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Is the smart home behind a future revolution in vacation rentals?
Despite scepticism about the value that ‘smart homes’ can deliver, an early adopter in the vacation rentals space believes smart controllers can deliver value to guests and property managers
Not all that long ago, ‘vacation rentals’ was a niche, sleepy cottage industry. Most were ‘Mom and Pop’ outfits, which built companies in Europe and America, or they were real estate companies that somehow got dragged into renting out holiday homes. Either way, there was very little technology involved; essentially they were classified listings where contracts were signed on paper and keys handed over in person. How things have changed!
Thanks to the rise of companies like Airbnb, which put private home rentals on the map, and has unquestionably driven huge category awareness, technology has significantly transformed this industry. Now there are electronic contracts, smart locks, mobile apps for communication, portals with information on where to go, what to do and where to eat, and a whole lot more. All of these things have improved the consumer experience by delivering fundamentally more efficient processes.
$194 billion – the estimated value of the vacation rentals market by 2021
Estimated to be worth $194 billion by 2021, in the US alone there are some 10 000 property management businesses, and with demand still exceeding supply by around ten to 20% there is still room for growth.
According to Steve Milo, CEO of Florida-based Vtrips, formerly Vacation Rental Pros, the next industry revolution is coming, and it’s going to happen within the next five years.
Says Milo: “The smart home is really going to transform the industry for private rentals. And it’s going to be good for the guest and the property manager.”
An early adopter, Vtrips has already invested $1-million in smart home automation and controllers, which have been rolled out to around 80% of the 2,000 properties it manages exclusively.
The idea is that the controllers will be able to do everything from operate smart locks, control noise and energy usage, and even monitor occupancy based on the number of mobile phones in use in the house. And that is just the beginning.
“Controllers will get smarter over time, and exponentially,” argues Milo, who believes that soon generic controllers will be replaced by the likes of Amazon Alexa, which guests can interact with even before they arrive at the property.
He continues: “All of a sudden, a private accommodation essentially has a concierge element to it that is produced through technology. Instead of calling the rental manager to shop for a checklist of gourmet groceries, the guest can do this in advance through their computer or even with their cell phone. They can programme the TV before they arrive, set the heating levels or organise a tour or excursion. Everything can be arranged and customised in just the way the guest wants it to be.”
What’s good for the guest…
If all goes according to plan, this ability to truly personalise will be good for guests. But it will be good for property management companies too, which will get an affiliate revenue share from the company offering any of the above-mentioned services. In addition, as companies like Amazon and other suppliers open depots in larges cities, things like maintenance could become more efficient. For example, instead of maintenance teams going to a property and trying to fix something, and then having to go back to office to order supplies, in theory, they will be able to place an order and get what’s needed within an hour or two.
“All this will revolutionise the guest experience and deliver revenue share for property managers. It’s brilliant,” says Milo.
So is this something that competitors are doing too? “I’m not sure everybody is talking about it but we are,” says Milo, “and we are engaging with companies that are getting venture funding to make these things happen from an operational standpoint.”
He admits that operationally it’s a “pretty intensive challenge”.
The first step is the capital investment to get controllers into every unit – what Vtrips is currently doing. Next is aligning the backend system or database that networks in through APIs with the software companies that drive the controllers. Finally, staff must be trained to leverage the technology.
However, beta tests are already underway by companies like Amazon, and Milo expects urban areas to benefit first, followed by resort areas.
Early adopters often face higher costs and need to channel more resources into project development; they also run the risk of things not going according to plan. Is Milo worried? No, in a highly competitive and consolidating market place, he believes it’s a risk worth taking.
“Early adopters also reap the rewards if they are successful, as the improved [smart home] guest experience is something that can be scaled,” he says.