Posted inLeisure & Entertainment

How will technology reshape the short-term rental industry in 2024?

Peter May, VP of Operations, Silkhaus exclusively shares how technology is reshaping the short-term rental industry, enabling immersive guest experiences, streamlining operations, and driving growth

How will technology reshape the short-term rental industry in 2024?

The travel industry across the world has seen significant upheaval over the past four years. While the pandemic couldn’t have been predicted by anyone, the rapid rebound in international travel was unpredictable as well. The IATA foresees travel to cross 2019 levels this year, which means it’s imperative to ensure sufficient guest accommodation infrastructure is in place to meet the demand.

However, that’s easier said than done. Leisure and business travellers have for long had to face inconsistent experiences even at global hospitality chains. For long-stay guests, this also meant being limited to small spaces, without the comfort and familiarity of being at home. Lately, the emergence of home rental platforms has allowed guests to book larger accommodations, but the inconsistency in experiences and quality often led to disappointing stays.

Peter May, VP of Operations, Silkhaus

Short-term rental industry: A multi-billion dollar industry

In the GCC, this problem is further compounded by the lack of sufficient supply. While hotels across price segments are coming onto the market, the supply gaps are still not being filled. On the other side, cities like Dubai and Riyadh are experiencing a construction boom, but property owners are ill-equipped to make the most of the short-term rental (STR) opportunity, monetise their assets and deliver a world-class guest experience.

With changing trends and expectations from guests who seek “slow travel”, affordable quality and transparency in the pre-booking journey, technology will play a crucial role in enabling the real potential of the short-term rental segment.

The global short-term rentals market is projected to grow to $57.05 billion by the end of 2028, which means property owners, whether they are individuals or institutional investors, will need to leverage innovative solutions and implement streamlined processes that elevate the end-to-end experience for guests.  Without technology acting as the secret sauce in the STR industry, it becomes ever so challenging to bridge the gaps across the guest journey including streamlined booking, digital check-ins and world-class furnishings amongst others.

So, how can technology truly disrupt the short-term rental industry and accelerate growth?

Enabling immersive experiences at every step of the guest journey: Loyal guests crave the same experience and quality of stay, wherever they go. While established hotel chains provide this, standalone apartments generally don’t. Technology solutions equip guests to virtually immerse themselves in a property during the booking process and ensure that a rental truly feels like home. For landlords, such features ensure quality demand, higher satisfaction of guests and thus higher revenue potential. 

Corporate guests, as well, have been underserved for a long, with limited options for their stays, due to organisations partnering exclusively with global hotel chains. Previously short-term rental platforms, mostly operating as single units in a fragmented manner, had distribution challenges and couldn’t penetrate markets in a structured way to meet the demand from corporates for accommodations. By enabling a branded platform that aggregates multiple properties, delivering technology, and creating bespoke pricing, services and facilities for business travellers, STR owners can take advantage of higher occupancy, while attracting high-value guests from around the world, ensuring a consistent stream of revenues across the year, particularly in periods like the summer when leisure travel reduces. 

Landlords who deliver consistent services stand to benefit: Once the booking phase is concluded, guests arriving for their stay at a property often look out for the finer details. This is where landlords can leverage technology to design and furnish their properties.

Smart locks, which are now largely available, allow guests to check into an apartment without the need for a physical key. Questions can be resolved via a digital concierge service on their smartphones thanks to a streamlined network of agents trained to deliver fast responses. Such services also provide guidance on local highlights, dining destinations, and tourist hotspots.

While  a  lot of this might feel overwhelming, landlords also get access to dashboard solutions which unite all individual features into one powerful tool. This not only equips them with modern technology, but also increases transparency around earnings, additional fees, and potential costs.  With such technologies available to landlords thanks to tech-enabled operators of short-term rental platforms, they are easily able to eliminate inefficiencies, and streamline operations, allowing scalability and reducing operating costs to enhance profits. In fact, we see landlords earning as much as 20-40% more than they would with regular rents.

The STR sector in the region is still in its infancy. However, the vision of regional governments to diversify economies, has resulted in the hosting of global events, attracted international businesses and is leading to a thriving tourism sector which will underpin growth.

Short-term rental landlords have a significant opportunity ahead thanks to Proptech operators for whom technology plays a pivotal role in creating a modern, world-class experience. This delivers growth and returns at scale for landlords, including for smaller newer businesses in the industry, and will reimagine the hospitality sector.