ShortTerm Rentals Cant Rely On Tech To Solve Its Labor Shortages — Yet
The technology based on artificial intelligence comes after a lot of hard work. But in the short-term rental sector, where human capital is vital, labor shortages remain a challenge.
Cleanliness and good housekeeping are the pillars of hospitality. And while users of short-term rentals increasingly expect hotel-like services, provided that the experience is paid and without the necessary labor.
"I don't see people leaving the scene for at least a decade," said Guy Westlake, founder of Lavender, which sells property management software to college students, condominiums, shared flats and serviced apartments. "Robots still can't clean and maintain apartments."
However, Westlake argued that it was more difficult to find labor willing to do manual labor for a fixed price than it would be in the short-term rental market.
Old is fine
Labor shortages in the hospitality industry are nothing new. The pandemic may make things worse, but it's a problem that has plagued the industry long before "work from anywhere" came along.
As short-term rentals increased in all markets and as we expanded into new markets, the manual workload for property maintenance increased in tandem.
“The average number of daily real estate transactions continues to grow,” said Jeremiah Gall, founder and CEO of Bridgeway, a real estate transaction platform for the short-term rental market. "And if the work is outsourced, quality control is necessary - a second team comes to check and make sure everything is in order."
Gale noted that customer expectations are also persistent.
"Guests expect a vacation rental to feel like a hotel," Gall said. "Ten years ago you could bring your own bed linen and toiletries to rent, but now that's changed - we know everything will be sanitized and super clean when you move in."
The national average cleaning price for a one-bedroom property in the United States in the fourth quarter of 2021 was $60.68, an increase of 18.31% compared to the same period last year.
But the cleaning fee depends on the location and type of property. In 2022, the average cleaning fee for a private/shared room on Airbnb in the US was just $47 per stay, while the average cleaning fee for a home with five or more bedrooms reached $333. According to AirDNA. But overall, cleaning fees have increased by 28% since 2019.
Unsurprisingly, much of this can be attributed to the strict sanitation policies required during Covid, which alone increased cleaning costs by 11% in 2021.
However, a significant proportion of the local leisure workforce is no longer dependent on the hospitality sector. A significant portion of the workforce is leaving labor-intensive jobs for higher-paying remote roles that open up opportunities everywhere.
"As telecommuting becomes more common, people living in holiday destinations are finding work online, making the existing problem even more acute and now even more difficult," said Steve Trover, chief executive of demand management company Better Talent for employees of holiday homes. . industry
Trover added that historically resorts, resorts and hotels have hired seasonal workers, but post-Covid it is becoming more difficult to do so.
"There's really no solution," Trover said. “Companies are aggressively hiring cleaners. Costs have skyrocketed and the wage gap is widening the gap between supply and demand – every position is in greater demand than ever.
What does this mean for users? Good, high average daily rate. Companies like Sonder and Airbnb (in some markets) waive cleaning fees. But this is a cost that is otherwise charged to the price.
"Cleanup fees may go away, but costs won't. And rising costs mean consumers are paying more," Trover added.
This is not the case everywhere, with 52% of properties in the UK not charging a cleaning fee, compared to just 13% in the US.
Is there an app for this?
There may not be a way to replace manual labor for important tasks like cleaning and maintenance, but there is a way to make it waterproof and efficient.
This should explain the rise of software solutions for the short-term rental market that automate everything else.
"What the customer can't hear or feel should be automated," Gal says. "The time and resources saved can be spent on amenities and services that guests love."
Gale added that the short-term rental industry is on the cutting edge. "It's an industry that understands it's multidisciplinary, and because of the connection between property management and hospitality, it now has a nice ecosystem of point solutions."
The turnkey company acquired by Vacasa has implemented technology for clean checks, screening staff to provide a 24-hour buffer between stays in response to Covid.
This has led to an influx of customer experience startups, according to Simon Lehmann, co-founder and CEO of AJL Atelier, a consultancy specializing in the private accommodation and holiday rental industry.
"We've seen, for example, a lot of companies that have started to outsource their customer service teams to the Philippines," Lehmann said. "Virtual support and other activities such as reservations and marketing are automated or outsourced."
An interesting finding is that secondary roles, regardless of position, are automatic.
"It's a no-brainer, but you've had a marketing team, customer service, booking agents that you've grown," Trover says. "Companies had fairly large delivery and customer service teams that were scaled and optimized with technology."
Pay the price
The labor shortage plaguing the short-term rental market is both a cause and effect of the booming industry.
The vacation rental industry has long been criticized for reducing the supply of affordable housing and displacing people from their hometowns.
In tourism markets that have experienced rapid growth in vacation rentals, local residents who would otherwise be employed in the industry do not have access to these resorts. Second-tier cities, where people commute to the big cities, have also become key rental markets
"A 10% increase in Airbnb listings leads to a 0.42% increase in rents and a 0.76% increase in home prices," say researchers at the National Bureau of Investigation. Economic and founded the University of California at Los Angeles (UCLA) and the University of Southern California.
"Cost of living and housing are major issues for workers," Trover said. "This problem is not going away, especially with rising inflation, so companies are looking for affordable housing for workers because these robots are coming soon."