PhocusWright revisits the spiny topic of this “parallel” market
In just five years, Europe’s private accommodation marketplace has witnessed explosive growth. Renting is common among European travellers, and a surge in bookings has fuelled growth of online distribution platforms. At the same time, a new generation of owners and hosts are getting into the rental game. A new report by PhocusWright provides sizing and projections for Europe’s private accommodation landscape, and identifies the key players, trends and challenges that characterise the market.
A study published by PhocusWright late last year is a follow-on from one done by the organisation in the early part of the decade. Indeed, Phocuswright first undertook research into the European vacation rental marketplace in a comprehensive study, European Vacation Rental Marketplace: 2011 2013. At the time of its publication, the report highlighted a formidable market characterized by a large volume of bookings (approximately €25 billion in 2010), strong growth and a wide variety of inventory across Western Europe.
As important and especially when compared to the US market the vacation rental segment in Europe was well recognised by consumers, and driven to a great extent by large, well-established vacation rental brands, often operating at a national level.
Despite these healthy indicators, the study found that the market was still immature and a bit messy from a supply, distribution and technology perspective.
This new report revisits Europe’s dynamic marketplace for private accommodation rentals to understand how the segment has evolved since 2011, and where it is headed.
Renting is commonplace, rental stays have become more hotel- like, and most European travellers view renting as a solid mainstream accommodation option. In addition, the market has moved online, with online distribution shifting from VRMCs to online intermediaries, including rental sites like Airbnb and OTAs such as Booking.com.
As the market has evolved, a path has been cleared for a new generation of owners and hosts, as well as new types of rentals. European homeowners many of whom are younger and choose to manage the property rental on their own are renting their primary residences in some of Europe’s largest cities. The once typical vacation rental listing a secondary residence in a traditional beach or country setting and managed by a professional Home or hotel? With the advance rental management company is now but one of a plethora of private accommodation choices available to European travellers.
- Bigger, faster, stronger. Europe’s private accommodation market is growing faster than accommodations overall, and faster than the broader travel market. From 2010 to 2020, the market is projected to add €20 billion in value.
- Renting is routine. The share of European travellers who rent is higher than in the U.S., and more than half of European nonrenters have considered renting in the past year.
- Digital dominates. Nearly half of all rental revenue in 2016 was booked and paid for online. And even for of ine bookings, renters rely heavily on online listings, reviews and communication.
- Alternative is over. Private accommodation in Europe is now a primary form of accommodation, driven in large part by the burgeoning millennial traveler population. European travellers see rentals as mainstream, rather than as a niche lodging category.
- Home or hotel? With the advance purchase window and average trip length shortening for rentals, private accommodation now competes more directly with hotels, especially in Europe’s urban markets. Price and location are primary drivers for both categories.
- Owners are ascendant. Two in three owners began renting in just the past three years, and the European rental market is awash in new hosts/owners. The share of rental by owner (RBO) listings has grown dramatically.
- Intermediaries abound. While traditional European vacation rental brands continue to have a strong presence in the market, online intermediaries have been the fastestgrowing distribution channel for private accommodation. Airbnb, Booking.com and others claim an increasing share of the space.
- Urban rentals remap the market. City rentals now account for one fourth of Europe’s private accommodation bookings. Growth in urban rentals is being driven by younger hosts, many of whom rent out their primary residences.