Musings from VRMA
What do you get when you have massive market growth, changing consumer appetites for how people travel, and a lack of attractive opportunities in other sectors? An industry that is growing up very quickly — adolescence was short-lived and we are full-on into our late teens. VRMA was emblematic of these larger shifts in short term rentals — an entrenched hospitality heavyweight, Marriott, gave the keynote; a bevy of “enterprise” platforms came to market; and, multiple point solutions for horizontal scale fighting for mindshare. Let’s talk through some of my key takeaways:
Consolidation on the Horizon
Last year we had the year of the point solutions — niche software aiming to solve very acute short term rental problems including noise monitoring, device monitoring, various smart IoT systems, and “guest experience management”. We saw this year many of those players have moved into tangential verticals since there are just too many integration issues and too many solutions to be scalable. Most of the larger players in short term rentals have become adept at being the Gorilla Glue that sits between these solutions, but I anticipate that within 2–4 years there will be a consolidation where a smaller number of solutions will better vertically integrate the needs of operators, as IoT hardware becomes commodified and software has more time to mature.
Incumbent PMS Software Being Challenged
The incumbent PMS’s are being challenged by a number of venture-backed startups — most of which are quickly finding closer feature parity with the traditional players. There is little support for migrating between these solutions so I still believe the incumbents will hold onto many of the long-tail property managers for longer than we think. More tech-minded companies will skew towards systems that are easier to integrate with and will give them more data & system independence.
Compliance Front of Mind
For an industry disrupted so quickly and with so many affected jurisdictions, the regulatory landscape for short term rentals took a while to congeal and it’s still very liquid. Thematically, cities & towns are changing regulations fast & furiously, especially now that they have some standards they can look to as an example. Extra emphasis is clearly being placed on compliance both from a community standpoint and from a tooling perspective. Multiple solutions now exist to try to tackle specific compliance monitoring challenges. In the next year, I expect to see a flurry of activity: from advocacy groups, to resourcing & tooling around understanding compliance data & regulations.
What’s Next?
From a software perspective, the bones of most of the industry have started to come together. Revenue management, booking management, channel management, accounting, and work orders all have solutions, albeit they can all get better. The next questions & innovations exist beyond those mundane day-to-day components of short term rentals — what is the heart & soul of the business? How do you offer a compelling guest experience? How do you use technology to do so? How do you differentiate the experience from traditional OTAs? How do you effectively reengage customers? Over the next year, I envision various players will be tackling these issues in innovative & interesting ways as the industry continues to grow up.
Being a teenager isn’t so bad after all — exploring uncharted territory and figuring out how we truly mature as an industry. NOLA was a fitting place for us to start to find our soul as an industry. That’s all I got and see everyone next year at VRMA! Please reach out at reuben@avantstay.com if you have comments/questions/concerns.
Reuben
Co-founder Avantstay
PS We’re also hiring!
