By George Volsky, Instant Software - Director of Research
In a recent blog, I suggested that you look for ways to become more efficient in five categories. In this blog, I include my thoughts about the last of these: “Changing your business model.”
For years, I’ve joined the rest of you in following the role of rent-by-owner. RBOs are simply one facet of changes that are arising from the Internet, which is today responsible for many new expense categories and more pervasive discounting. Among my conclusions is this:
The legacy of the Internet (and Rent-By-Owner) evolution will not ultimately be the eradication of mainstream rental managers but fundamental changes in what they do and how they do it.
Taking a Lesson from the Real Estate Industry
We have seen a trend similar to rent-by-owner in real estate sales, when FSBO’s (“For Sale By Owner”) came into prominence on the back of new consumer-friendly Internet technology.
In the early years, real estate agents worried that FSBO would put them out of business. They saw FSBO as the enemy, and worked actively to oppose it. In extreme examples, the government took action to prevent the industry from relegating FSBOs in the context of multiple listing services.
Before long, the National Association of Realtors was advising sales agents to find ways to work with FSBOs. Their polls concluded that the vast majority of homeowners were reluctant to price their home on their own, market it properly, and do the related paperwork. The FSBO trend peaked, and trailed off to occupy a fraction of the industry’s annual sales.
The FSBO trend changed the industry. Many real estate agents began to offer services a la carte. They let FSBOs pay them to do almost any aspect of the sale: provision of signs, marketing, MLS listings, and the like. The industry also departed from its commission structures to become much more competitive.
Changes in Our Industry
Today, there are many new rental managers who began by renting their own homes. They have leveraged the Internet to redefine the way they do business. Many do not have central offices and don’t require renters to check in and check out. Many are able to service far larger geographical areas. Some rely primarily on the Internet for bookings and/or allow their reservations staff to work from home.
The net effect is a breed of vacation rental companies that have lower costs than mainstream competitors (and provide less service). They can charge lower commissions, or spend more money on Internet marketing. This new breed is growing, proving that mainstream rental managers have many homeowners and renters who would accept less service in order to get lower prices. This new breed is steadily stealing inventory and market share from mainstream managers.
There will be many markets in which there is no discernable change from the Internet. But you cannot afford to take this for granted. Change can occur if one of your mainstream competitors is sold to a new-breed rental manager. Rental managers must always have a contingency plan .
-
Think about ways your company can profit by providing services to RBOs;
-
While you are at it, consider services to vacation home owners who do not rent;
Also consider whether it can be in your company’s interest:
-
To specialize in a type of vacation rentals that is efficient (high-end luxury homes; or more basic “Motel-6” type properties, etc.)
-
If you are large and secure in your market, to split your operations into two or more distinct businesses;
-
To offer a la carte services so that the renter and homeowner need only pay for services they really want.
As farfetched as some of these ideas sound, we are seeing similar trends in industries where the business models were so perfected that such changes would have been considered unthinkable ten years ago.
I’ll cover some of these in future blogs.
Nice post,
This is some great money saving advice,
Anyway, thanks for the post
Posted by: bespoke software development | January 22, 2010 at 05:35 AM