renting.

On that note, also be aware income depends on the location of your Airbnb property. There are many jurisdictions that place strict restrictions on Airbnb, making it almost impossible to rent out property other than your own residence. Restrictions are placed to ensure there is enough housing supply for residents.

Furthermore, many homeowner associations (HOA) have restrictions on using homes for short-term rentals. This means it is important to first check with your HOA and see if your rental is legal.

5. Beware of Fake Gurus

Although Airbnb offers an incredible rental learning opportunity, there are a lot of scammers out there. If an “Airbnb guru” makes you pay for information that you can learn for free online, it’s likely best to stay away.

Instead, BiggerPockets, Airbnb Automated, and Richard Fertig are just a few examples of companies and individuals that give out free information about the rental industry.

Another way to grow your vacation rental expertise is to use Facebook groups or communities in your area. That way, you can ask the group members for public opinion and take those responses with positive criticism.

6. Arbitrage vs Ownership

So, you own or are planning to own a property and are trying to decide what to do with it. If you can handle the hospitality aspect, Airbnb will make more money in comparison to a long-term rental.

With long-term rental income, you’ll probably collect 50% to 100% of your mortgage on top of your expenses. However, with the Airbnb approach, you may collect 4 to 6 times your mortgage, which is not normal in a long-term market.

That said, you could make more money in the arbitrage market than by owning a property — and you’d make a profit sooner. If you aren’t good at being dedicated to maximizing revenue and maximizing profit, however, buying a property would be an easier way to still be profitable.

Since Airbnb is a competitive market, it is possible not to make money. Therefore, owning a property is a way to get into the rental market, but it’s also cost restrictive. With that in mind, maybe you opt for rental arbitrage for part of the year to see if it’s right for you.

7. Risk of Being a Landlord

In general, there is a risk involved in being a landlord. This is especially true if you give someone a lease for a year and they decide not to move or to quit paying. Then, you’ll have to evict them, which can be frustrating.

Further, in a situation where the tenant leaves but destroys the property, you may not be able to quickly fill the vacancy with a new tenant and recover your missing income.

Once a tenant damages your property, you’ll have the trouble of renovating. If you do not have experience as a landlord and know how to protect yourself against tenant damages, the possibility of losing money is high and, again, the eviction process is no fun.

8. Unsteady Income

If you own a property and rent it to a single responsible tenant long-term, each month you’ll receive rent that can provide you a regular source of income. However, as much as Airbnb can be lucrative, there are times of the year, especially in the off-season, when there’s no guarantee of a steady income stream.

Moreover, Airbnb rentals may be far more inconsistent. In theory, you can rent out a property 365 days a year, but you’re likely to have many vacant dates on your calendar. As an Airbnb host, your occupancy rate depends on several factors, including the weather, time of year, and location.

Therefore, be sure to get comfortable with earning less money part of the year when starting an Airbnb business.

9. Success May Be Gradual

When starting an Airbnb business, it is very unlikely to get booked nearly every night. Keep in mind that bookings come largely from your past guest reviews and ratings. The higher rating and more positive guest reviews you have, the more likely it is for your Airbnb to attract potential guests.

With that said, at the start of your Airbnb business, you may need to offer potential guests incentives or lower prices to get them to stay and experience your Airbnb — and leave raving reviews.

Get More Helpful Advice on Airbnb Hosting

Starting an Airbnb business is a learning process, a lot of work, and a huge decision. That said, it can be a rewarding and lucrative experience.

Surely, you’ll have to commit a lot of your time to learning this industry. But if you can survive the cons and are willing to put in the effort to overcome the challenges you face, then starting an Airbnb may be right for you.

For more tips and advice on hosting a short-term rental, visit Hostaway’s informative blog.

The post Is It Too Late to Start an Airbnb? appeared first on Turno.