State of Vacation Rentals 2017

admin 03/01/2017

8 experts weigh in on the landscape of our industry for 2017.

Phocuswright published that the U.S. Private Accommodation Market would reach $36.6B by 2018. They stated that, “In 2016, private accommodation grew 11%, nearly twice as fast as the total U.S. travel market. While growth is expected to slow, the segment will continue to outpace the overall market through 2017.”

So what does all this growth mean? What should we expect to see happen between now and 2018?

We wanted to ask diverse thought leaders and experts in the vacation and short term rental ecosystem. They represent the voice of many stakeholders in this industry. Here are their thoughts!


Who will win and who will lose

“I think vacation rentals in 2017 will be all about chaos. The winners will be the small businesses that organize themselves in such a way that chaos happens from within -- learning new things, working harder than before, getting serious about our businesses. The losers will be those that experience chaos imposed by outside forces. Whether we like it or not, we're in the big leagues now. Time to step up our game!”


One big winner could take the cake

"The vacation rental industry is rapidly evolving and I expect this trend to accelerate throughout the remainder of 2017. As private equity and venture funding make larger investments in the niche, the focus will be on technology that is scaleable and improving the quality of guest stays. The majority of funding in the past has been focused on increasing demand or improving efficiency rather than operational excellence for the guests.

Similar to the hotel industry, I expect that market leaders will attempt to standardize and commoditize an excellent in-market experience in the very near future - there will be a Hilton of our industry that emerges and this giant will potentially cause issues for smaller players. The foundation that property managers and VRBO owners lay today will either set them up success or failure when those new industry giants do emerge."

Stand out with great amenities and value-added services

“I am not surprised at the results showing a saturated and slowing of the market growth of vacation rental, as the Phocuswright research suggests. A saturated vacation rental market means travelers have a greater selection from which to choose. Adding to the limitation of expansion in the market is the crackdown by many local governments to assure owner compliance with licensing regulations and­­­­ tax collecting requirements. Thankfully the CA Coast Commission reconfirmed their stance that a ban on short-term rentals along the coast will not be supported. This is good news for our oceanfront home, Sea Ranch Abalone Bay, located in The Sea Ranch, situated within a 10-mile stretch along the northern Sonoma County's coast.

The secret to remaining successful in the coming years will be to move beyond being just another vacation rental commodity. While our home is a unique gem among the architecturally renowned Sea Ranch enclave, we recognize our need to assure it continues to stand out from the crowd. We do that by not only meeting the needs of our guests with great amenities, but also by providing value-added services such as insider tips, recommendations, and discounts to local businesses. It also means establishing a trusting relationship with our guests to assure they have an enjoyable experience and rebook the next year.”


Independence from booking sites for VRMs

“I predict 2017 is going to be a big year for vacation rentals on the web. We're finally getting to a point where we're getting noticed in a big way on the web. In 2017 more small managers are going to be taking charge of their property marketing with less reliance on expensive advertising channels - and more dedication to an "in-house" and branded solution that they are in control of.

Listing sites are great - they bring in bookings...however there is a significant cost there and they don't really do a great job of selling the brand or uniqueness that we are seeing everywhere in the VR industry right now. This is an industry of "experience" not "transaction". As listing sites feel the heat from the SEO, marketing, and pricing battles they play with each other we're going to experience an opportunity that did not exist before. Big kids on the block aren't that big anymore. 2017 is the year for the vacation rental manager to step up to the plate and take charge!

I forsee a big ramp-up in vendor support for our growing niche this year - in 2017 we'll start to see products and services that are going to make it even easier to create this independence.”


Niche markets playing a bigger role

“I wanted to comment regarding a trend that I see as necessary for the “independent” vacation rental operator to continue to succeed. I believe it will become increasingly difficult to compete with the commoditization of the industry unless we narrow our focus on a niche market.

I design, build and operate vacation rental homes specifically for groups of golfers. 90% of my guests are men on a guys’ “buddy trip”. My homes are “purpose built”, meaning they are created for one purpose. My floor-plans have 4 master suites, 8 queen beds, 5 HDTV’s, a pool table, stainless steel grill…etc. No one gets stuck with a jack-and-jill bathroom or bunk beds! I also offer concierge services such as a personal chef, grocery shopping and massage therapy, to name a few.

I am able to compete effectively against hotels, larger VR homes and lodging options that are less expensive, because I offer EXACTLY what my niche is looking for.

I’m sure you can find many more examples of VR’s that appeal to a narrow niche and I am confident you will see a trend in that direction in the future.”


Upgrades that will pay off in the long run for owners

My husband and I have owned vacation rentals in the Gatlinburg and Pigeon Forge, TN market since 2002. We now own a total of 5 personal properties and I manage 6 properties for other owners. Our cabins are smaller in size, 1-2 bedrooms.

I’m also a vacation rental photographer ( so I receive calls from new cabin owners, as well as realtors. In our market, I’ve definitely received more calls from new first-time owners in the last year or two. Our market offers modestly priced properties so it’s attractive for first-time buyers who want to get started as vacation rental owners. The economy has been good the last couple of years and mortgage interest rates for second homes and investment property are far lower than when I first purchased properties over 10 years ago. But now, cabins that used to linger on the market for months are seeing multiple offers and selling in days. I just received a text yesterday from one of our past guests who put an offer on a cabin Monday. The next day he was notified there was more than one offer and by Thursday he learned another party was awarded the sale. He says he’s going to keep looking.

It’s not only newbies but experienced vacation rental owners are picking up more properties. I have quite a few clients who will call me to say they’ve purchased another property and could I photograph as soon as it’s ready. For the longest time, most of my owner-friends in the market had one or two cabins. Now many of them own 4 or more.

What I find interesting is these new owners spare little expense to prepare their properties for the rental market. Years ago, a good rental cabin in Gatlinburg or Pigeon Forge was reasonably well maintained, had modest if not somewhat dated furnishings, a pool table, a hot tub and probably a mirror-surrounded jacuzzi for two in the master bedroom. Now these same cabins have been updated with flat screen TVs throughout the house, game rooms, theatre rooms, granite counters, leather recliners, spacious tiled showers, Keurig machines and fire pits. This latest crop of vacation rental cabins is a new breed and dressed to kill. These updated rentals will no doubt will raise the bar as existing properties play catch-up with their own renovations and updates. I’m no stranger to the catch-up game. Since Jan. 2016, I’ve done large renovation projects at three of our five cabins. The other two got minor facelifts last year.

I can only imagine this is good news for travelers to the Tennessee Smokies. Our market is very competitive and therefore, price sensitive. Despite $40,000 in renovations at one of our cabins in 2016, we only raised the rates $10/night during peak periods, shoulder season and holidays. $18,000 of our budget went for a retaining wall re-do--hardly something that adds value to the guest experience. With our modest rate hike, it’s unlikely we’ll fully recoup our investment but we feel we can now be competitive in the coming years. And just hope our guests appreciate that we’ve invested heavily in their comfort and enjoyment!


Owners will be breaking traditional frameworks

"In 2017 I predict the 'Independent Owner Emergence' out of the shadow of the traditional company frameworks that restrict their business. Vacation rental homeowners are becoming savvier in this exploding industry.

They are searching for new ways to connect with their target market, offer curated guest experiences and ensure that their investment is protected. The typical homeowner realizes they need to find new ways to list their rentals away from huge conglomerates that just aren't producing results.

Homeowners are fuming about restricted guest communication which blocks the opportunity to successfully book a lead. Fortunately, new options are popping up, think social media platforms, local niche websites, etc... where owners can easily reach the guest in a multitude of ways. This isn't just relating to listing sites, new products on the market are helping owners successfully protect their income flow. We've invested substantially in new smart home system products to monitor activity at our properties while we are off site.

The successful vacation rental homeowner is breaking traditional frameworks allowing them to emerge as independent and successful vacation rental experts."


We go head to head with Hotels

What I foresee happening with the vacation rental industry in 2017 is continued growth and closing the gap between vacation rentals and hotels. Vacation rentals provide something very unique compared to hotels. We provide homes/condos that provide full kitchens, one, two, three or more washrooms, as many bedrooms, most of the time pools and all the luxuries of a home. We provide a personal touch, killer websites, we are up to date with technology, innovations, a complete understanding of the community, tours, activities, things to do, restaurants and transportation. No one can provide a better guests experience than the single vacation rental owner.

As we continue to close the gap with hotels the inevitable comparisons will be made:


  • Marketing budget (big disadvantage).
  • Can not compete with the cancellation policies of hotels (big disadvantage).
  • Very difficult to compete with hotels when it comes to complaints and problems. Hotels have the advantage of simply moving guests from one room to another if there is an issue with televisions, toilets, water, beds and cleaning (big disadvantage).
  • Property owners/manages have a great/irrational fear of instant book (Big disadvantage).
  • Hotels do a much better job of communicating terms and conditions therefore minimize the risk of charge backs.

Learn more on how we're a part of industry trends specific to regulations. Can we solve the problem in one of the loudest cities in the US?

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