The year is already off to a good start for some owners. According to HomeAway’s seventh quarterly report, about 60 percent of vacation rental owners say their bookings for the first quarter of the year (January through March) are about the same or higher than the same time period last year.

“It’s clear an increasing number of travelers are considering vacation rentals as an alternative to hotels,” says Brian Sharples, chief executive officer of HomeAway. “We’ve done a lot of work to promote the benefits of vacation rentals – extra space, added privacy and full kitchens – and that marketing and advertising is having an impact. More travelers are asking themselves, ‘Why hotel when I can HomeAway?’”

Good News for Travelers: Prices Stable, Choices Continue to Grow
The HomeAway report also found that a majority (59 percent) of vacation rental owners will keep their 2010 rental rates in place this year – good news for travelers looking to stretch their travel dollar in 2011. About 10 percent will decrease their rental rates from last year, and approximately 31 percent expect to increase their rates.

While rates look to be consistent in 2011, vacation rental inventory continues to grow. For the sixth consecutive quarter, Austin makes the list of the top 10 fastest-growing cities for vacation rental listings. Last year’s list, comprised of three markets in California (Carnelian Bay, Santa Monica and Beverly Hills), three ski towns (Estes, Colo; Truckee and Carnelian Bay, Calif.) and two lake destinations (Canyon Lake, Texas; Lake Norman, Illinois) is a change from this year’s list that featured beaches and less traditional vacation rental destinations. (see chart)

In addition to a greater selection of vacation rentals, travelers also will benefit from owners’ efforts to improve their properties and the experience that travelers have while staying in them. The report found that 59 percent of vacation rental owners are planning an upgrade to their homes in 2011.

Of those owners who say they’ll embark on an improvement project:

• 41 percent plan to paint the interior of their vacation home
• 29 percent will add new bedding
• 23 percent will update the home’s exterior (landscaping, roofing, painting, etc.)
• 21 percent will add new electronics
• 17 percent will add new furniture
• 11 percent will upgrade the appliances
• 9 percent will make their vacation rental more energy efficient.

“For most vacation rental owners, it’s about providing a great vacation experience for their renters,” says Sharples. “They’re looking to create a little piece of paradise that brings families together.”

In fact, when asked how they describe their vacation home to travelers, 19 percent say they use the word “paradise;” 18 percent say “retreat;” and 14 percent use the word “peaceful.” Other descriptors included:

• Private (9%)
• Convenient (8%)
• Cozy (7%)
• Fun (5%)
• Middle of the action (5%)
• Other (12%).

If they could afford to buy another vacation rental today, nearly half (49 percent) of the owners surveyed say they’d buy in a beach destination – more than any other type of destination. Fourteen percent would buy in a ski or mountain destination; 9 percent would buy near a lake; and 6 percent would buy in a big city like New York, Dallas, Los Angeles or San Francisco. The remaining owners would buy in a destination built around family attractions or a mid-sized city like Austin, New Orleans or Santa Fe.

However, for those who are serious about buying vacation real estate with the intent to rent, Sharples says they should consider markets where travelers are looking to vacation. McCall, Idaho, was the fastest-growing destination among travelers looking for vacation rentals in the third quarter of 2010. The resort city in the southwestern part of the state is known for its annual winter carnival. The destinations with the largest year-over-year percent increase (from Q3 2009 to Q3 2010) in inquiries from travelers looking to rent vacation homes:

• McCall, Idaho – up 467%
• New Orleans – up 226%
• Indio, Calif. (near Palm Springs) – up 157%
• Haiku, Maui – up 143%
• Chicago – up 121%
• Canyon Lake, Texas (in Texas Hill Country) – up 118%
• Portland, Ore. – up 115%
• Amelia Island, Fla. – up 113%
• Haena, Kauai – up 108%
• Wimberly, Texas (in Texas Hill Country) – up 108%.