Airbnb launched its startup in 2008, and at the time, VRBO had been in business for more than a decade. But thanks to advances in technology, Airbnb’s model changed the short-term rental market overnight. And VRBO soon adopted similar strategies to tap into this market. Suddenly, travelers and tourists didn’t have to settle for hotels or extended vacation rentals. Instead, they could share someone’s home for a period of time for a reasonable price. It wasn’t long before hosts saw potential in this new market. In fact, many homes were bought and operated by commercial enterprises and entrepreneurs to reap the benefits. Without question, the short-term rental market was a boom for many. But times have since changed, and many short-term rentals have become vacant and abandoned properties.
(Airbnb brought a real estate market boom–read more about it in this Bold story.)
There are several reasons why many of these commercially-operated short-term rentals have become vacant and abandoned properties. Some involve aggressive legislative restrictions that now make operating these rentals extremely limited. Other factors relate to inherent seasonal fluctuations that are inevitable in some areas. But one of the least appreciate reasons involves a lack of management resources that many short-term rental property owners face. Outsourcing back-office support services offers one remedy that can alleviate these issues and increase opportunities. Not only can such outsourcing services improve customer relations and communications but similarly help owners navigate existing laws. There’s no doubt we’ve entered into a new era when it comes to short-term rentals. And understanding strategies to thrive in this new environment is essential.
The Vacancy Problem of Zombie Rentals
Statistically speaking, the numbers of vacant and abandoned properties have increased progressively in recent years. In the 50 largest cities, reports have documented that over 5.5 million homes are unoccupied. Some cities including touristy areas like Miami and Tampa sit at a 13% vacancy rate. Notably, not all of these are short-term rentals. Secondary homes, foreclosures, and investment properties also add to this figure. However, seasonal and recreational properties do comprise the largest segment. These are the Airbnb and VRBO sites often referred to as zombie rentals because they are alive but empty. Because of rapidly changing city and state laws, rules have made their operation more challenging. These added requirements, on top of routine property management, have proven to be overwhelming for some.
To be fair, some percentage of zombie rentals have always existed. Property owners and commercial enterprises fail to invest needed administrative and back-office activities. For example, call center supports to handle customer issues and answer booking questions is a must. Without an effective customer relationship management arm, bookings will be lost to better managed properties. Likewise, support for accounting, marketing, and data management also boosts bookings and short-term rentals. By outsourcing back-office support services like these, revenues can be greatly improved and more than cover these expenses. Plus, it reduces the number of vacant and abandoned properties overall, which is positive for cities and communities. Especially for commercially-operated Airbnb and VRBO rentals, putting such supports in place can be a gamechanger.
Navigating the Legislative Environment
Across the country, many cities are imposing new laws targeting short-term rentals. It’s no secret that a tremendous housing shortage has driven up selling and renting prices in the last five years. Interestingly, many are blaming the increase in Airbnb and VRBO listings for these increases. Supposedly, these rental properties and zombie rentals reduce the supply of homes for sale and long-term rental properties. In turn, this drives up prices as supply compared to demand decreases. But as it turns out, research shows that these specific short-term rentals account for only a 1% increase in overall housing costs. This is because such rentals are in areas where affordable housing isn’t needed. While having vacant and abandoned properties is never a good thing, it’s not the reason for escalating home and rental prices.
Regardless, that doesn’t mean cities aren’t passing highly restrictive laws against short-term rentals. These include laws requiring owners to reside on the property being rented or limiting the number of rentals per year. Some are also requiring owners to acquire permits and licenses to better monitor compliance with these new laws. Though such legislation was designed to improve housing markets, it’s instead contributing to increases in vacant and abandoned properties. Commercial enterprises and owners find it challenging to negotiate these new laws well. Here again, outsourcing back-office support services could help with this. Quality call center services and back-office support optimize bookings for short-term rentals. At the same time, they also better negotiate the rules to get the most out of the new situation.
Making the Best of a Tough Situation
Given the pressures on Airbnb and VRBO short-term rentals, it’s likely the market will contract. Vacant and abandoned properties will therefore increase even further in the near future. Some owners and commercial entities may also believe liquidating their properties as a path of least resistance. But for those who persevere, the potential remains excellent for capitalizing on the short-term rental market. Of course, this will require reducing costs and maximizing bookings within new parameters. But this is precisely where outsourcing back-office support services can provide an advantage. Doing so allows commercial enterprises and entrepreneurs the chance to access expertise in these areas. And it frees up their time to invest in other profitable activities related to their properties.
At the same time, it’s also likely that cities will eventually realize current restrictions on short-term rentals are too much. When these new rules begin to deter tourists from coming to cities, licensing and rental limits may well be relaxed. Here again, however, outsourcing back-office support services allows property owners to gain a partner in this dynamic process. By collaborating with a quality outsourcing services partner, overall short-term rental business performance can excel. The goal is to minimize zombie rentals while gaining a competitive advantage within the market. And outsourcing back-office support services could be an important part of such a pursuit.
Forget what you think about workplace culture and read this Bold story.
