The last 20 months of vacation rental demand may never occur again.
It appears, for many markets, the bull run is over.
Welcome to the new (no, like really new) normal.
(Of vacation rental demand, that is).
Folks much smarter than me are predicting that a possible recession, or even just a slow-down, is here and may stick for some time. This means that rates may fall, demand may drop and overall booking pace may change and revert to 2019 levels or even lower in some markets.
Where Does This Leave Your Marketing Strategy?
Let’s be honest: it wasn’t a huge challenge to market premium vacation rental properties during the post-Covid boom (at least here in the US). Demand was plentiful, rates were sky-high and inventory was crunched. Now, as we enter into a new season of demand, marketing is more important: when demand is lower, it’s all about how to capture attention.
Think of the following matrix.
Note: not drawn to scale nor meant to be illustrative of all markets, just some we’re familiar with here at BuildUp Bookings. Again, not hard data, just observations.
As you slide “up” the demand curve, it can be great as long as inventory doesn’t get too high. But some markets, over the past 20 months, have had very much a “gold rush” of new listings. Gatlinburg, for example, has grown from 3,100 rentals before the pandemic to over 4,800 today (source).
Has demand been strong in Gatlinburg to support that increase in listings (a 54% increase in listings)? For the last 15~ or so months, I think the answer was yes. However, as demand has slipped slightly into the summer, and inventory in the market doesn’t appear to be slowing down, you’re seeing revenue fall back a bit. This is the case for many markets.
Regardless of your market’s conditions today, it’s fair to assume that things may likely weaken as you head into the later parts of Summer of 2022, and possibly fall quite a bit into the Fall of 2022: much less than last year.
Demand from families with children in school has changed, for example, as remote schooling is over and mid week “remote learning from the vacation rental” travel has dried up. Demand from lower-income folks who are heavily impacted by gas prices and inflation is going to likely slow things down a bit too.
In a way, the reasons don’t matter too much. Here’s what does matter: I believe that over the next 12-20 months, the best marketed properties in the best locations will still win. Guests aren’t going to stop traveling altogether. They’re just going to be a bit harder to reach, a bit harder to market to and a bit harder to convert.
In other words, the best marketer is going to win. In the rest of this post, I’d like to share how I think you can become a better marketer for your vacation rental business without breaking the bank.
Generate Awareness With Past Guests
The best (and often least expensive form of) marketing you can do in the short-term is with your past guests, leveraging email marketing to reach out to those past guests and let them know what you have to offer and why it’s a great value. Guests who paid $300 per night during the peak times often will convert at $230 per night during a slower season or lower overall demand time period.
Market to past guests via:
- Email marketing newsletters showing deals, open dates, area events and information
- Send an outbound email or text message asking when guests who booked last year, but not this year, plan to return
- Leverage remarketing ads to target past guests who’ve not yet booked for this year or over a 9-12+ month period
Providing Value, Not Just Rate Cuts
The easiest thing to do is cut rates. It’s also the hardest way to complete over time.
The problem with the race to the bottom is you might win — Seth Godin.
Instead, consider what value can be added during a shoulder season or lower demand?
- Can you offer a free late checkout to any 3+ night or 7+ night guest?
- Gas prices are skyrocketing: a $100 or $200 gas credit for any 5+ or 7+ night stay possible?
- Are there local businesses that you can partner with to offer credits towards? For example, get a $100 gift card to a local restaurant for any 3+ night stay.
- Can you waive fees or make them more simple for the guest? A single admin fee instead of two?
Highlight Unique Events & Activities
It’s not just about your vacation rental properties! Why are they traveling? What events and activities are going on during slower seasons? Is there events, unique activities you can highlight and even cross promote?
For example, if the Fall fishing season is fantastic, you can run a Facebook/Instagram ad targeting those interested in fishing in a 8~ hour driving radius to your destination.
For local events, you can get your properties listed on a “preferred lodging partners” page to drive demand during off season events and gatherings.
Consider Looser Rules: Locals Allowed & Minimum Night Requirements
Now is the time to consider where you can loosen your rules, requirements and restrictions. During high demand times it makes little sense to allow shorter stays when long ones will book, however if demand slows, that is a useful lever to pull.
- Allow locals and even advertise to locals “staycation” offers: save on gas and target travelers within a 20-50 mile radius.
- Change minimum night requirements during the shoulder season to 2-3 nights
- Adjust cancellation policy to a less strict option to stays in the next 90 days
While each adjustment may be small, the overall demand can be helped by some preferring each of the above options.
Marketing During Low Demand Is Both Art & Science
Hopefully these ideas spur some actionable tactics you can leverage in the event you need to boost occupancy in the coming months. There’s no doubt that we may be heading into a lower demand season in general but the long-term prospects of vacation + short term rentals is still as bright as ever!