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PhoCusWright reports fueled by industry growth cites recent industry studies reporting the dynamics behind the explosive growth forecast for the vacation rental market.

Strong online traffic growth, bolstered by successful new entrants to the category, have shifted vacation rental from an uncharted “alternative lodging” segment to a major online marketplace reports PhoCusWright.  An $85B vacation rental market in U.S. and European vacation rentals was reported by Radius Global Market Research in 2010.  2011 offered continuing positive growth for the industry. A significant number of prime vacation destinations have seen increases in both overall tourism and the use of vacation rentals, with the vacation rental industry seeing the most growth of any accommodation type.  Marketing as well as economic factors have played a large role in this continuing growth.

“Repeated studies from multiple highly-regarded sources, including PhoCusWright, Radius Global Market Research, Travel Insured International, TripAdvisor, RCI, and Vacation Rental Managers Association, all confirm that the explosive growth of the vacation rental market industry will only continue,” commented Jason Burgess, CEO of Yellow7, a rapidly evolving internet media company and a provider of online vacation rental property listings, cites recent industry studies reporting the dynamics behind the explosive growth forecast for the vacation rental market.

With only 1 in 10 Americans reporting to have rented a vacation home, according to PhoCusWright, the potential upside for growth is exciting.  A survey in 2010 found more than 5 million vacation properties in the U.S. and Europe were being rented to travelers for a fee at least two weeks per year. Approximately 40% of travelers stayed in a vacation rental in 2011. Americans are not as much resistant to vacation rentals as they are unaware of it. All that is changing.

With a relatively mature and vibrant vacation rental market, Europe has enjoyed a more established rental market for a longer period of time. More than one in four European travelers booked a vacation rental in 2011, up from 2010.  PhoCusWright reports that this lodging segment has strong awareness among European travelers, and a high purchase incidence across many countries. While vacation rentals in Europe are already a mainstream product category, the market continues to mature dramatically in terms of its distribution dynamics, online penetration and revenue generated. With steady growth in the online channel and a variety of new challengers entering the space, Europe’s vacation rental market is evolving rapidly.

Studies confirm that consumers recognize the value of more space, the convenience of kitchen facilities, enhanced privacy, and amenities like pools, laundry and hot tubs.

Professionally-managed companies have the opportunity to grow the vacation rental market by taking advantage of their knowledge of the market, and that can help build occupancy for homeowners who put their properties in the hand of the company. Because of efficiencies of scale, professionally-managed vacation rentals tend of have lower average daily rates than rent-by-owner properties.

Industry experts agree that the vacation rental industry is still a highly fragmented and inefficient market.  Vacation Rental Managers Association states “Representing one of the fastest-growing hospitality markets, the vacation rental industry faces many distribution challenges as managers must navigate disparate standards, methods of rate management, inventory and other content.  Distribution channels, for their part, are challenged with providing a consistent shopping experience across a highly fragmented and specialized supplier base.”

“This represents a tremendous opportunity for us.  With the recent expansion of to the Caribbean, Europe and South America, our footprint is expanding. has a strong brand that allows the company to branch out to not only the current vacation property rental market but into all aspects on online travel – including mobile versions, real-time bookings, travel-related insurance plans and segmenting into other areas of the vacation industry,” Jason Burgess continued.

Industry growth is forecast to continue at impressive rates. Consolidation will only accelerate the market’s growth.  The vacation rental industry is continually increasing the general awareness of consumers worldwide and expanding distribution to as many channels as possible.

Vacation rental market growth has been driven by the dynamics occurring in the industry.  Part of this equation is consumers looking for value and choices during the economic downturn of the past few years.  There is no indication that this sensitivity will disappear once the economy turns around.  The huge and growing market opportunity that vacation rentals can only be good news for families, business travelers and the economy.

Theodore Koumelis
Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.