In 2009, a PhoCusWright study called the vacation rental market the "last frontier of the hospitality and lodging industry."
The very qualities that kept the vacation rental market somewhat uncharted as far as travel distribution -- fragmentation, size and a lack of regulation -- also represented "significant opportunity," the report found.
In the three years since, travel agents have been chasing that opportunity more than ever.
While still lagging far behind cruises, hotels and tours as an American vacation choice, public acceptance of vacation home rentals has grown. And as it has grown, so has travel agents' interest in the business.
The rewards can be substantial. Most villa wholesalers offer 10% commissions and cite average commissions north of $1,000 per booking.
World Travel Holdings, the parent company of brands such as CruiseOne and Cruises Inc., said its Villas of Distinction brand was its fastest growing. Steve Lassman, CEO of Villas of Distinction, a villa wholesaler, said that in 2010 and 2011, business grew 50% and 35%, respectively. Business from travel agents in 2011 grew 24% from 2010, after having already grown over 25% from 2009 to 2010.
"It's not new, but it's what the next generation is doing more of," said Judi Chaitman, a travel specialist with Great Getaways. "It's much more popular now than it was five years ago."
There are several reasons for the increased appeal of vacation rentals. For starters, the Internet has made it much more transparent. Interested clients can now see photos of the properties and read reviews.
Travel agents have found that for seasoned travelers, it represents something different.
"A lot of people who call me are my old clients, and I'm always trying to suggest new experiences to them," Chaitman said.
Sylvia Jones, the owner of Villas and Apartments Abroad, echoed that sentiment.
"Our clients will stay in a hotel for business trips, but for that signature vacation experience, they are choosing to stay in villas," she said.
The growth in multigenerational and group travel has also contributed to the popularity of villas.
Jones said that most bookings come from family travel and that multigenerational travel is the fastest-growing segment of her client base, followed by groups of friends and destination weddings.
Even small groups of corporate executives will use villas that have meetings facilities, because "it affords them privacy that they can't have at a hotel," Jones said.
What many of these travelers are looking for, according to both travel agents and villa wholesalers, is something unique and exclusive.
"These travelers want to see 'behind the curtain' and be immersed in the culture of the place they are visiting," Jones said. "The staff at our villas provide guests first-hand contact with local customs and will supply all the insider tips."
As Chaitman tells her clients, they will have a private home and maybe a private pool and personal chef, but they will also get to know the feel of the country and are more likely to meet the locals.
"You might be in town or close by," she said. "You rent them for at least a week or two weeks, and you meet the locals in town."
Selling value
One of the barriers travel agents often identify in selling villas is that it's considered a high-price vacation.
In fact, some villa wholesalers find that despite offering an inventory that would suit vacations of all budgets, agencies that focus on luxury are more successful than the average travel agency in growing their villa business.
Villas of Distinction's Lassman said that business from travel agencies that focus on the luxury market was up 58% in 2011, after having doubled in 2010.
This clearly suggests that a huge area of the vacation rental business remains untapped.
Companies like Villas of Distinction represent properties that start as low as $2,400 for a week. Lassman said the average price point for agents who focus on luxury is significantly higher than the company's average: $17,000 vs. $12,000 to $13,000.
Paradoxically, despite often carrying a high total price tag, it is value that often draws people to villa rentals.
Many properties end up costing $500 per night, per room in a home that has a kitchen, which means major savings on meals and drinks, plus amenities few luxury hotels can offer, such as private pools, private gyms, tennis courts and beachfront access.
Then there is perhaps the most important, yet intangible, amenity of all: privacy and seclusion.
Not fighting for chairs around the pool or the best spot at the beach has great value for many travelers.
But in the end, real value is mostly a factor of numbers.
"If you have six to eight couples, it could be a good value for you," Chaitman said. "For two people to do a villa, it's usually not a money-saver. ... The more [people]you have, probably the more savings you might have."
Chaitman recently sent a group of 10 to a villa in St. Martin that cost $30,000 for the week through Villas of Distinction. But when it was broken down by couple and night, it cost less than $900 per night, for a place that Chaitman described as "over the top as far as luxury."
Jones said that even at the high end, vacation rentals offer a value that comparable luxury hotels don't.
"Our villas are of the same standard as the most discriminating five-star hotel, but the diversity of our collection of homes and the ability to personalize the experience for guests makes the villa vacation a truly extraordinary experience that is impossible to imitate in a hotel," she said.
The wild card factor
There is no question that the wild card factor is the most difficult one for travel agents to come to terms with when it comes to selling vacation rentals.
The industry is highly fragmented, and the properties often have no professional management or oversight.
But there are many companies -- Villas and Apartments Abroad and Villas of Distinction among them -- that not only broker the rentals but know the properties and can vouch for them.
What is most important for travel agents to know is that these companies send their teams to visit the properties themselves. Perhaps more importantly, they have close relationships on the ground where the properties are, where people they trust inspect and manage the properties and look after their clients.
"What could give you that extra added measure of confidence is when you are working with a villa company, they should have someone that is very closely related to the on-site property manager," Judy Sweetland, marketing director for Private Trade Winds, a villa rental company, said at a recent webinar for the Travel Institute.
That, she said, is the difference between renting a home off the Internet and finding one through a company like hers.
"You can't be everywhere," Sweetland said, "so you need to make sure you are working with a company that not only properly vetted a villa to make sure it's worthy of your client, but you need to make sure there is really great coordination between a property manager on site and someone in the villa company you are renting from."
Those qualities are what keep Chaitman working exclusively with Villas of Distinction. She only began selling villas a few years ago, having been one of those people who was concerned about the "wild card" factor.
"I certainly can't -- and don't -- have the firsthand knowledge of these places like I do on hotels, so you've got to trust someone," she said. "It's very hard for me to sell something and tell someone, 'Well, the pictures look great,' because no one has been there. That's not an answer I'd ever give anyone."
One of the qualities that keeps her working with Villas of Distinction is that it sends its staff to so many of the destinations to view the products.
"Between them, there is a great knowledge of the products they are selling," Chaitman said.
Whether it's a management company or a villa's own staff, these wholesalers have relationships with the staff on the ground, who are on call to make restaurant reservations, set up cooking classes and private chefs, arrange car rentals or anything else guests will need. These people give the clients the comfort of having the equivalent of a hotel concierge but in the privacy of villa.
As Jones noted, the team on the ground has much more insight and an understanding of particular destinations than she or her team can glean by doing a site inspection.
"If I'm working with a local manager and it's someone who I've worked with for decades, I know their standards and they know mine," she said. "I rely on them for guidance. We are partners in that respect. It's a very important relationship."
Jones said she can give local managers and concierges a description of what her client needs and they will visit many properties and inspect amenities as particular as mattress quality to make sure it fits the bill.
"They source these properties and send reports, and I send it on to the client," Jones said. "From there, the client will have a really good feel for the property."
Follow Johanna Jainchill on Twitter @jjainchilltw.