We invited industry leaders from Australasia to share their insights on the current state of the vacation rental market. The industry experts shared their success drivers, challenges they face and technology tools they use to overcome them. They shared tips and insights to rental property operators who focus on scaling their businesses and shared their growth advice.
François Gouelo, cofounder and CEO of Enso Connect
Rebecca Cribbin, Owner and Founder of Holiday Rental Specialists
Jon Lawry, Founder and CEO of The Urban Butler
Yoav Tourel, Managing Director APAC at Guesty
Holiday Rental Specialists is an Australian property manager with 13 years of experience, overseeing 1200 short-term rental properties in the New South Wales region.
Over the past 13 years, they have successfully handles 62,000 bookings, accommodating over half a million guests in holiday homes. Their rental earnings have surpassed 100 million, of which they have paid 70 million to property owners.
Holiday Rental Experts – a new business, helping short-term accommodation industry colleagues to boost productivity, profitability, and enjoy their work. She is offering coaching, training, and access to virtual assistants for efficient task completion.
The Urban Butler, located in Auckland, is a mid to high-end property management company specializing in short-term rentals. Currently, they oversee approximately 60 properties, operating as a tech-based and software-driven management firm.
Guesty is a global property management software company.
Yoav serves as the Managing Director of the Asia Pacific division at Guesty. Following a successful acquisition and merger with iRoom, an exceptional property management solution from Australia, the team in Australia has expanded significantly, comprising around 30 dedicated professionals.
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The state of the short-term rental market in Australia and New Zealand in 2023
The end market for short-term rental properties typically falls within the range of 175k to 220k. There might be some variation depending on whether we include occasional short-term rentals and aparthotels in the mix. In the past three to five months, the market has shown signs of stabilizing as the initial surge of travel excitement, known as the “sugar rush” post-COVID, subsides. COVID had a significant impact on the vacation rental industry, drawing more people to explore this accommodation option and choose short-term rental properties as investments.
Throughout the pandemic, there was a notable increase in short-term rental properties in both New Zealand and Australia. And now, we see that: hotels are back, inflation and interest rates are increasing, etc. The market is now shifting back to pre-pandemic levels, with a decline of approximately 7% to 9% in property performance. Some properties are transitioning back from short-term to long-term rentals.
While rural vacation rentals have experienced a decrease in pricing and occupancy rate in recent months, urban properties are thriving due to the return of business travel and event activity. However, discussions surrounding regulations in different regions of Australia and New Zealand are creating uncertainty.
Globally, the vacation rental industry has seen a decrease in bookings this summer compared to the same period last year. Nevertheless, the current market is witnessing increased professionalization. More operators are treating vacation rentals as profitable businesses rather than just side hustles on platforms like Airbnb. These property management companies are focused on delivering profitability and higher rental income for property owners.
Main challenges vacation rentals face today [in Australia and New Zealand]
Apart from economic factors like hospitality labor shortage and rising costs, professional property managers must tackle the following challenges:
It is important for a short term rental business to have a consistent approach to both the owner and the guest side. It means maintaining a cohesive system that delivers on the property owners’ experience, ensuring their needs are addressed properly.
The guest side demands a seamless experience for all visitors across all properties in the business. Achieving this consistency requires effective communication, streamlined processes, and meticulous attention to detail throughout the vacation rental operation.
Amidst numerous smaller operators treating rentals as side hustles rather than a business, trust-building measures are essential. Regulation can actually help here, supporting the industry professionalization.
Additionally, the other side of guest-host relations is knowing who is coming through your doors. With the rise of guest fraud, chargebacks and property damage incidents it is important to have guest verification systems and processes in place.
Owner satisfaction and retention
Unlike real estate agents, rental companies are here in a long game. We need to make sure that our property owners, the people who we actually work for, are our advocates and stay with us throughout the years. There is not enough technology to manage owners’ experience. We must manage the relationships from the initial meeting, through the years we want to keep them onboard and happy. Establishing trust and transparency with the owners is the goal of all hospitality professionals with this business model. The expectations of the owners are high, as well as their mortgages. They still expect the “post-Covid frenzy” returns, while the market is back to the 2019 performance.
Short-term rental accommodation owners want to be hands-off but also to have good visibility on their properties’ performance. It is a challenge to keep them engaged and understanding what actually is done to keep their investments profitable.
Yoav Tourel agreed that this is a big area for PMSs to invest in.
Growth tips for vacation rental businesses
Take your time to go fast
In 2019 The Urban Butler we’re bringing in too many properties too quickly without adequate staffing and technology. While two people were managing 65 properties, they encountered several shortcomings and experienced a steep learning curve for managing growth. Lesson learned – get all the resources in place before pushing to the next stage. “My advice for the short-term stays businesses at the rapid growth stage – take your time to go fast. Otherwise you’re a “chaos manager” and not a property manager”
The pandemic was actually a good time to reset, get everything in place and get ready for where they are now.
Delegate and trust your team
For Holiday Rentals Specialists it’s been a slow growth path. Rebecca’s advice for businesses focusing on scale, is to delegate things that you’re not good at.
“You can’t do everything yourself and you’re not good at everything. It’s probably part of being an entrepreneur – trying to get everything done, understanding all aspects of the business and lead the growth. But finding the right people to do the right job at the right time is the key to success.”
Navigate hotel competition
Rebecca shares that currently, the short-term rental industry faces competition from hotels. They are attempting to challenge holiday rentals through regulatory measures. To stay competitive, short-term rentals properties must directly compete with hotels. Otherwise, guests might lean towards hotels, which could be detrimental to the sector. Focusing on presentation, cleanliness, maintenance, and delivering a superior guest experience is essential. While doing so, property managers must also ensure owners’ satisfaction and overall experience. By excelling in these four areas, vacation rental businesses can position themselves for growth.
Have a niche
It’s important to niche not only into specific markets but also into individual properties. The Urban Butler categorizes properties based on their earnings and manages them accordingly, tailoring their approach to the owners based on the property’s performance. This differentiation allows them to focus on properties that align with their prerequisites: location, presentation, and a unique selling point. By maintaining consistency and trust through this niche product approach, they create opportunities for growth as customers recognize and expect a consistent experience with their brand.
Building the right technology for growth in holiday rentals
Our guests discussed what holiday accommodation managers should include in their tech stack to be able to grow their business right.
Scoping and understanding the need of the property management company
When choosing technology for your vacation rental business, it’s essential to engage with your team members and champions. Sit down with the people who drive the processes and make things happen in the company. Gathering input from them is crucial as they can offer valuable insights and identify aspects we might have overlooked. This collaborative approach is the initial step, often referred to as scoping, to ensure we provide them with the right solutions and incorporate the necessary features to meet their needs.
PMS’s approach to vacation rental managers’ needs
Yoav Tourel shared property management platform approach to scoping and understanding the needs of hospitality professionals in technology:
Automate as much as possible to make the property managers’ lives easier. Guesty’s strength is unified inbox and analytics.
Being able to connect to third party tools that operators like and use, working on a best of breed approach. So having integrations with the best task management, the best cleaning app, the best guest experience provider data.
Continuous training is vital to ensure users feel at ease with the tool, understanding its various applications and scenarios. Equally important is excellent support and it is often the softer aspect of any tech provider.
Holiday Rentals Specialists’ tech tools checklist
PMS – HomeHero
Property Management System (PMS) should serve as the centralized source of truth. At the moment they mostly manage bookings, but eventually, it should encompass the entire business. Rebecca suggests calling it a Booking Management System (BMS) until it fully evolves into a comprehensive Property Management System. Constantly integrating essential tech tools will enhance this evolution.
Dynamic pricing – Beyond and Price Labs
Rebecca highly recommends using dynamic pricing technology to manage daily rates and supply-demand dynamics. This has led to a revenue increase in 75% of the properties despite a decline in average daily rates due to recent market changes. Implementing this technology requires effort, but doing it manually is not sustainable in growing businesses.
Although dynamic pricing tools are expensive, the potential for increased revenue offers long-term benefits in a changing economy.
Direct booking website
38% of Holiday Specialist’s bookings are direct, targeting 50% in the near future. Their best practice is to compete with OTAs (online travel agency), while still maintaining partnerships with them. The objective is not only to capture, retain, and remarket to guests through direct bookings but also to generate revenue for the business, which remains the ultimate focus in the end.
CRM – Hubspot
You need a CRM to stay on top of your both owners and guests pipelines. Use the data you collect to retain and remarket to your audiences.
Guest tools – incorporating Enso Connect
Rebecca is building a unified communication tool that would incorporate messaging with guests and owners. The use of AI-powered inbox will streamline all interactions, including question answering, addressing issues and requests and more.
The Urban Butler’s Approach to Using Technology for Growth
Jon Lawry shared his best way to fuel rapid growth in a professional hospitality business, working with luxury properties.
”Automate the predictable so you can humanize the exceptionalJon LawryThe Founder and CEO of The Urban Butler
PMS – Guesty
Jon observes the consolidation of all tech pieces in property management system (PMS). It’s similar to how we carried separate devices like cameras and walkmans, but now everything is integrated into our cellphone. This convergence is becoming the norm in property management software.
Dynamic pricing is even much more a necessity in a New Zealand market, affected my many changes recently. Jon recommends using dynamic pricing technology and start with checking all three big names in the industry – Wheelhouse, Price Labs and Beyond.
Guest app – The Boarding Pass
Owners of high end properties often don’t want a contactless arrival for our guests and we do an in-person check-in for luxury homes.
On the urban side of our business, we’ve noticed that guests prefer as much independence as possible. They seek contactless experiences like remote check-in and easy access to property information with digital guidebooks. They desire the convenience of the property without any unnecessary hassle, making seamless communication and processes essential for their satisfaction.
This is why a contactless and easy entry for guests and easy communication via Boarding Pass that makes simple for everybody. However, we are moving into a more luxury market. We’ve just listed and are about to list a couple of properties that I want communication with the guests to be face to face. I need to show them how to use the equipment that is in the property.
We need to differentiate between guest communication and guest entry in our concierge service. We should consider each property and guest individually and allow them to choose their preferred method accordingly.
Regarding check-ins, we offer both digital and remote options to meet different expectations. Even 13 years ago, we used Keysafes. However, in one of the areas where we operate, all of our competitors, except for one, still require guests to go to the real estate office to pick up the keys.
One of the crucial aspects that hospitality technology needs to focus on is the concept of configuration. Every property owner, guest, property, and property management company is unique and requires a customized approach from technology solutions. The technology must adapt to the diverse needs of each business while also offering convenience to guests by providing choices. Even providing two less desirable options allows guests to feel empowered by making their own decision, removing hassle and enhancing their experience.
Check out the top vacation rental management companies in Australia!