Unless you’ve been living under a rock, you would have seen the quick rise of private letting channels such as Airbnb, Stayz and HomeAway. If you’re the owner of a management rights business, you may not be their biggest fan. Disruptive companies, in any industry, often cause issues for existing operators within that industry. In the case of property management, you may be worried about losing properties in your letting pool to owners wishing to let privately, or you may have had bad experiences with the guests or bookings from these channels. Whatever it may be, this article is intended to help you understand what it means for you and how you can manage any consequences for your business proactively.
How big are private channels really?
No one can argue the significance of these channels within the global tourism market, considering the massive impact they’ve had on holiday accommodation supply levels. Airbnb is now the largest short-stay accommodation supplier in the world with approximately 3 million rooms currently listed[i]. In Australia, in the 2015-16 financial year, the platform hosted a massive 2.1 million guests over 3.7 million nights, contributing approximately $2 billion to the Australian economy[ii]. Airbnb is not the only prominent private channel either, other big players include Stayz, HomeAway, Flipkey, Travelling Frogs, Aura and Tripping are playing within this space. According to industry experts, these channels are expected to grow over the coming years, with the use of ‘sharing economy lodging services’ to increase by approximately 33% by the year 2020[iii].
What does it mean for you?
As the owner of a management rights business, you’re probably accustomed to the threat of losing properties from your letting pool to external agents. However, what is becoming more prevalent is the threat of owners choosing to manage their letting privately, meaning you lose revenue.
In addition to lost revenue, it has been reported that some property types (usually strata properties with a high proportion of owner-occupiers) have experienced additional conflicts between residents and ‘party guests’, with the potential added security concerns of having an increase in foot traffic.
However, it’s not all bad news. Other property managers feel like it’s the perfect channel to fill their vacancies. Regardless of how it may affect you, the extent to which these issues affect your business can be managed.
How can I reclaim some revenue if my letting pool has shrunk?
There are other ways to earn a cut of the pie, from privately let properties in your complex, despite the loss of rental commissions. Whilst property managers are still coming to terms with the affects, some savvy operators are using it as an opportunity to reclaim some of their lost revenue, and you can too!
Why not introduce a concierge service for your owners that are switching to private letting?
Companies like Bnbsitter, andchill, Airbnb hands free and MadeComfy, all specialise in providing complementary services to private letting channels. They provide the services that most property managers do on a daily basis, such as facilitating check-in and check-out, managing guest request’s and reviews, providing owners with financial reports, and organising housekeeping and laundry services. Some also offer additional services that include styling advice, pantry-stocking, photography and copywriting services for their listing, with some even advising on pricing strategies.
By offering these services to your owners that have chosen to privately let, you have the potential to regain some of your lost commission. Most of these services are going to go hand-in-hand with your current daily routines anyway, so why not reclaim your profit!
Capitalise on your position as an onsite property manager
Most private letters opt for little-to-no face time with their guests, giving you the opportunity to step in and build rapport with the guest yourself. Some onsite managers choose to ignore privately let guests’ requests because they are not on their ticket (so to speak).
Why not try a different tact…making contact with the guest, demonstrating the above and beyond services that a guest would receive by booking direct, enticing the guest to join your loyalty database to receive special promotions and discounts. Adding them to your database will allow you to market directly to them, encouraging future bookings – direct to you!
If you can’t beat them, join them
If you’re feeling the pressure or have the inclination that your owners are about to jump ship and manage things privately, why not consider connecting to a private letting channel yourself? It may be exactly what you need to fill your vacancies. The HiRUM development ‘Brains-Trust’ is working hard to bring you full integration with Airbnb with our HiSITE channel manager, making your connection a breeze. We don’t have a confirmed go-live date as yet, but, it will be here very soon!
We are also in conversations with HomeAway/Stayz regarding full integration, which will take place once their new API connections are ready. Watch this space!