2023 Predictions For The Short-Term Vacation Rental Industry

CEO and founder of VTrips. VTrips is a premier property management company with offices across the country.

Some short-term vacation rental (STVR) companies went through a rough patch in late 2022 due to a looming recession, layoffs and poor stock performance—and it seems that this year could bring more of the same.

Although leaders of any industry would be foolish to try and predict the future (as the global pandemic taught us), there are analyses we can make and proactive methods to implement that can better prepare us for whatever is to come.

In the STVR industry, I predict that economic uncertainty will continue for a while longer. To maintain sustainable operations, STVRs will need to battle the winds of change and the potential strongholds of technology companies to learn how to navigate a potential recession without throwing in the towel.

More layoffs could be possible.

AvantStay laid off 22% of its workforce in a second round of cuts last November. Meanwhile, Vacasa saw its stock decline last month, and that’s not to mention employee layoffs—with its latest announcement highlighting the discharge of 1,300 workers, or 17% of its workforce.

I expect that we are going to witness more layoffs from some of the larger property management companies in the sector throughout 2023, including closing some unprofitable offices throughout the country.

While it is true that some companies will need to make unfortunate decisions like these in 2023, they may be able to avoid them with proper priorities, prediction and strategy. Layoffs in 2023 may be especially likely for less profitable businesses in an economy where investors are placing a premium on cash and profits.

It is crucial to center your strategies around customer service and the guest experience. In this sector especially, there is no substitute for guest centered hospitality practices that can best facilitate positive memories for each person who steps on your property. Embodying this core value for your STVRs can help to retain and attract customers, which can help maintain demand, profits and employees.

Follow the cash flow.

Property managers who have never experienced a recession will likely have to adapt quickly to face significant financial headwinds. Some larger venture back companies could inevitably be forced to sell or face bankruptcy due to cash flow issues.

I think this will be more common for C-level executives who don’t have a financial background and who, in some cases, operate as if they are working for a technology company instead of a hospitality company.

Working in the vacation rental sector can be challenging even on the best days—not to mention during economic difficulties. If you are an STVR leader looking to adapt to uncertain financial times, it’s important to keep meticulous records of your cash flow and projections. Understanding where your money is coming in and going out is a vital element of staying afloat, and proactivity is key. Don’t wait until your organization is in the red to start considering what financial moves and systems are best.

Cutting costs and optimizing operations is a constant process and balancing act that depends on company goals and vision. Since founding my company, I have discovered that leaders can never go wrong with putting people over profits and prioritizing community. By staying in synch with residents, guests and local government officials, you can better prepare yourself for long-term success and find lucrative expansion opportunities and increased profits.

Pay attention to new market penetration.

Market penetration refers to “the amount of a product or service that is sold to customers compared to the estimated total market for that product or service”—and is a term to remember in STVRs throughout 2023. The online travel booking platform market share is expected to increase by $943.60 billion from 2021 to 2026, according to a recent market study by Technavio. This means that platforms like Booking.com could start to make more penetration into the U.S. market. Evaluating these economic moves helps to determine market size, develop strategies for increasing the market share of a solution and more.

Even bigger than online travel agencies (OTAs) like Booking.com or Airbnb, Google is the even bigger elephant in the room. I think Google travel has the potential to be bigger than all the OTAs combined. All it takes is for the global company to figure out how to distribute an unbranded category, and it could be extremely powerful because Google also has maps, reviews and endless resources.

Although demand is expected to grow by only 5% after growing by more than 20% consecutively in 2021 and 2021, occupancy should still remain higher than the 53.3% rate recorded pre-pandemic in 2019. With a vigilant eye and impeccable strategy, STVRs still have a chance to flourish even with fewer projected travelers.

Prepare your company for the rentals of the future.

While I may not have a crystal ball to predict all that is to come throughout 2023, I have seen the patterns and predictors that are crucial to look out for over the decades I’ve worked in the vacation rental industry. “Recession” doesn’t have to be a terrifying word. Effective strategy and preparation can help an enterprise stay afloat in times of turmoil—as do the customers who keep coming back for great experiences.

Competition is likely to heat up from tech companies in the vacation rental industry over the next couple years, and economic conditions will likely continue to challenge property managers. Leaders must have their hearts wholly dedicated to hospitality and have the education and background in this sector to understand how to keep STVRs running sustainably.


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