The Vacation Rental Manager’s Association (VRMA) made an exciting announcement today: They are sponsoring the construction of a “vacation rental switch” — a centralized location for vacation rental managers to easily distribute their inventory to online distribution channels.
A Vacation Rental Switch (VRS) could be a huge boon for the professionally managed vacation rental industry. It will provide one low-cost and structured mechanism to quickly and easily enable online bookings at 3rd party websites.
GOOD JOB VRMA – THIS COULD SOLVE A LOT OF PROBLEMS
Currently there is much pain in the industry around distributing inventory to 3rd parties… each VRMA member is at the mercy of their Property Management Software’s (PMS) distribution system and relationships. It will
- help the PMS companies by providing on switch to rule them all and in effect leveling the playing field.
- help the VRMs by lowering their cost and increasing their efficiency.
- help the suppliers by having only one data-feed to work with thereby creating larger scales of efficiency.
- help the industry by putting the owners of the data (the VRMs) back in the driving seat.
THE INDUSTRY ITSELF IS HUGE AND RICH
- Vacation rentals accounted for more than 333 million available unit nights in the U.S. market in 2007.
- Vacation rentals accounted for nearly $24.3 billion in rental revenue in 2007.
- Approximately 10% of all U.S. adults and nearly 20% of all online travelers have booked a vacation rental.
- Vacation rental consumers are a market to covet: They’re well-off, well-educated, and they travel – a lot. Nine in 10 take at least four leisure trips a year.
VRMA itself averages more than 600 property management and associate members in the United States, Canada, Mexico and the Caribbean representing approximately 150,000 vacation rentals, condos and villas.
Hundreds of millions of investor dollars have flowed into this space in recent years, whether to rental-by-owner behemoth HomeAway (which announced a staggering $250 million placement) or B2C and B2B online players such as Escapia, LeisureLink, VacationRoost and Zonder. Vacation rental management companies across the industry have identified online distribution and investment in technology among their top strategic business priorities. Wyndham’s concerted push with its Endless Vacation Rentals brand is but one of many.
DETAILS ON THE NEW SWITCH
Many of the current pain points can be understood by reading between the lines on VRMA’s Declaration of Distribution Independence. The Italics added by me to help readers grasp critical pain points and read between the lines:
- Create quick access and trusted experiences for consumers
- Create centralized location for vacation rental managers (VRMs) to easily select distribution channels and control inventory distribution (i.e. blackout dates, distressed inventory)
- Create a centralized location for distribution channels to access vacation rental inventory
- Provide a platform on which the industry can develop relevant merchandising and e-commerce tools such as reviews, tours, special insurance, etc… that would benefit the industry first before any 3rd party distributor
- Require that all distribution channel partners who access the inventory abide by a set of rules that protect professional mangers’ best interests and corporate integrity
- Facilitate simple, cost-effective 3rd party distribution that ultimately leads to greater volume of bookings and greater revenue per booking for the VRM industry
- A low cost to utilize the Switch for both VRMs and Distributors that will stimulate usage and ultimately facilitate significantly greater amounts of commerce
- Create a revenue stream to be used for the promotion of the VRM industry and its interests
- Create an revenue stream for any software provider who enables VRMs to simply and easily distribute through the switch by adopting its technology standard
- Create a revenue stream for distribution channels who abide by the rules of the switch enabling managers to choose which distribution partner they would like to distribute through based on that channels terms & conditions
- Provide a manual upload for property managers to distribute through the “Vacation Rental Switch” in the event their software provider does not participate
- Provide influence and control to Industry Stakeholders
- Have a Switch that is produced and managed by a credible, experienced management team with
- knowledge of the needs of VRMs and Distributors
- the technology expertise to deliver the solution, and
- The financial stability and resources to fund the Solution and maintain it over a long term period
- The Solution should protect vacation rental managers from unfair exploitation from 3rd party distributors while enabling distribution to propagate
- The Solution must not attempt to set market rates, rather it should facilitate more competition and market rate options. The presence of the Switch will permit the free-market system to establish competitive rates, and eliminate monopolistic rate power.
- The Solution should be constructed to benefit from the lessons learned from the hotel and airline industry distribution world, and explicitly provide mechanisms to avoid allowing any 3rd party distributor from gaining so much pricing power that it could “dictate terms” to the industry
- The Solution should not create the opportunity for a “choke point” in the industry that would allow any one party to take advantage of the industry
- The Solution should not be set up so that a sale of any particular vendor or participant in the Solution could seriously jeopardize the interests and well being of the VRM industry
This will be fun to watch play out. I expect some sour grapes and sniping from the entities that stand to lose control and revenue. I expect many supporters who are either sick of the current status or on the outside looking in. For sure, VRMA has taken a huge bite and will be challenged by the difficulties of mounting a giant technology project. I support their endeavor and hope it is wildly successful.
Check out the Request for Proposal to learn more.
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