Instant Software Blog

Research Defining State and Local Economic Impact of the Vacation Rental Industry Released by Instant Software and VRMA

Industry leaders publicize recent research to aid vacation rental managers and tourist offices in understanding and measuring the economic impact of the Vacation Rental industry on their communities.

Instant Software, Inc.’s (ISI) research department, in conjunction with participating in a Vacation Rental Managers Association (VRMA) committee, has released a comprehensive White Paper laying out a blue print for identifying the economic impact of vacation rentals on state and local economies.  While it targets state and local officials, it also hones in on educating vacation rental managers on how their industry plays a prominent role in resort economies.

This research outlines the many ways that vacation rentals generate substantial economic benefit in areas outside of the tourism segment, such as driving local construction, real estate, finance and insurance industries. In addition, it shows that economic contributions of vacation rentals are not fully understood and are poorly documented in analytical methodologies commonly used by state planners.

“Instead of vacation rentals being stereo-typed as inconsequential to the tourist economy, the research shows the many positive influences this sector of the market has on any community in which they reside,” says Alex Risser, president of the VRMA. “This is truly insightful information which allows those of us in this profession to see and communicate the large ripple effect our business operation has on the surrounding community’s economic environment.”

Unlike owners of hotels and motels, investors in vacation homes expect to subsidize rentals. For example, they expect mortgage and management costs to exceed rental revenue. This subsidized lodging can facilitate tourism growth and enhance tax revenues in resort areas where large hotels are not economically sustainable.  State and civic leaders will be better poised to manage their communities by understanding this and the other investment dynamics that tie vacation homes to a resort community’s economic health.

“The vacation rental industry is complex and its enormous dollar value is not adequately profiled by the standard economic forecasting models today used by most states,” states Dave Hopcroft, CEO of Instant Software. “Public policy debates over community growth seldom include any financial analysis of how tax increases or restrictions on vacation rentals will affect a resort’s construction, real estate, finance and insurance industries, or the related tax revenues. We hope this white paper will provide public officials with a better understanding of how this occurs.”

Officials can identify the numbers needed to calculate the economic impact on their community by using the research provided. These numbers serve to better inform state and local governments, who in turn will perhaps be more willing to recognize and support this industry as a major source of growing its economy.

The White Paper outlines how a better understanding of vacation rental homes can affect debates typically arising in resort communities over ideas such as distribution of tax burden among property owners, residents and tourists, large rental homes and other high-density accommodations, as well as tourism growth where hotels are not economically sustainable.

Click to download the full White Paper by ISI and VRMA.

Be Cautious When Reviewing Industry Statistic Reports

By George Volsky, Instant Software - Director of Research

As many of you know, we recently started publishing industry statistics.  We did so after receiving inquiries from clients asking about reports being issued by other industry vendors.  We reviewed those reports and found that they were inexplicably different from the numbers we harvest through ISILink, the nation’s largest inventory of vacation homes.  We felt we needed to supply reliable data to our customers (and to others to whom industry stats are important).

The reports I looked at from other vendors do not offer much in the way of definitive year-to-year trends, but tend to focus on month-to-month changes.  These would be of limited value to managers who need to know how their company is doing on a year-to-year basis.  But the reports were difficult to reconcile in other ways.  For example:

• Average Rent.  We know that the average rent paid during the first six months of 2009 was $1205.  But an Escapia ClearStay report shows average rents ranging from a low of $1,350 (Jul-08) to more than $1400 during ten of 12 reported months.  Escapia shows six of the 12 reported months as averaging more than $1500. Vacation Rental Market Trends, 2nd Quarter, 2009, chart titled “Average dollars per Booking (Jul-08 through Jun-09).”
• Length of Stay.   Escapia concludes that the average booking is between four and five days in length whereas the number derived from our very large database is 6.5 days for 2009 (our numbers comport more closely to the conclusions in a PhocusWright survey that the average renter stayed 6 nights in 2007). 
• Average Daily Rate.  We know that the average daily rate for the first half of 2009 is $185, compared to $199 for the same period in 2008.  Yet, Escapia reports that during 12 months ending June 30, the average daily rate ranges from a low of $286 per night for February bookings to a high of $342 per night for May bookings.  Fully 10 of 12 months are reported by Escapia to average daily rates exceeding $290.

Escapia’s numbers might be perplexing to any of our clients, or to any managers whose numbers fall within the national average.

I am confident that our numbers are cleansed and representative of the industry’s averages.  I can’t tell you why the statistics generated by Escapia, or any other vendor, are different than ours. There are many possible reasons: 

• Some vendors’ customers may not be representative of the industry (i.e., their customers may be smaller or concentrated in certain geographical regions);
• The data behind the reports could be flawed (it takes a lot of “cleansing” to weed out companies’ test data and reservations where booking dates are missing or wrong (this can happen when a company tries to put reservation data from an old reservation system into a new one);
• The vendor may not filter out long-term reservations (residential) or non-revenue bookings (owners or owner guests who pay less than normal);
• The vendor may be inexperienced in data harvesting and reporting and unknowingly includes inappropriate data.

But be cautious when viewing industry statistics from other vendors.  At minimum, be sure to review ours before making any conclusions about how your company performed vis-à-vis others.  Instant Software reports are based on volume and experience.  I have been harvesting data from reservation systems for more than fifteen years and, during that period, have run across an enormous number of traps that can skew statistics.

To get a representative sampling of reservation trends, I throw out half of the data because it may be tainted in one manner or another.  Fortunately, our data is supplied by the nation’s largest pool of vacation rental homes and data cleansing leaves a very large data sample that identifies trends in all major markets.

View Instant Software Industry Trends Reports HERE

Distinguishing Yourself from Competition in Today’s Economy

As revenues decline, how are you attracting more guests and setting yourself apart from the competition? The single most popular solution has involved some form of dynamic pricing,often in the form of  discounting.

A few innovative things Instant Software clients are finding successful in getting more business during today’s economy have been:

• Contacting previous guests and giving them special pricing
• For “drive-to” destinations, offering to pay for guests’ gas either by giving a gas card or reimbursing a portion of the gas
• For “fly to” destinations, reimbursing a portion of the airfare by crediting money towards the rental
• Covering guest lodging tax and/or travel insurance
• Giving the 3rd night free if a guest stays for 2 nights
• Upgrading to a larger unit for free
• Packaging deals – golf, meals, local attractions
• Setting up referral programs or guest “rewards” programs
• Revamping and customizing their websites with unique offers

 

Vacation Rental Bookings Increases 20% Over Year-to-Date 2008

By Amy Regnier, Director of Marketing

Instant Software leads the way to increasing reservations in the Vacation Rental Industry by helping clients generate over a quarter of a billion in year-to-date online reservations through ISILink.

Instant Software, Inc. (ISI) clients have experienced record breaking growth for online bookings of vacation rentals through the strength of ISILink. Despite the downturn in the economy, through the end of August, online reservations of vacation rentals through ISILink represented over $250 million, a 20% increase over year-to-date 2008.

Although total revenue from bookings across the vacation rental industry is down 15% in the first half of 2009, total online reservations year-to-date exceeded 2008 by 20%. This is evidence that more vacation rental companies rely on ISILink connectivity and internet distribution to drive business. ISILink, the Vacation Rental industry’s largest distribution system for suppliers and distributors of online vacation rentals, is becoming the industry’s most powerful Web Distribution System, and by far the best way to connect to web distribution channels.

“These figures prove what we have long believed - efficient distribution through established websites with comprehensive content will yield results,” stated Dave Hopcroft, CEO of Instant Software. “Early results and visit trends for the next part of 2009 are showing that this upswing in reservations is likely to continue.”

Instant Software is the leading supplier of technology solutions for property management companies which manage and rent other people’s homes, cottages, apartments, and condos for vacation travelers. ISILink is Instant Software’s web distribution system that bridges suppliers of vacation rental properties with distributors, such as travel sites and portals. 

“Through ISILink, our clients can now compete with hotel chains in the same arena the hotels have long controlled. This is an extremely important milestone for the vacation rental industry,” Hopcroft says.

ISILink is a unique data hub that consolidates, normalizes, and interprets data from suppliers’ reservations systems and enables seamless real-time automated bookings between the different parties’ systems in North America, the Caribbean and Europe.  Distributors connect to ISILink and automatically pull information such as property descriptions, availability, prices, and guest reviews to market to potential travelers.  When a traveler books a vacation property, the reservation information is sent back through ISILink to the property manager’s reservation system and automatically confirms the booking in real-time.