With rates and stays finally taking a breather, many short-term rental property managers are experiencing greater competition and are ready to up their digital game. Utilizing technology solutions can set a short-term rental apart from the competition. Applying technology solutions provides convenience and leverage for the property manager with the ability to quickly pivot and remain competitive in response to market conditions, and it also provides more data insights for the host/owner. Some key technologies top of mind with managers includes dynamic pricing, marketing and compliance tools.
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Technology gives a competitive edge
While short-term rental demand persists, the increased supply is catching up with the booking demand, causing occupancy rates to slip across the board. Property managers that utilize the latest technology are better positioned to manage rentals and compete in a crowded and competitive marketplace.
A recent study in conjunction with Phocuswright found that 59 percent of property managers are concerned about the feasibility of operating their businesses in the future due to the constant shifts in rules and regulations. Many property managers have found technology tools so vital to their operation of the property, that they insist that their owners integrate a complete technology stack into their operations. The same study found that 61 percent of property managers have adopted a pricing system, 50 percent used rate monitoring, 59 percent tapped a calendar manager and 61 percent created a website with booking capabilities.
Benefits of dynamic pricing
It’s true that hosts/owners are primarily focused on improving bottom-line revenue (see figure 3 in Phocuswright’s May 2022 White Paper), so, it’s no surprise that property managers embraced and promoted automated dynamic pricing and booking tools. These technologies allow property managers to respond to a rapidly changing market or booking conditions including lengths of stay, last-minute cancellations, area occupancy and demand, and other booking needs. Dynamic pricing tools afford property managers efficiency in a competitive environment. When there are many available short-term rentals in an area, pricing needs to be adjusted to attract renters and make sure that the property continues to be occupied. However, when there are few options and high demand, pricing can be raised to make the most revenue from each booking and ensure that revenue isn’t left on the table. In the case of last-minute cancellations, property managers can use booking tools to get the property back on the market asap at an appropriate rate, attempting to get the short-term rental occupied again and capture revenue for the owner.
Benefits of marketing tools
Other game-changing technology additions are marketing tools that allow managers to advertise the property, especially when faced with shifting consumer demands and last-minute cancellations. From the Phocuswright study, property managers are far more likely to use technology compared to smaller, independent hosts given their larger scale (see figure 6 in Phocuswright’s May 2022 White Paper). Enhanced marketing tech tools allow for more strategic outreach to former guests and/or look-alike guests on multiple platforms and in varying geographies. This will ensure that the property is top of mind for guests when they start their short-term rental search and then become ready to book.
Benefits of compliance technologies
Compliance technologies are an essential tech stack addition for property managers looking to proactively address everything from licensing, permits and lodging tax to noise control. Property managers might also choose to onboard compliance automation tools to stay ahead of changes in rules and regulations impacting short-term rentals. As owners add more short-term rental units, property managers will have an even greater challenge in tracking various compulsory compliance obligations for each individual unit in each location – for example, lodging tax, which has varied and ever-changing rules and regulations depending on jurisdiction. Compliance technologies not only streamline processes but also reduce the risk of human error and create competitive advantages. And while legacy software systems can be outdated and inefficient, newer cloud-based compliance technologies can help with:
• Tax compliance
• License and registration of short-term rental status
• Reporting on both taxes and occupancy stats
• Data extraction and transfer
• Data input of reservations and rates
• Revenue calculations
• Property monitoring for noise control, energy use, check-in/check-out and more
Get a competitive edge with technological upgradesThe short-term rental landscape is becoming highly competitive, and proven technology helps property managers gain an edge and stay in compliance. Digital transformation, including dynamic pricing, marketing and compliance technology tools, plays an essential role in taking a short-term rental to the next level. These tools will ensure that owners are maintaining high occupancy, at the best rate for the market, and helping property managers with their government mandated compliance burden, from short-term rental taxes to being good neighbors and monitoring the property. Utilizing technology tools will support short-term rentals as they compete in a tightening, and increasingly regulated market.
Author: Pam Knudsen is an executive at Avalara, leading multi-tax teams including Lodging, Beverage Alcohol, Telecommunications and Sales & Use Tax. She serves as a leading voice in vacation rental tax compliance and regulation, in addition to bringing in-depth experience across software/SaaS technology as well as ERP systems. Pam joined Avalara in 2012.