VACATIONFUTURES WINS PHOCUSWRIGHT TRAVEL INNOVATION AWARD

Contact:  Mickey Kropf                                                                      

Tel.  617-256-6425

Email:  mickey.kropf@vacationfutures.com

December 9, 2014

VACATIONFUTURES WINS PHOCUSWRIGHT TRAVEL INNOVATION AWARD

Atlanta, GA --  VacationFutures, the wholesale vacation rental marketplace, took top honors for most innovative startup at The Travel Innovation Summit, part of The Phocuswright Conference in Los Angeles.  VacationFutures was one of thirty-two “innovators” selected to demonstrate their technologies on-stage in front a panel of travel industry judges and conference attendees.  VacationFutures was also one of five companies in the world to win a scholarship to the event.

“We had an amazing experience at Phocuswright.  It was a privilege to present as an innovator, but a true honor to be named the Most Innovative Startup Company amongst a fine group of startup travel companies,” said Andrew McConnell, CEO and Co-Founder of VacationFutures.

VacationFutures is the wholesale rental marketplace for the vacation rental industry.   Through its proprietary listing and auction platform, VacationFutures allows vacation homeowners to generate guaranteed income from their property without the time commitment currently required by other options.  At the same time, VacationFutures helps professional vacation rental managers grow their inventory of properties under management in the quickest, easiest, and most efficient way possible.

“We have nearly 200 professional vacation rental management companies competing for new properties on 4 continents via our online marketplace.  We are placing great properties with these managers at price points that work for all parties involved,” said Mickey Kropf, VacationFutures Co-Founder and Head of Sales.  

Vacation rental managers interested in adding more properties to their portfolios may register for more information at www.vacationfutures.com.

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Is the New Economy a Democracy or a Republic?

It seems like for as long as we have had the Internet there has been talk of how it can and is “democratizing” anything and everything.  There is the “democratization of technology,” the “democratization of personal finance,” the “democratization of data,” the “democratization of retail,” and through blogs like this, the “democratization of publishing.”  So are we really seeing “The Democratization of Everything?”

Just because the Internet enables people to do virtually anything themselves rather than use a professional party, does that mean they actually will, or even that they should?  In school most of us learned about Adam Smith and the concept of the division of labor.  As a refresher, this is the idea that it is actually better for the individual and for society as a whole to specialize in a specific area.  This allows the individual to become more expert, and increases productivity individually as well as in aggregate.  This approach has been credited with spurring the Industrial Revolution, and essentially creating the modern economy as we know it.

But now some would argue the pendulum is swinging in the opposite direction.  No longer do you need a banker to focus on finance, a retailer to focus on selling goods, a taxi driver to focus on transporting people, or a hotel to focus on providing lodging.  In our Internet-enabled age individuals can and will fill all of these roles and more, not as professionals, but as part-timers.  The office worker can become a part time driver on Lyft or Uber to earn a few more dollars.  The empty nesters can make some extra money for retirement by renting their spare bedroom through Airbnb or VRBO.  You can even cut out those greedy banks by lending and borrowing directly from people just like you through LendingClub or Prosper. What is there not to like?

A recent New York Times article suggests quite a lot.  While technology has allowed for the possibility that amateurs can and will displace professionals, the reality is rarely so simple.  The “providers” in these peer-to-peer platforms often find that to really be worth their time, they have to treat it like a real job.  Even when they do, as the New York Times points out, the returns are far from certain. 

And when people don’t treat it as a full time job?  Not only do they make less, or sometimes nothing at all, but they are still taking on a significant burden.  Take for example vacation homeowners who decide to rent out and manage their homes themselves.  In theory this is great – they can save on the commissions they otherwise would have to pay to rental management companies.  In reality they have just signed up to take on all of the risk, hassle, and time commitment a professional would otherwise cover.  In fact, a HomeAway survey of homeowners using their platform shows that these owners spend 8.4 hours per week managing their homes. That’s right. Every week they are spending an entire workday doing something that a professional operating full-time and at scale can do more effectively and efficiently.

Fortunately, despite all of the “democratization” noise to the contrary, amateurs are not actually displacing professionals in droves.  For example, look at eBay, the great democratizer of retail.  Though the site started as a venue for soccer moms to sell Beanie Babies to other soccer moms, it is now a platform on which new professional retail businesses are started and grown.  This shift is so pronounced that “Power Sellers” now account for 80% of eBay’s total sales.

Or look at Airbnb, the darling of the sharing economy.  While pitched by the company as a platform where “regular people” can rent a spare room or even a couch, the reality of how it is being used is far different. A recent Skift report shows that already, much faster than the shift occurred with eBay, 40% of Airbnb’s revenues come from hosts with multiple listings, and a majority of its revenue comes from whole-home listings – not spare bedrooms or couches. 

What is actually happening is that the platform Airbnb provides has enabled the creation and growth of new model management businesses such as AirEnvy and MyVRHost, the new “Power Sellers” of the sharing economy.  Companies built entirely on the backbone Airbnb provides, but companies nonetheless.  No wonder Jason Clampet says: “The future of Airbnb is not the guy who rents out his place on the weekend. It’s the professionals who know what they’re doing, and sell rooms every night of the week.”

Even beyond these companies, despite all of the talk surrounding what Airbnb and VRBO are doing to the lodging space, it is a more traditional vacation rental management company, Vacasa that appears to be growing the fastest.  Largely by working with homeowners who have started to realize that just because they can do things themselves does not mean that they should, Vacasa was recently named the fastest growing company in the Portland area, and the 9^th fastest in the entire United States. 

All of this is to say that what may in the short term look like a Democracy is more likely to evolve into a Republic.  We will not become a society where every single person does everything for himself or herself.  However, that does not mean the business environment as we know it will remain static. Technology and new platforms enable the creation of new and disruptive business models.  In the end, though, it will still be businesses that predominate. 

And this is a good thing.  We should remember that, in the United States at least, our forefathers very explicitly chose to create our country as a Republic not a direct Democracy.  Understanding the principles of the division of labor, they knew it was better for us to elect representatives who could focus on governing full time rather than requiring each and every citizen to be involved in the writing, passing, and enforcement of our laws.  Even with this more hands off approach where we outsource the heavy lifting of governing to elected representatives, most people find it difficult to do their part and vote. With voter turnout at record lows, can you imagine if we actually had to do everything ourselves? Now there is a scary thought.

Vacation Rental Trends: Q2 2014

An earlier post on the VRMA blog covering Q1 focused on 4 main trends, namely continued growth, regulation, increasing professionalism, and new entrants. While these trends have continued, simply repeating the same trends again would not be terribly interesting or informative. For this reason, this post will focus on some new trends, and some nuances to prior ones. Specifically:

• Industry consolidation (new)
• Backlash against the big players (new)
• VR industry becoming ever more mainstream (nuance)
• Regulations not being as bad as predicted (nuance)

Below I will briefly touch on what each trend is, and its implications for VRMs as well as the industry as a whole.


Consolidation

Though not addressed on its own before, this is not exactly a new trend. HomeAway and TripAdvisor have been buying up smaller companies in the VR space for years. Their appetite for acquisitions is so voracious that each has its own page on Crunchbase dedicated to the topic (HomeAway, TripAdvisor).

And this period was no different. The beginning of the year saw HomeAway make two high profile acquisitions: of Stayz in Australia, and Glad to Have You closer to home. TripAdvisor announced its acquisition of Vacation Rental Homes in May.

But while these moves may seem like business as usual, there were a few events that set Q2 apart. One was the entry of RealPage into the space. While large VR players led this trend in the past, RealPage’s acquisition of Bookt signaled that the industry is now getting to a size and level of importance to attract big public companies previously unaffiliated with vacation rentals.
 And it is not just large public companies driving this trend. Acquisitions by Vacasa, Resort Realty, Seaside Vacation Rentals,TurnKey and others show that with the right management and strategy, smaller and even relatively new companies can get into the game. The trend was so pronounced this period that VRM Intel not only published an article with experts weighing in on some of the biggest acquisitions, but also published one advising owners how to get the most from the sale of their company.

That being said, not everyone is looking to be bought. During the quarter Airbnb effectively priced itself out of an acquisition with a round of funding that valued the company at $10 billion. And even at less stratospheric altitudes companies like LiveRez haveexplicitly stated their intent to remain independent.

Still, this is a trend worth watching. Clearly many people and companies believe bigger is better when it comes to vacation rentals. With the recent launch by Priceline/Booking.com of Villas.com, they may have good reason to want to solidify their position quickly.


Backlash

One note on this section – most of the links in this section are to group discussions in LinkedIn, Yahoo, etc. Many are only open to members of said groups. If you are reading this, you are clearly interested in the vacation rental space. If you are not yet a member of these groups, I would strongly suggest applying (all should be free). 

While bigger can certainly be better, size and power come with tradeoffs. In particular, as your company gets bigger so does the target on your back. As Q2 saw some of the largest companies in the space grow ever larger, it also saw the backlash against said companies grow ever more vocal.

Amongst the big players, virtually no one walked away unscathed. Not surprisingly, one of the most active current discussions regarding a big player revolves around HomeAway.  And in some forums, the debate has grown so heated that HomeAway Co-Founder Carl Shepherd has felt the need to weigh in personally.

But HomeAway is not alone. Airbnb has received its share of complaints in discussion groups, as have FlipKey  and HouseTrip. The anger is not necessarily even targeted at individual companies, but rather the idea of large players wielding too much power more generally. Besides the targeted discussions, there are also numerous more general ones about being fed up with the large players, and people deciding to go it on their own instead (e.g.,here and here).

It is too early to make any sort of meaningful prediction as to where this trend might lead. That being said, the tension between this trend and the first one is real. As companies seek to grow ever larger on one hand, some of their customers become ever more frustrated on the other. Only time will tell if bigger truly is better.


Going mainstream

Admittedly this is a trend mentioned in the first article, growth, albeit under a different name. However, there are some nuances worth discussing here that were less apparent last time around.

At a high level, the growth and popularity have continued apace. For the first time, a TripAdvisor survey showed that over half of US travelers plan to stay in a vacation rental. This statistic alone is tremendous when as recently as 2008 only 11% of travelers reported staying in a vacation rental, and it is indicative of just how mainstream vacation rentals are becoming.

No longer are vacation rentals just for families booking weeklong vacations. Specific events are also driving the growth in the industry. Events like Coachella and SXSW, where local hotels sometimes cannot accommodate the surge in demand even if people wanted to stay in them are also increasing the sector’s popularity.

And “vacation rental” may soon become a misnomer. Concur reports that business travelers are increasingly booking these alternative accommodations as more convenient, unique, comfortable, and/or inexpensive alternatives to hotels. Perhaps this is why the industry got perhaps the best endorsement anyone could receive when the Sage of Omaha, Warren Buffett,recommended shareholders look into rentals rather than overpriced hotels for the Berkshire Hathaway annual meeting in Nebraska. Mr. Buffett is rarely wrong when it comes to business decisions, so if he is backing the industry, I like our future prospects.


Tempered regulation

The final trend we will cover in this review is an update to the ever-present regulatory threat. Last time we looked at how the battle against vacation rentals, and the sharing economy more generally, was spreading beyond the confines of New York City. Threats across the US and even in Europe were becoming apparent.

I am happy to report that the past quarter has for the most part seen sanity overcome hysteria. While regulations have been put in place, from Florida to France, and from Napa to Amsterdam the regulations that passed have for the most part been reasonable. They recognize the appeal of the offering, and why owners and renters alike often prefer rentals to more traditional lodging options. Rather than seek prohibition, they have put in place sensible rules ensuring consumers are protected, while at the same time working to increase the tax take, and thus benefiting the local economy on all fronts.

But while vacation rentals and consumer choice may have won most of the recent battles, the war is not yet over. Vested interests, namely hotel owners and operators, will continue to fight back as long as they believe their profits are being threatened. We are continuing to see this in New York, but it is also true as far afield asVienna and beyond. I hate to say it, but my guess is this will be a top trend for some time to come.


Conclusion

As the vacation rental industry continues to grow in popularity and appeal, we can expect to see ever more, ever larger, and ever quicker changes within the industry. While it is difficult to ascertain exactly what each of these changes will mean in the long run, staying abreast of them provides us with the best chance of taking advantage of them, and of mitigating any risks they may create. I look forward to any comments or discussion on the points discussed above, or any I may have missed. If you would prefer to discuss things more privately, feel free to contact me directly atAndrew.McConnell@vacationfutures.com. I look forward to hearing from you, and to seeing what the future brings.

Note: This post was initially published on the Vacation Rental Manager Association's blog on June 5, 2014.

Own a Vacation Home? Here's how you can earn guaranteed rental income with VacationFutures

If you want to learn more, please check out our video or visit our website at www.vacationfutures.com.

Taking a bigger piece of the pie: How to manage more properties

Our last post addressed how to ensure that you do not end up getting a smaller piece of the vacation rental pie even as it continues to grow. This post will discuss how you can move beyond maintaining your market share to growing your inventory, and also making more from it.

Some of you may know about VacationFutures already. We are relatively new, but an incident that occurred right as we were starting out is informative. In December of 2012 we had just started speaking to homeowners and property managers about creating a marketplace where homeowners could sell all the weeks they wanted to rent their property and get guaranteed income for it. They were going to be able to do this because on the other side of the transaction, property managers who wanted to add to their inventory would bid on the properties and the weeks they wanted to manage. At that time, however, it was just an idea. There was no marketplace, and we did not even have a website.

Despite this, in December someone found my email address, and reached out to me on his own, I will call him Bob. Bob was representing a property management company in the Florida Panhandle, and had been tasked with looking into ways that the company could grow its business. As Bob explained to me: “The company simply hasn’t grown for more than 5 years. With the online listing sites, every time they get a new property, they lose two properties to homeowners deciding to manage their homes themselves.” Bob had reached out because he had heard about what we were doing, and thought we could help the company, which we were more than happy to do.

Most of you are probably aware that the market share of vacation rental managers has slipped to 42%. Some of you may also be aware that the trend is continuing in that direction, with only 27% of homeowners saying they plan to use vacation rental managers in the future. In the face of these headwinds, how can property managers possibly grow their inventory, and thus their market share? Is the annual shuffling of homeowners from one company to another, with hundreds of mailers, and constant haggling over rates the only option? Absolutely not. 

Alternatives

Getting the facts straight

The first option is to show homeowners that they are not actually better off managing their properties themselves. As I touched on in an earlier article on the VRMA blog, the people who can afford these homes can do so because they have high paying jobs. As a result, their time is expensive. HomeAway estimates that the average homeowner spends 8.4 hours per week managing his or her home. If you are an attorney who normally bills at $200 an hour, and you are spending an average of 8.6 hours per week, do you really believe you are coming out ahead by no longer having to pay a vacation rental manager’s commission?
Even if you come across a homeowner who does not value her time, and there are plenty who don’t, as someone who has been doing this professionally for years, you should be able to make a strong case for why they are still monetarily better off working with you than going it alone. Richard at Discovery Holiday Homes wrote a great piece breaking this out. Do the same for your homeowners, and leaving you will start to look much less appealing.
Notice that none of this contemplates lowering your commission to keep your clients. Keeping your properties, but making less off of each one, is not any way to grow your business. In addition, the lower your commission, the lower your incentive to squeeze out the highest possible rate for each and every week (just see the studies on Real Estate Agents in Freakonomics). This isn’t good for you or for the homeowner.  Do everything you can to maintain your rates, and if you can make a strong, fact-based case, your homeowners should stick with you.

Guarantee contracts
Another option is to guarantee homeowners a certain amount of revenue. One of the most common complaints I hear from homeowners is that under the typical property management relationship, the homeowner takes all of the risk, but they get only a portion of the revenues. Showing them that you believe in the home, and will do everything in your power to get the most for it, becomes a lot more convincing when you have money on the line. 
However, this can be a risky proposition if you are not able to earn as much as you guaranteed. In addition, you need to think carefully about how you structure the agreement for any revenues earned above the guarantee. Will you still just earn your normal commission? Do you get a higher commission? Do you get 100% of the upside? Obviously each has different implications for your risk/reward potential, so make sure you structure any guaranteed contract in a way that you feel protects your business.

Own the properties
To go to one extreme, another option is to actually own the properties you manage. The potential rewards are nearly boundless. Not only do you keep 100% of any revenues you earn, but also any upswing in the property’s value goes directly into your pocket. 
But as with many things, with a great potential reward comes a great risk. While you keep 100% of the revenues, if the revenues are not enough to pay your mortgage, taxes, cleaning, etc., this becomes a losing proposition. In addition, 2008 showed us quite clearly that property values can drop just as easily as they rise. Add to this the very limiting nature of relying on ownership for inventory growth (How many homes can you really buy outright?), and this, at least on its own, is not the most compelling option.

Own the weeks
Another option is to just own the weeks you want to rent on an annual, or even seasonal basis. This is similar to a guaranteed contract, but rather than guaranteeing money over the course of the year, and still having all of the back and forth with the homeowner during that period, you are instead buying the weeks upfront. This guarantees you will receive 100% of any revenues from the beginning, and it means you will have full control over management, as well as full pricing power.
These kinds of deals can be negotiated directly with homeowners, but in our experience, few homeowners are likely to accept them if approached directly. This is because of the imbalance in information and sophistication between a professional vacation rental manager, and a homeowner who at best does this part time.  When an offer is made, the homeowner thinks: “What do they know that I don’t?”

This is why we started VacationFutures.  By creating an auction platform that enables homeowners to get offers from multiple property managers, they can be safe in the knowledge that they are receiving a fair market price. At the same time, by providing vacation rental managers with a one-stop-shop where they can easily find and access the kinds of properties they want to manage, we make the entire process for obtaining new inventory that much easier.

Conclusion

This is not intended to be a shameless plug for VacationFutures. There are many non-traditional options out there, only some of which are addressed in this piece. I would encourage readers to use the comments section to share your own thoughts and ideas for how to grow rental inventory. Professional vacation rental management is better for renters and for homeowners. Let's work to make it the norm again, not the exception.

Note: This post was initially published on the Vacation Rental Managers Association's blog on November 7, 2013.

Your Piece of the Pie: How Vacation Rental Managers can capture a fair share of industry growth

Currently losing market share

For many, the story of vacation rentals over the last several years has been the story of the rise of the listing sites. Much of the attention has been focused around how these companies contribute to the “sharing economy.” It is largely due to the growth of these kinds of sites that has led to professional vacation rental managers going from managing virtually 100% of the supply 10-20 years ago, to managing just over 40% today.

Who is better off?

But for all of the hype, there are real costs associated with this shift. For renters, the downside of working directly with a homeowner as opposed to a professional manager is pronounced. Does the homeowner offer instant booking, or does it take several days for him to respond only to tell you the dates you wanted are no longer available?  When something goes wrong during the stay, is there a helpline the renter can call knowing that there is someone local on the other end who can immediately remedy the problem?  How much does the renter really know about this homeowner, and will the photos they see really match the property when they get there? And on top of all of this, is the property they are booking even real, or just another scam?

For the homeowners, this shift can be just as damaging. The day they decided to manage their homes on their own, they essentially became small business owners. By HomeAway’s estimate, owners spend an average of 8.6 hours per week marketing and managing their homes. Homeowners who can afford these vacation homes typically have high paying, and demanding jobs. Those 8.6 hours a week have to come from somewhere, and whether it is less time to spend on their full-time job, less time to spend with their family, or less time being able to play golf, it is a tradeoff many in retrospect wish they had not made. Add to this that their lack of scale means they undoubtedly face higher costs (cleaning, etc.), and they rarely get as many weeks rented, or receive as much per week as a full-time professional vacation rental manager could, and self-managing the property looks to be a clearly losing proposition.

How to win

Given all of this, how best can professional vacation rental managers compete? Is the best course of action to compete head-to-head with RBOs and make the entire space a race to the bottom (on costs, service, and quality)? Unequivocally the answer is no.

We live in a society that is more than happy to pay for convenience. There is a reason so many restaurants have valet parking – most people would rather pay a few extra dollars than have to park their cars themselves. There is a reason that branded products can charge more for essentially the same offering as non-branded ones – most people associate known brands with the quality of their prior offerings, and rather than risk purchasing a cheaper alternative, they stick with the known entity.

The answer for vacation rental managers follows the same line of reasoning: become more professional; offer more, not less.  

There will always be people who do not value their time, they just want a deal. This applies as much to the homeowners who do not care that they are spending over 400 hours a year managing their properties as to renters who do not mind rolling the dice to save a few hundred dollars per week on their rental. Are these really the homeowners and properties you want to manage? Are these really the renters you want in your properties?

No, you want the best homes, with the best owners, and you want to fill them with the best renters. Don’t keep lowering your fees.  This just encourages you to offer less and less service and undermines your brand. Play to the strengths that come from full-time professional management.

Given this, what can you offer that RBOs cannot?

Brand – You have a name and a history behind your company. Make it mean something, and the renters who value that over the discounted online deal will flock to you.

Customer service – Increase your customer service.  This becomes part of your brand.  Offer services that others, cannot.  This starts as early as initial inquiries, and carries over through the rental and beyond.  The renters you want will pay a premium for it.

Scale – Take advantage of the fact that you have a company focused solely on this business.  Your costs, spread across your entire portfolio, should be a fraction of the individual homeowner’s.  Your efficiency in advertising, marketing, sales, and everything else should far exceed what a lone homeowner can do.  Use this to your advantage.

Focus – The RBO homeowner typically only has one home he is focused on renting, and some managers argue that this gives him an advantage in earning more off of it than a property manager with tens or even hundreds of properties under management.  DON’T LET THAT BE THE CASE.  Treat each home like you own it (more on this in the next article), and make sure you maximize the potential rental value for it.

Others – I am sure you have some strong opinions on this.  Please use the comments section to add other offerings that vacation rental managers can provide to further set themselves apart from the competition. 

Conclusion

All of this to say: play to your strengths, not your competitor’s. If you do, you will have a superior offering, and be able to charge a premium for it.  If you don’t, you will likely see market share slip as RBOs take an ever-larger slice of the pie. My next article will address different ways to take an even bigger piece of the pie by growing your inventory, and making more off of it.

Note: This post was originally published on the Vacation Rental Managers Association's blog on October 10, 2013.

Guaranteed Vacation Rental Income With No Work? Here’s How!

By:  Mickey Kropf

The vacation rental industry is on fire. This is an industry that has seen tremendous growth for more than a decade - nearly doubling in size from 1999-2011.

This growth has been spurred by the rise of listing sites, such as HomeAway and its affiliate websites, which have improved visibility of and access to this lodging option.  But there has been an inverse correlation between the growth of these sites and the number of professionally managed vacation properties, with the percentage of professionally managed properties dropping from nearly 100% 10-20 years ago to approximately 40% today.  Every year, vacation homeowners are faced with the same dilemma:  should the property be managed by a professional property manager, or should I manage it myself with the help of advanced online tools?

There are pros and cons to both approaches, and until recently, these were the only two options for owners who wanted to generate income from their vacation properties.  But this is now a false dichotomy thanks to the advent of a third option that allows homeowners to receive guaranteed income from a property manager with just a tiny fraction of the time investment of self-management.  Let us examine the three options in detail.

PROPERTY MANAGERS

Placing a property with a vacation rental manager is a fairly straightforward process:  offload all management responsibilities to a licensed, third party expert in exchange for a commission on all rentals.  In a traditional management agreement, the manager will take care of marketing, reservations, cleaning, maintenance, and more.  The homeowner can still use the property, and if it rents, the owner will receive his share of income after expenses and management fees (often 20%-50% of rental income) have been deducted.

But there are at least two major issues with this approach: 

●      No Guarantee - there is no guarantee of ANY income, only a guarantee that 20%-50% of any income generated will go to the manager

●      Lack of Investment - the manager has little invested in any given property.  Incentives are aligned with owners in general (i.e. if a property under management rents, the manager receives income), but not on any single property in particular 

This lack of investment can manifest itself adversely in the forms of tenant screening and property repairs because managers only earn income if properties rent, so they may be less discerning with guests than an owner would be, especially if the manager is not responsible for the cost of any damages caused by poorly screened tenants.  Moreover, the manager may even charge the owner a margin on repairs made to bring the property back to form.

Rental By Owner

The second vacation rental management solution, rental by owner, now comprises the majority of U.S. vacation rental supply.  The internet is increasingly empowering homeowners to handle vacation rentals by themselves.  In terms of benefits, the advertised value proposition is clear:  do all the work and keep 100% of the income. 

This approach also affords owners the opportunity to maintain control over their properties, from tenant screening, to owner usage, to repairs, and everything in between. 

But there are major disadvantages to this approach too: 

●      No Guarantee - there is still no guarantee of income

●      Time - owners have effectively taken on a second job - HomeAway research states that vacation owners spend an average of 8.6 hours per week marketing, booking, providing customer service, hiring and managing contractors for cleaning, maintenance, and capital improvements, accounting, and handling any other issues that may arise at any time of day

●      Competition - increasing competition from other owners within the rent by owner community and versus professional managers who have better online distribution for their rentals as well as lower cost bases for management compared to their amateur counterparts

Renting by owner is a great solution for some, including those who simply do not trust third parties to manage their properties, and those for whom there is no more lucrative or otherwise enjoyable use of their time.  But the income generated can still vary from one year to the next, thereby making it difficult to count on the income to cover property costs or living expenses.  Though U.S. vacation rental managers manage less than half the supply of rental properties, they account for more than half of the vacation rental market’s total revenue.  While rent-by-owner websites may advertise that homeowners need only pay a small yearly fee to list their properties, the truth is that additional marketing investments are often necessary to match the number of bookings brought in by a property manager.

Included in this group is the so-called “hybrid” arrangement, which includes various forms of shared management between owners and professional managers.  Ultimately, this arrangement  can make both parties worse off.  Owners spend their precious time performing management duties often to lesser standards than their professional counterparts, and managers earn less income and have even less invested in such a property. 

A Better Way

What if there were a better way - one in which a homeowner could count on rental income no matter what occurred with the economy, weather, or other external factors while receiving professional property management services from a management company that was co-invested in the property and responsible for maintaining the property’s condition at its expense?

There is, and it can be achieved by selling a property’s rental rights for a discrete period of time to a vacation rental manager, in other words, a guaranteed contract. 

Major advantages:

●      Guaranteed Income - guaranteed income, whether the property rents or not

●      Time - save all the time and hassle of renting and managing the property

●      Co-investment - manager co-invests in the property’s performance and condition, and is typically responsible for maintaining the property’s condition at its expense (except for capital expense items such as roof repairs) throughout the term of the agreement

Not all managers enter into guaranteed contracts, and those that do have inventory preferences that may or may not fit a given homeowner’s vacation property.  Furthermore, soliciting a single management company for an offer would mean that an owner would have little assurance that the guaranteed contract amount was fair market value. 

Enter VacationFutures, the only online marketplace that allows homeowners to receive guaranteed contract offers from professional property managers who compete against one another for the right to manage properties.  This service is completely free for vacation rental owners, and there is no obligation to accept any offer.  

For example, a homeowner may use her property four weeks every year, leaving 48 weeks available to rent.  She can list those 48 available weeks (for free) with VacationFutures and receive offers from professional vacation rental managers.  The top offer may look like this:

Total contract amount: $50,000

Management duties/expenses: marketing, booking, cleaning, linens, minor maintenance, all local occupancy taxes

Owner duties/expenses: utilities, capital expense items, preventive maintenance, property taxes, HOA, mortgage, property insurance

Terms: 5% paid at closing; remainder paid in equal monthly installments

Term: 48 weeks beginning August 1, 2014

In the example above, the property manager would likely expect the property to gross approximately $70,000-$75,000, thereby providing enough in revenues to cover the guaranteed contract payment to the owner, the agreed upon expenses, and a return on its investment. 

If the offer does not meet the homeowner’s expectations, she can simply decline the offer and carry on with her normal rental activities.  If the homeowner likes the offer, she can move to due diligence with the manager, during which time she can interview the manager, review references, and close the deal in person or on the website.   

Through this example, it is easy to see how the guaranteed contract approach can make vacation rental owners and managers better off, and that the VacationFutures online marketplace is designed to create true “win-win” scenarios for owners and managers. 

If you are interested in receiving a free, no obligation quote for your property’s rental weeks, visit VacationFutures or email mickey.kropf@vacationfutures.com today.