Go-to-Market Strategy

Shaik Omer

Marketing Management

June 30, 2023

Market Analysis Report: Vacation Rental Industry

Customer Insight and New Product/Service Design

Vacation Rental Industry

Customer/Buyer Immersion

How would you describe the customers/buyers in this market? What do they value? What

do they need? What are their challenges?

The customers/buyers are typically looking to change the pace and get away from their

usual day-to-day routine. Many rentals serve as a gateway drug for people interested in building

up or downsizing their own properties across the country. The customers/buyers in the vacation

rental market are typically looking for comfortable accommodations with all the amenities to fill

their needs, and with the option to get a feel of the local culture. What makes them different from

hotels is that they are meant to be an extension of their own home (Daniel, 2019).

The buyer's goal is to understand the rental property in order for them to make an

informed decision about it. Buyer Immersion can be as simple as asking a few questions and

walking through the property yourself with the owner. It can also include taking photos of the

property from multiple angles, contacting neighbors, and watching YouTube videos of rental

houses that are similar to what you are buying.

Customers/buyers need sources of revenue that have low upfront costs and high returns.

They also need to have the ability to grow their business. This is why vacation rentals usually

require some degree of operational training as well as inventory management. Also, in order to

maintain a high level of standards, many require a major financial commitment from their

owners. Also, in order for the market to survive financially year after year, customers/buyers

need support from local politicians and economic development agencies. One of the major

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Market Analysis Report: Vacation Rental Industry

challenges for customers/buyers in the vacation rental market is pricing their property

competitively with similar accommodations in the area. The average price for a studio apartment

is $13-$19/night depending on location (Daniel, 2019).

Problem Statement - What is the main problem to solve for the customer?

"Just because you own a vacation rental doesn't mean it's going to be easy."

The main problem addressed by the Vacation Rental Industry is how to increase the

amount of rentals in order to compete with other market players, such as hotels and condos. This

problem cannot be solved without increasing the rental number and income from each individual

property. The solution is to increase and/or diversify rental units (Daniel, 2019).

Problem Statement - What is the main problem to solve for the customer? in the Vacation

Rental Industry, "Just because you own a vacation rental doesn't mean it's going to be easy."

The above quote was used as the main problem statement for this research and the

starting point.

This is a problem statement because the customer is still not clear on how to increase the

number of rentals and diversify units. This will be evident in the various products and modules

that are presented within the product roadmap, each of which will have a corresponding function

with regards to the problem statement. This can be seen through the structures and strategies that

are evident in each module, which represent what is known in terms of product development and

research. The customer is still not clear on how to increase the number of rentals, but is provided

with an idea or direction on how to get there. Another issue faced by many tenants is that the

house itself isn't up to their standards or expectations. They often don't like the furnishings in the

house, prefer to rent somewhere else, or have very specific requirements for what they want. If

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Market Analysis Report: Vacation Rental Industry

these things are not met, this can often result in tenants moving out of your property quickly due

to bad experiences with your property and your service (Daniel, 2019).

Ideation

(1) Initial draft - List ideas you posted for your Design Ideation Discussion.

The idea of a vacation rental industry is that you can rent out your home while you're not

there and make money off it. One of the biggest problems with vacation rentals is that they are

illegal. This is because you have to have a home owner's permit to be allowed to rent. My idea is

to make the process of getting a Home Owner's Permit easier. The existing process is time

consuming and it costs a lot of money. By making it easier, more people will go online and try

out hosting their own Vacation Rentals. By hosting more vacation rentals, more people will be

able to make money renting out their homes. Not everyone is able to travel all the time. People

who don't like traveling or don't want to travel that much like staycation will be able to stay at a

vacation rental whenever they desire (Mathew, 2017).

(2) Final copy – Describe your recommended product design using the output from the

design ideation process generated in your Design Ideation Discussion Forum.

Every year there are more and more people who want to rent their houses out for a few

weeks a year or even a summer or two. Instead of staying in the same area over and over again,

people who don't travel as much can rent out their home while they are away. They will be able

to get cash that they can put towards paying down other debts or saving up to take another

vacation later on. It is also good for businesses because they will get new clients that they

wouldn't have normally gotten (Mathew, 2017).

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Market Analysis Report: Vacation Rental Industry

It is important to consider the factors and problems that are most likely to occur with a

product before you commit to creating it. Research and plan ahead if your product is going to

rely on other people or require outside help such as a contractor or accountant. If you are going

to be creating a product yourself, it also is important to have a clear idea of what you want in

mind when you begin. Consider the market that you will be selling it in, how long it will take,

and what resources and money will be needed before beginning the project (Mathew, 2017).

My concept for this product is to make the process of getting a Home Owner's Permit

easier and less expensive. I would start by making the process a lot easier. I feel that the current

process takes too long and that it costs too much money. It should only take a couple of days to

be able to get your Home Owner's Permit if you already own a home, otherwise it should only

take about 3-4 weeks for you to get your permit. I would also make the permit process cheaper. I

feel that it should cost at least £250 for a Home Owner's Permit. I think that this should be the

price because not everyone needs one. If someone rents out a room in their home to another

person, they don't need a Home Owner's Permit (Mathew, 2017).

Market Segmentation

Vacation rental industry is a $42 billion industry that provides an alternative for the

traditional hotel. The primary segment of the industry is owners of individual rental properties

and managers/owners of vacation provider companies. On average, individuals rent twice a

month and 42% own more than one property. The average price per night is $116 with the

median at around $75 per night. The industry averages 74,000 reservations a day and has an

average mean of 5.8 nights per reservation. The industry has seen a steady annual growth of

4.9% for the past 15 years.

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Market Analysis Report: Vacation Rental Industry

The second segment of the vacation rental industry is companies like HomeAway,

Airbnb, and VRBO. These companies act as the intermediaries between property owners and

renters. This market has seen exponential growth since 2008, with most of the revenue coming

from a part of the company’s that helps property owners operate their vacation rental business by

providing a website where they can list their property and collect payments from guests. This

form of rental is called fractional rental. The fractional rental market is $15 billion annually, but

likely less than 20% of the market. HomeAway’s revenue from the fractional market has reached

$700 million in 2014 (Mathew, 2017).

Customer/Buyer Target Profile

Customer targeting is the process of finding out where your customers spend time and

how they make their daily financial decisions. Once you find out where your customers spend

time, it will be easier to target your marketing towards them with some products or sites. By

understanding who your customers are, it will also help you understand what kind of product or

service they might need in the future. For example, if people are looking for work in a specific

area, they may be more likely to look at a job board that is organized by the type of work that is

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Market Analysis Report: Vacation Rental Industry

wanted. This will help you do your research and determine if it is the right time to begin selling

your product (Richard, 2018).

When looking at a new market, it is important to determine whether or not you will be

marketing your product or service to people who live there. Finding out about the area you are

targeting will help you decide if it is a good time for your market to begin selling your product. If

the population of that area is already very large and successful with buying from other

companies, this may be a poor time for you to begin selling your product. You will also want to

look at what the population of that area wants in order to better target their sales (Richard, 2018).

Consider the following insights into customer targets for this industry:

• It is an economy that has a limited amount of inventory. This allows the customer to

feel comfortable dealing with the vendor and to know they will not have to wait too long

for the property they are looking for. The high demand from customers is a sign that this

industry is growing.

• The target customer is often a "last minute" traveler and deals in business travel on spur

of the moment deals. They make their travel plans for when they want to go rather than

when there are properties available. These customers want to feel comfortable with the

vendor and want to be sure there will be a place for them when they are ready to go.

• The target customers are income level is usually above average and will usually have

money to spare for these types of trips. This means that those who rent a vacation home

will be able to afford the rates they are charging.

• The target customers are looking for unique locations and experiences, like owning

their own private island or having their own vineyard in Napa Valley.

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Market Analysis Report: Vacation Rental Industry

• This industry is growing. As it grows, the target customers will grow with it (Richard,

2018).

Buyer Persona

A buyer persona is a complete package that represents your customer. It is one of the

most straightforward marketing tools because it helps you understand who is most likely to buy

your product or service and how best to entice them.

This article will help you create a buyer persona for the Vacation Rental Industry. You

will find out how buyer personas are used in this blog space and what they should include

demonstrating whether your work is successful. You will also learn how buyer personas can help

you segment and determine what social media channels best fit your product or service (Richard,

2018).

What Is A Buyer Persona?

A buyer persona is your ideal renter's target demographic and budgetary profile—how

they behave, what they want to do on their trip away from life's responsibilities and obligations.

It cuts through the clutter of a myriad of statistics and generalizations to focus on your most ideal

renter. Figuring out who they are and what they want is essential to your marketing. Not only

will it allow you to be in front of them, but it can also help you determine the ideal location for

your property and how much you should price it at to attract them to it.

Buying a vacation home is an investment. Every dollar you spend on advertising,

marketing, and marketing materials reflects directly into your bottom line. A property that is

marketed and marketed effectively will stand to make more money for its owners than one that

doesn't receive the same amount of activity. It's for this reason that most investment

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Market Analysis Report: Vacation Rental Industry

opportunities—especially second homes—are targeted to elite buyers. If you're not in that

demographic, you need to work harder at selling your property (Richard, 2018).

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Market Analysis Report: Vacation Rental Industry

References

Daniel, L. (2019). Vacation Rental Industry: Customers/Buyers and their Problem Statement.

Journal of Vacation Marketing, 81(3), 529–562. https://doi.org/10.1111/jori.12042

Mathew, S. (2017). Product/Service Ideation & Market Segmentation of Vacation Rental

Industry. European Journal of Tourism Research, 18(1), 77–100.

https://doi.org/10.1111/rmir.12030

Richard, C. (2018). Vacation Rental Industry Target Profile of Customer/Buyer and Significance

of Buyer Persona. International Journal of Tourism Economics, 04(02).

https://doi.org/10.4172/2151-6219.1000081

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