The Shift and Challenges of Vacation Rentals
The vacation rental management industry has experienced a substantial shift this past year. For years, it was dependent on VRBO as the primary source of bookings. Gaining placement was easy with the original subscription model. However, since the implementation of the Pay Per Booking Model, the market has become over-saturated with listings. Any owner or vacation rental management company can now list with no upfront costs, whereas in the past, the subscriber paid to gain placement on a tiered level. Those who paid more gained the best placement. Much of these changes are due to the Expedia $3.9B acquisition of HomeAway (the parent company of VRBO) while changing their business model to be more focused on garnering commissions. The Pay Per Booking Model, also referred as third party fees, has changed the way the industry operates going forward. Just a few years ago, there were around 1200 subscription listings on Panama City Beach. Today, that number has increased to 8952 listings. The challenge is that the analytics haven’t changed. Our market receives nearly the same number of inquiries, seeing only a slight increase. Pay Per Bookings as previously mentioned have commission fees ranging from 5% up to 25%. Starting in February 2016, HomeAway/VRBO and Flipkey adopted the Air BnB revenue model by instituting a traveler fee. Some of these fees range up to 12%.
The number of college spring break visitors saw a dramatic decrease in March 2016. We believe we will experience the same effect this year. Losing the stigma as a college spring break party town will take some time to overcome. We hope to see more families visit Panama City Beach earlier in the spring break season. In fact, a number of the public and private schools in the southeast start releasing for spring break during the 2nd week of the March. We hope this change will prompt families to take advantage of a more peaceful Panama City Beach.
No matter whether you are ready to buy, sell or rent, Portfolio Real Estate & Management Group has the knowledge and tools to help you on your journey to success in Panama City Beach. Be sure to contact us with any of your real estate needs. We look forward to hearing from you!