One of the biggest, if not the biggest victim of COVID 2019, is Urban Vacation Rentals for several reasons. Perhaps the principal reason is that this segment of VR is not really “seasonal,” but rather it runs all year and because it was in the middle of a huge transformation which is suddenly being interrupted. Also, a very high percentage of the OTA´s business was based on Urban rentals.
Local and governmental authorities have almost closed down or prohibited Vacation Rentals in most countries, with some very reasonable exceptions. For example, some countries allow professionals considered to be “essential personnel,” such as first responders, to stay or use VR as a safe harbor to protect themselves or protect their families from being infected.
In some countries like China, they have created specific places to stay if you have been infected. Now it seems that Italy and Spain are moving in that direction as well. The only drawback is that you have to share the space, and that is precisely what you need to avoid as the more exposure to the virus you have, the worse the prognosis is.
The crisis has affected all of the Urban VR segment because the business was dynamically running, and mobility and international borders have been closed. In Europe approximately 80% of urban occupation is international and the rest is local professionals or internal tourism.
All indicators and data show that Urban VR is going to be down for at least ONE YEAR unless they reinvent themselves and flow with the market. They will need to find other activities or sources where they can keep generating income instead of being locked down for an entire year.
Here are a few scenarios and possible options that Urban VRs have in the short term. These ideas are reversible which means that you can transform your business temporarily and come back to being an Urban VR when travel normalizes (although it will never be as it was before).
Change Business model from Short-Term to Middle-term :
The biggest advantage that the Urban VR has is that properties are typically located in the city center. They are usually well furnished and tastefully decorated, and they have everything ready to be rented for periods of 6 months to 1 year.
- The situation in big cities right now is that the long term rental costs are high, and they are sometimes located 45 minutes away from the city center. Public transportation is also very costly monthly.
- In other cases, there are many shared apartments among young and not-so-young people. For example, young independent workers, or just recently divorced couples.
- Students that are used to sharing dorms/apartments and paying averages of €450 – €500 per room in an average big city in Europe, or $1,200 – $2,000 on average in the US.
These “tenants” could be a ball of oxygen and perhaps a good way to withstand the current difficult period.
The competitive conditions couldn´t be better right now, as Urban VR properties have excellent conditions and they are located in the best places in cities, so they are easy to rent for a reasonable price.
If Property Managers do not begin doing this, probably the owners will do it. You can reinvent yourself temporarily, at least to keep resisting during this crazy pandemic period.
Change Business model from Short-Term to Long-term :
Leave a big part of your inventory and rent the properties long term. This means long-term contracts, full-furnished rentals ready to go. A longer period may be definitive, but you can ask for a better price and be competitive with actual long term rental.
Here again, the advantage of being well located is a key point.
Look for corporate or professional companies that rent short-term for their employees. Perhaps you can also connect to specialized platforms like Magic Stay, for example.
Convert your properties to Shared Spaces and Rent-by-Rooms
If you are fixed on rentability and cannot relinquish, start renting rooms. Quite risky, but business is business and if you don´t have other options, this is one way to generate some income for the company.