The State of the Global Vacation Rental Market 2017

Report Overview

The vacation rental market has captured serious attention from investors and travel consumers in recent years. The Airbnb marketplace disrupted and transformed the space by introducing a new category of rental: the underutilized resident-occupied flat, room, home, villa, treehouse, houseboat, and other forms of non-hotel accommodations. And while Airbnb has captivated the imagination of the mainstream media, an undercurrent of technological innovation has also taken root within the traditional, professionally-managed vacation rental space. In this report, we analyze the role of Airbnb as a marketplace and distribution channel, but also look more broadly at the tech-enabled ecosystem that has developed around the professionally-managed investment property — most often referred to as the vacation rental (VR). Investments in the form of acquisitions and venture capital have poured into property management groups, third-party technology providers, and online marketplaces including Airbnb. Competition on the supply and demand side has exploded as a result of the Airbnb effect. In this context, the large OTAs including Expedia and Booking.com are stepping up to compete against Airbnb on the distribution front. Meanwhile, the dominant property management companies including Wyndham and Accor continue to roll up a heavily fragmented supply of vacation rental properties. Here, technology will continue to play a key role in shaping a rapid evolution of the market. Until recently, innovation in the VR product category has remained slow compared to other segments in travel. Access to real-time pricing and unit availability across a deeply fragmented supplier base is one example; discussions with industry insiders point to further efficiencies and savings that can be achieved both in distribution and property management costs. This competitive environment will spur new investments and innovations targeting the full breadth of the VR value chain, i.e. the property owner, manager, distributor, and end consumer.