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Predictions for New VR Future by Nancy McAleer
3 min read

Predictions for New VR Future by Nancy McAleer

Predictions for New VR Future by Nancy McAleer

The following guest post comes to us from Nancy McAleer of Florida Rental by Owner and Anna Maria Island Home Rental.

Airbnb falters but probably won't disappear

Airbnb hosts shift to a love-hate relationship with Airbnb dictatorship decisions similar to what VRBO has experienced. They will lose some supply and be lopsided in their business model of having more travelers compared to hosts/units. They will recoup many of their stimulus host programs and losses on the backs of the travelers who gained loyalty through the COVID refunds. - Airbnb has already increased its traveler fee average from 13% up to 14.2% (I think the increase occurred late March but don't quote me on that).

Diversification of marketing and advertising

More experienced business-minded VRMs and Owners explore Book Direct marketplaces to diversify their portfolio and gain ad space market-share to compensate for lost bookings and streamline as well as solidify their business operations. Many are already improving their listing descriptions and photos in their downtime, as well as starting their own websites getting ready for the relaunch.

Loss of Many New Commission Based OTAs

OTAs that work on a commission-based business model will falter in 2020 into 2021 where many will close as well as large funded companies like Vacasa that don't run with a solid annual profit or already have a "slush fund" in place will also fail with the lack of bookings.

Rental arbitrage will lead to less supply in the urban marketplace

First-tier recovery areas

"Close to home" drive to locations that have few crowds and short-term rentals will be the logical choice versus crowded hotels as a viable, affordable post-COVID vacation choice. This is where owners and VRMs will have to regain traveler trust through transparency with cleaning protocols, etc...

Rate Disparity

There will be diversity in rental rates in the short-term recovery period (relaunch) where hosts that found themselves in a dire financial situation will be offering discounts, shorter min stay periods to gain quick cash flow to make much-needed operation expense payments. I don't expect this to last too long into the future.

Rebuilding Insurance into Business Models

Many VRMs and Owners will create a travel insurance checkpoint with each guest's journey to minimize the risk to their business model. Now is the time that these players will revisit their business and change how it operates. Travel insurance will become very important to VRMS and Owners... and a better system to track which guests have it versus those that don't will transform the marketplace and the way we work with insurance companies.

Certification and/or Legislation

There will be a call for certification/legislation into the business practices of vacation rental properties in order to comply with new health guidelines and policies.

VRMs and Owners Better Accounting Practices

Where VRMs and Owners were spending profits before the actual check-in date there will be a shift in better accounting practices where money will be kept in accounts until the guest departs. At the same time, VRBO will have to shift to the same payment at the check-in model as Airbnb to avoid financial losses. Whether owners and VRMs will accept this change is another matter.

Vacation Rentals in the USA will Open Up this Summer

In analyzing the number of FLARBO inquiries from Feb 1st to date, there is steady growth in the number of inquiries since the lowest week on March 21-27, 2020. Early estimates of this week's inquiries (2 days of data) show that April 18-24, 2020 will have 66% of the number of inquiries compared to the first week of February (pre-COVID in the USA). Consumer confidence is returning even while living with stay-at-home orders.

Watch How Large Corporations are Relaunching

Looking to Disney World Florida's actions by current CEO Bob Chapek who by the way used to serve on Trump's advisory board in 2016-2017, (past CEO Bob Igor has also returned to the crown to help get Disney relaunched) their opening up of their reservation system for June 1st for new reservations is something I will be watching closely for an indicator that relaunch will be imminent this summer (right or wrong). Their new flexible stay cancellation policies for June reservations is also a good indicator of ways to gain early relaunch business.