How Can Vacation Rentals Attract New Customers and Retain Users?

November 20, 2024

The commercial landscape of vacation rentals has evolved considerably since the mid-2000s, transitioning from an unconventional idea to a mainstream travel accommodation option. This shift has been largely precipitated by the success and increasing ubiquity of platforms such as Airbnb, which have normalized the practice of renting private homes and spaces to travelers. However, despite this growth and acceptance, vacation rental brands face critical challenges and opportunities as they seek to expand their market presence and appeal to a broader audience. Identifying the right strategies and understanding consumer behavior trends is essential to overcoming these challenges.

Understanding Current Customer Behavior

Vacation rentals have experienced significant improvements across key brand metrics in recent years. The COVID-19 pandemic, in particular, has served as a turning point for the industry. As travel restrictions eased, many consumers preferred the greater physical distancing offered by vacation rentals over the close quarters of hotels, resulting in a notable increase in vacation rental bookings. The share of travelers planning to use a vacation rental increased from 18% in late 2021 to 27% in early 2024, indicating a robust upward trend in their popularity.

This surge in usage has been paralleled by improvements in several key brand perceptions. Since early 2020, net favorability for vacation rentals has risen by 5 points, and net trust has increased by 4 points. These metrics indicate growing consumer confidence and satisfaction with vacation rentals. Additionally, there has been a positive shift in the perception of vacation rentals’ impact on local communities. Despite ongoing concerns about these rentals’ effects on affordable housing and neighborhood culture, public opinion has become more favorable over time. This indicates that vacation rental companies have successfully addressed some of the earlier criticisms and are increasingly viewed as responsible members of the community.

Addressing Perceptions of Value

Despite these advances, one critical metric for vacation rentals has remained stagnant: perceptions of value. While still positive overall, perceptions of value have not seen the same growth as other brand metrics. This indicates that a significant portion of consumers, especially baby boomers and lower-income individuals, do not view vacation rentals as offering a good value relative to their cost. This sentiment suggests that these demographic groups may need more convincing or reassurance about the cost-benefit ratio of vacation rentals.

Moreover, net purchasing consideration remains negative for vacation rentals, meaning more consumers are not considering booking a vacation rental than those who are. This is partly due to the infrequency of travel — individuals not planning trips in the near future are less likely to consider any accommodation options. However, hotels still maintain a positive net purchase consideration, implying that the issue for vacation rentals isn’t solely due to travel infrequency. Instead, it is more likely tied to the limited travel scenarios for which vacation rentals are currently deemed suitable. For example, vacation rentals may not be seen as suitable for shorter stays or solo travel, where hotels traditionally dominate.

Targeting Specific Travel Scenarios

Key findings indicate that vacation rentals are more popular among travelers for group trips and extended stays. Casual leisure travelers, defined as those who took one or two leisure trips in the past year, prefer hotels for most travel occasions. However, they are more inclined to choose vacation rentals when traveling with large groups, and they view vacation rentals on par with hotels for small group travel. For stays exceeding five nights, vacation rentals are seen as more competitive. This trend suggests that vacation rentals are well-suited for scenarios where space and extended use can be maximized.

Meanwhile, travelers who have stayed at vacation rentals are likely to become repeat customers for a range of travel scenarios. Despite this, they still tend to prefer hotels for solo trips and short stays, likely due to considerations of cost, logistics, or safety. There’s also room for vacation rentals to grow in appealing to business travelers and gaining traction in urban locations. These insights indicate that vacation rentals need to refine the booking and staying experience for these specific travel occasions to attract a broader audience. Understanding and addressing the nuances of various travel needs can help vacation rental brands better position themselves against traditional hotels.

Emphasizing Price and Safety

To attract new travelers, vacation rental brands must focus on price and safety — the two primary concerns for potential customers. For leisure travelers, price remains the most significant factor when choosing accommodations. While platforms like Airbnb have made strides in helping consumers assess total costs upfront, there’s still a need for clearer cost-benefit communication. Brands should emphasize potential savings beyond nightly rates, such as reduced food and beverage costs, and the absence of additional fees typically incurred at hotels. This approach can help shift perception towards seeing vacation rentals as economically sound options.

Safety is another critical factor, especially for those who have not previously booked a vacation rental. The consistent and secure experience offered by hotels often outweighs the perceived risks associated with staying in a private home. Although vacation rental companies have introduced measures to enhance safety — including prohibitions on intrusive surveillance like cameras — continuing to invest in and communicate these safety enhancements will be vital in winning over new customers. Highlighting safety protocols and guest protection measures can also reassure hesitant travelers and convert them into vacation rental users.

Enhancing the Booking and Staying Experience

Other considerations like house aesthetics, host rules, or designated working spaces, while beneficial, do not significantly influence new customer acquisition. Therefore, vacation rental brands should prioritize message and product enhancements that align with consumers’ primary concerns: price and safety. Vacation rental companies can also improve the booking experience by offering more flexible cancellation policies, transparent pricing, and user-friendly platforms. Enhancing the staying experience with amenities such as high-speed internet, well-equipped kitchens, and comfortable living spaces can also make vacation rentals more appealing to a broader audience.

Creating a seamless and hassle-free booking process and ensuring guests have an enjoyable stay can lead to higher satisfaction and repeat business. Simple steps like clear communication during the booking process, easy-to-follow house rules, and rapid customer service responses can significantly impact the overall guest experience. By focusing on these areas, vacation rental brands can foster loyalty and differentiate themselves from traditional hotels in meaningful ways.

Leveraging Marketing and Community Engagement

Since the mid-2000s, the commercial landscape of vacation rentals has undergone significant changes. What started as an unconventional lodging choice has now become a mainstream option for travelers. This transformation has been driven largely by the success and widespread use of platforms such as Airbnb. Airbnb has made it commonplace for travelers to rent private homes and spaces, effectively changing the way people think about travel accommodations.

Despite this growth and acceptance, vacation rental brands still face considerable challenges and opportunities as they strive to expand their reach and appeal to a wider audience. It’s crucial for these brands to identify effective strategies and keep abreast of consumer behavior trends. By doing so, they can better address these challenges and seize opportunities to establish a stronger market presence. The key to overcoming these hurdles lies in understanding what motivates consumers and adapting offerings to meet these evolving demands.

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