Thought Leadership Sponsored by Luxury Retreats The Sharing Economy Opportunities for Travel Agents in the Luxury Rental Market April 24, 2017 Share 1 -- In less than 10 years, Airbnb has grown from a revolutionary concept of home sharing in 2008 to a major player in the hospitality industry today, bringing the concept of the sharing economy into the mainstream. In 2016, the company’s website listed 3 million homes and facilitated the hosting of 70 million guests. In the United States alone, growth in the private accommodations market has surged over the past few years, growing 11 percent in 2016 in the U.S.—nearly twice as fast as the overall U.S. travel market—according to statistics from Phocuswright’s study “A Market Transformed: Private Accommodations in the U.S.,” released in February 2017. “The segment’s shift online, the expansion of the concept to include private homes in urban markets, the entrance of OTAs and numerous innovative startups have all contributed to powering a period of tremendous growth,” says Douglas Quimby, vice president at Phocuswright. “Against a backdrop of strong performance for the U.S. travel industry, the private accommodation segment has grown much faster than overall travel.” Certainly, the sharing economy is here to stay. And as with any other travel disruptor, some travel agents might lose business to this new model. But savvy travel agents are finding ways to tap into the same traveler desires that fuel the use of sites such as Airbnb to grow their own businesses. One area where travel agents see significant potential for growth is rentals of villas and other upper-end properties, such as castles, farmhouses, barges, upscale apartments in major tourist cities and other unique accommodations. The Target Market for Luxury Rentals While any luxury traveler is a potential client for a villa or luxury rental, travel agents emphasize that the market is not limited to traditional luxury travelers. The flexibility, cultural immersion and ability to host multiple people inherent in villa rentals appeals to a variety of non-traditional groups. “I do unique travel for unique people,” says Rick L. Carter, group sales for Holiday Adventures Inc. “You don’t have to be wealthy. But you do need to want something more than what you can get out of a brochure—I create an entire experience.” To that end, Carter says, “A villa would be my first choice for family reunions, multigenerational travel and even some small corporate groups.” He notes that multigen villa groups can have many moving parts. For example, the whole group will come in for a certain period of time when they’re all together, and then those who are retired might choose to stay in place longer. Meanwhile, parents with children might opt to leave the villa and add on a separate three-day package in a nearby location, or a couple might take off on a one-day off-site adventure. “I talk to the principles, ask about interests, make suggestions,” he says. “There’s a drip effect with these trips—an extra car rental, a few days in a nearby location, maybe a move from a large villa to a guest house for a smaller number of people who want to add on time.” Ellison Poe, president of Poe Travel, also emphasizes that villa rentals are not just for the well-heeled. “If I get a call for a trip to Italy, for example, once we start talking about it, it might quickly become clear that the number of people means a villa can be a great option—both for the overall experience and the pocketbook. Villas can actually be a much more affordable option than the same number of people staying in four- or five-star hotels.” Theresa Tyo, of Camelot Journeys, has had similar experiences, noting that villa rentals can be a cost-effective solution for a group of travelers. “In the end, it can be cheaper to rent a villa than renting that same number of hotel rooms for a group,” she says. “But it’s our responsibility to present the price in a way that is understandable. I don’t start off giving the full price because that can be off-putting. I break it down into a per-person price or a per-night price so clients can see the comparison.” Travel agents who are successfully tapping into the market for villa and luxury rentals often take a different approach to qualifying clients. “I don’t start out asking about how many days or budget,” says Tyo. “I want to know what they like to do, what they haven’t liked on previous vacations, even their favorite color,” she laughs. Poe, too, goes to a granular level when talking to clients to find the right fit. “You have to ask the clients the right kinds of questions,” she says. “Sometimes they don’t know where they want to go—or they think they want to go to Italy, but maybe Salzburg will really be better for them. I ask them to close their eyes, envision their ideal vacation and then describe to me what they see. For one client, her vision was sitting on a balcony, reading a book, overlooking water. But it took a while to get to that realization.” Of course, villa rentals aren’t just for groups. Individual families or couples also choose villas—sometimes for the experience, sometimes for the price, sometimes for a combination of factors. “A couple came in who wanted to spend their summer writing,” says Poe. “They have chunks of time, but not a lot of money. A B&B for that many nights would have been prohibitively expensive, but a villa hit the mark.” Creating a Full Vacation Experience While some travelers are interested in sourcing such vacations for themselves, others understand that a professional travel agent can provide invaluable advice on choosing the right site, as well as pull together an entire vacation experience with sources, suppliers, insights and experiences that few travelers can match on their own. “I create an entire experience,” says Tyo. “If a client just wants air or accommodations, maybe it’s better if they do it themselves. But I feel that they’re getting cheated if they just go to a place and can only say they’ve been there. I want my clients to remember every place we send them because the experience has been made so incredible by all these small details that add up to a cultural experience that they’ll remember forever.” With the fluidity of today’s travel marketplace, it’s increasingly likely that the same client will have different needs for different vacation experiences—for a simple trip, a client might book their own hotel, for example, but come to a travel agent for a more complex vacation. It’s up to each agent to make their own case for the value they add to a vacation experience, as well as understand the times it might not be worth the effort. Julie Danziger, director of luxury travel services for Ovation Vacations, has encountered clients who want to book their own villa or vacation rental homes—and that’s okay. “We understand that if the customer doesn’t need us for this particular booking, then we’re not for them; there’s no need to beat the dead horse,” she says. “We’ve found a way to position it that we’re not competing—they do their thing and we do ours. What we offer is simply different. There’s nothing wrong with the Airbnb market—it’s just a different product.” To illustrate the difference about the kind of experience a travel agent can create, she tells the story of a recent client for whom she booked a villa for his wife’s birthday in the Caribbean for the couple and several of their friends. The vacation included a chef, butler, yoga instructor and more. Danziger says the total was “pricey, but not that pricey considering the number of people and what they got.” Upon his return, the client told her the vacation “was off-the-charts great,” and “so much better than the other guy’s villa.” It turns out that a friend of the client had booked a similar vacation on the same island for a group of friends, but had booked it himself. He, too, stayed in a lovely villa with a chef and butler. But the villa was not air conditioned, which they hadn’t known in advance. And the chef didn’t speak English, so he wasn’t able to understand their dietary wants and restrictions—meaning the group ended up going out to eat most nights. “They got an even more amazing price,” says Danziger, “but in the end they spent about the same amount because they ended up going out to eat all the time. They didn’t understand what they were getting for the price.” Choosing the Right Partner As with any other market segment, not all luxury home rental companies provide the same services and amenities. Here are some key points to inquire about before choosing a villa/home rental company to do business with. Product Vetting Before travel agents can comfortably make a recommendation or booking, they need to know that the product lives up to their—and their clients’—standards. To that end, it’s important to understand what requirements a vacation rental has to meet in order to be listed with a villa or vacation rental supplier. Does the supplier provide open access to anyone who wants to list with them, or do they feature a curated list of properties they have vetted themselves? If they do vet, how extensive is the screening process? What are the kinds of factors considered? What standards must be met? Does the supplier periodically inspect the properties? If so, how frequently? Knowledge of ProductWouldn’t it be great if you could see or stay in every property before you recommend or book it? Back in the real world, of course, that’s not possible. But it is reasonable to expect that the company you’re working with knows the details of every property available. “We look for companies that know their product inside and out,” says Danziger. “If I ask about the number of sinks in a bathroom or if there’s air conditioning in every room or if there’s a separate tub and shower—they need to know the answers to those questions. I’m looking to my partners so I can position the product in the right way, and these are the kinds of details I need to know about.” Partnership with Supplier Just as travelers need to know they can turn to their travel agent in the event of a problem or question, travel agents must be able to count on their own suppliers, both in building a mutually respectful relationship and in case their clients encounter problems along the way. Some factors to consider: How easy is the booking process? How responsive is the vacation rental supplier? How quickly will you receive a response to an inquiry, and perhaps more importantly, how quickly can you get in touch with a human being if your clients have a problem on site? Is the vacation rental commissionable to the travel agent? If so, what is the structure of the agreement? What aspects are commissionable? If not, can you reasonably add a surcharge or planning fee for your services? If the client does go directly to the supplier for future rentals, is the original agent still the agent of record and eligible for commissions?Does the supplier attempt to undercut the travel agent in any way, encouraging clients to book direct and bypass the agent? If there are prices on a website for the general public, are those prices the same as what you can offer? Does the supplier have the infrastructure in place to help create a customized experience, with vetted referrals or recommendations for other affiliated aspects of the vacation? (also see below) Ease of Add-Ons Vacations centered around villa or other home rentals can be complex. They often involve multigen families or groups of friends, with various factions that could initially arrive at different times from different places, and might later want to break off from the group for part of the time. Others might love the idea of staying in a home, but still want the amenities that typically come with a hotel stay. How easy does the villa/vacation rental company make the process of sourcing such extras? Consider: Does the villa/vacation home come with on-site staff? Is so, who exactly will be on site (housekeeper, butler, chef, etc.)? If the villa/vacation rental does not automatically come staffed, can the supplier make arrangements directly for desired staff? Can the supplier help you create an overall customized experience, with either direct sourcing or recommendations for extras such as transportation to/from the rental, tours, personal guides, restaurant recommendations and reservations, etc.? Luxury Retreats Partners with Travel Agents With more than 4,000 listings of villas and high-end rental homes, Montreal-based Luxury Retreats is one of the largest villa and luxury vacation rental services. At 17 years old, it’s also one of the best established brands, with a solid reputation based on its past and an innovative eye to the future. Recently acquired by Airbnb, the company remains committed to the concept that “travel agents are a very important channel in the luxury segment,” says Amr Younes, vice president of revenue optimization for Luxury Retreats. “We continue investing resources in our business development team dedicated to growing our relationships with travel agents.” “Many travel agents haven’t found a way to be part of the sharing economy yet,” continues Younes. “We have created a structure, with our commissions and service, to ensure that they can be a part of this sharing economy, and continue to grow and evolve their businesses with new opportunities.” To that end, Younes notes that Luxury Retreats pays standard commissions to travel agents, and also keeps track of how return guests first booked with the company. “If a guest who originally came to us through a travel agent books again directly, we tag the travel agent and pay them commission on this return trip,” he says. “We are looking at long-term partnerships with travel agents, and our policies have helped us gain trust and confidence with our travel agent partners.” To ensure consistency of product, all villas available through Luxury Retreats are vetted through a 125-point inspection process. “Only about 5 percent of those who want to be listed on our site actually make it through the rigorous programs,” says Younes. “And once they’re on the site, we continue to do regular inspections to ensure the quality is maintained. We offer a consistency and credibility of product throughout the world.” Property amenities vary based on location and individual property. For example, Younes says that many villas in Mexico come complete with chef, butler and housekeeping services, while those services are not automatically provided in some other destinations. “In regions where villas typically don’t come automatically staffed, our concierge services can work with the travel agent to source any additional requirements,” he says. “And of course, if guests don’t want the full services that are traditionally included, we can adjust that as well. Every program is carefully curated for the individual guest.” Plus, Younes notes that a client’s profile follows them regardless of the location of the booking. “Based on what we already know about a client, we can offer a personalized presentation for any destination, whether it’s in Mexico or Italy or anywhere else,” he says. Outside of the actual villa experience, Younes says Luxury Retreats’ concierge services can work with travel agents to book anything from excursions to transportation to guides. “It’s our goal to help the travel agent create a customized, immersive experience for their clients. These services are generally not commissionable, but we can help an agent fulfill any kind of request, whether it’s procuring the best regional wines, closing off an entire ski hill for a family or building a full basketball court at a villa for an NBA player—all of which we’ve actually done.” For more information about partnering with Luxury Retreats, go to LuxuryRetreats.com.