Short-Term Rentals Market: Scenarios, Marketing Strategies and Financial Operations

Abstract

During the last decade, a new trend within the travel business is spreading globally and very rapidly. Thanks to the so-called sharing economy, emerged from the increased use of the internet, short-term apartment rentals have enlarged travellers’ accommodation “menu” providing additional types of structures to the existing traditional ones. Moreover, short-term apartment rentals also give owners the possibility to rent their vacant apartments or to investors the possibility to invest in an increasingly growing market. The hypothesis that this thesis aims to prove, sustains that the short-term vacation rental market is a sustainable business and a viable alternative to pre-existing traditional structures such as hotels, B&Bs or hostels. The phenomenon would be facing a remarkable and stable growth, while being a profitable market for companies managing apartments on the owners’ behalf and promising positive returns on investment to those, who rent their vacant apartments or choose to direct part of their capital to apartment short-term rentals. In order to prove the hypothesis, it will be followed a methodology, which consists in three steps: research, analysis, and hypothesis validation. During the research process, several different types of sources have been consulted including business articles, TV news reports, surveys and interviews, tourism flow data issued by local authorities, meetings and conferences with companies operating in the market and home business generated data. Due to the very rapid changes taking place in the market, information becomes soon outdated so that only recently updated sources have been chosen. Research and analysis have been addressed to the industry origins and growth, customer segmentation and demographics, existing competition, legal system and guest protection and platform providers. The hypothesis will be proven through both the analysis of data available in the market and a sustainable business and marketing plan, which show positive returns for both investors and companies leasing apartments on the owner’s behalf. The business and marketing plan will include strategies meant to not only increase occupancy rate by targeting specific guest by their demographics but also through customer satisfaction, which can be defined as the key to success. As we will see, it is indeed customer satisfaction, which reflected on excellent reviews, allows for an increase in both occupancy rate and price per night, which in turn increases return on investment and further validates the thesis.