Over the past decade, while the vacation sector as a whole has gone through a lot of ups and downs, one area has shown remarkable resilience and consistent growth. Vacation apartments doubled as a proportion of travel accommodation between 2007 and 2012, and they have proven popular with budget travelers and affluent travelers alike. So what’s going on?
The secret of their success
There are many different theories as to why this is happening, and it may be that several of them hold true in different areas of the market. Among budget travelers, the consequences of the 2008 global economic crash led to a search for more affordable vacation options, which made self-catering in vacation apartments look good next to traditional hotel packages. Among affluent travelers meanwhile, an increasing desire for privacy has made conventional hotels less attractive. Family groups traveling from different places to spend time together often choose apartments because they offer more room for everyone to stay together, and family reunions have been growing in popularity. The more travelers rent vacation apartments, the more word gets around about them, encouraging others who may never have considered the idea before to think about its advantages. The internet has speeded up this process and has also made it easier to find and book apartments.
Renting as a revenue source
A shortage of economic opportunities in places like Spain and Greece has led to more people capitalizing on the assets they do have – homes in the sun. In other parts of the world, such as the city of Edinburgh or the Tribeca area of New York City, locals often choose to vacate their apartments for annual festivals so they can rent them out to visitors. An increasing number of agencies handling such rentals has made this easier to do.
The decline of the hotel industry
Because they often operate on very tight budgets and depend on each season being a success, hotels were hit particularly hard by the economic slowdown, and this left opportunities for vacation apartments to move into their territory. The overheads on apartments are usually much lower, especially if they are only rented seasonally and are lived in by their owners during the rest of the year. As the rental apartment market grew, it became harder for hotels to take back the niche they had previously occupied. Smaller hotels also began to struggle because of the difficulty of having staff available at all times due to apartment renters discovering they could come and go as they wished, even in the middle of the night, at a point when many cities were extending the nocturnal events and activities they offered.
Vacation rentals and the internet
When thinking about a destination, most travelers now turn first to the internet, where smaller hotels can’t compete for visibility with big agencies promoting rental apartments. 93% of companies offering vacation rentals operate online, and 60% of them say that over 20% of their bookings are taken there. This doesn’t include bookings that customers make over the phone following internet searches. Online research allows vacation planners to be very precise about where they want to go and exactly what kind of place they want to stay in, whereupon the sheer variety of apartments out there gives them an advantage over hotels. Meanwhile, the ease with which those internet users can compare options has the effect of driving down prices, again giving the advantage to businesses with lower overheads.
Rome Escape Apartments
A company which manages holiday rentals in Rome, Rome Escape Apartments, has done very well out of these trends. It was founded in 2004 as part of the WorldEscape group and its market advantage lies in a reputation for quality as its staff take care to visit and inspect every apartment suggested to them before adding it to their site. They also provide information in a consistent format and make their site easy to navigate, giving them strong appeal to customers who want to get through the searching process as fast as possible so they can start looking forward to their vacations.
The impact on local economies
The increasing success of the vacation rental sector has been accompanied by an increase in the buying of properties for this purpose, especially in areas of the world where prices have been depressed. This is helping to keep struggling communities going and it also provides job opportunities for tradespeople with skills relevant to restoration work, and for cleaners. In addition to this, a subsequent influx of tourism can help keep restaurants and other local businesses open, boosting the area’s economy and helping to ensure that facilities also used by local people remain viable. It can even enable some people in the area to supplement their regular income, such as when fishermen take tourists out on their boats.
Looking to the future
The comparative sustainability of the vacation rental apartment business, even in times of economic difficulty, makes it an appealing option in an uncertain world. 48% of travelers now say that they would like to stay in properties like this, and that figure seems set to grow as there has so far been little in the way of a hard sell where the advantages of this kind of accommodation are concerned. The risk is that recent levels of interest could turn out to be a fad, and apartment rentals could come to be seen as unfashionable, but the duration of the phenomenon so far suggests this is unlikely.
The popularity of vacation apartment rentals has been sustained for over a decade now and growing for at least eight years. It has grown as the internet has grown, and the amount of time the average person spends using the internet is continuing to increase. Travelers see apartments as affordable, discreet and authentic, while those renting them find that doing so provides them with useful additional income. With all these factors in its favor, this is a sector that seems unlikely to weaken anytime soon.