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FOR IMMEDIATE RELEASE
Wellesley - February 20, 2007
After years of tumultuous change, the Cape Cod and Island vacation rental market
has stabilized! Instead of reporting on the shocks caused to travel by
September 11, or tracking the astounding growth of the Internet as where
vacationers go to plan their vacations, or seeing the mad rush to buy and rent
second homes drive prices through the roof, these market-shaking forces seem to
have played out and we now have what we'll call the "new normal." The 2007
summer season looks like a duplicate of 2006, with higher inventories of homes
and greater competition among homeowners, steady demand, modest increase in
prices, and a few uncomfortable vacancies for some homeowners.
So what is this new world? And, how do homeowners maximize their enjoyment and
investment in second homes?
But first, a look back at 2006 versus 2005 and a look ahead to 2007, as seen
through the lens of the data that we collect at WeNeedaVacation.com, the
largest website for advertising Cape and Island vacation rental homes. A
year ago, homeowners increased their weekly prices for the upcoming 2006 summer
season by 2.3% over 2005 prices. This year, prices for summer 2007 are up
2.7% for a sample of 1,315 homes that have advertised with us since the summer
of 2005.
Our homeowners are showing a
similar confidence in 2007, showing a steadiness that marks this new normal
environment. Increased competition has pressured prices; they have risen
only 16% since 2003.
Homeowners set prices against a backdrop of another dynamic that has settled in
over recent years: they set an initial price in the fall or winter and then
react as the season plays out.
They have the ability to set a price for every week of the year on WeNeedaVacation.com, and the vacationers can search for
availability for any week at or below a certain price. For example, one
can ask for homes for the third week of July under $1800. This past June
through August, 300 homeowners dropped their prices an average of $112 to woo
last minute vacationers. With a median weekly price of $1,800, $112 is a
substantial percentage drop. In June thru August 2005, 363 homeowners
dropped prices the exact same $112: the new normal!
Vacationers, armed in the new millennium for the first time with websites that
publish weekly prices, have also adapted to this new Internet age. Spooked
by 9/11 and
Iraq
and economic struggles, vacationers delayed making summer plans in 2002 and
2003. They learned that they could still find available homes due to a
burgeoning inventory of second homes for rent and thanks to published calendars
on the Internet.
The new "learned behavior" has lead to remarkable patterns: in looking for July and August vacations, 10% start their quest in the
prior year; one third look in January through March, another third look in
April through June, and a whopping 18% wait until July 1 to start
looking! That is, nearly one-fifth of vacationers plan their summer
vacations within a month of going.
In fact, this past summer, 19% of all the interest in August came in July alone.
So the good news for homeowners is that there is still hope for filling empty
weeks after July 1, but they will have to slash prices. We advise
homeowners to list their homes year-round due to the year-round interest, or if
not, for at least six months to accommodate this very attenuated vacation
planning behavior of the new, Internet-savvy vacationer!
Interest so far in 2006 for summer 2007 is exactly the same as it was a year ago
January to January. Supply and demand are in balance price-wise, with 6%
of homes priced under $1000 a week; 36% are $1000-$1999; 32% are $2000-$2999;
and 26% are over $3000.
So, if prices and vacationer interest suggest a very similar year in 2007 to
2006, how can homeowners avoid price-cutting and even unbooked weeks?
Find a suitable marketing vehicle. Select
a website that is prominent in the search engines or that you hear others have
used successfully. Put yourself in the shoes of the vacationer and Google "(your
town or city) vacation rentals." See which sites come up first for your
area. Even if you decide to go with a rental agency or property management
company, you may still want to do some advertising independently of them.
Price your home competitively. But be
realistic in setting your rates. Find comparables in your area in terms of size
and amenities and then try to price your home at or slightly below the others.
Proximity to water is usually top priority for vacationers, so homes within a
half mile of the beach generally rent more easily than those farther away. Size
is important; a four-plus bedroom home can sometimes fetch twice as much as a
smaller home, particularly when an extended family or two families are
splitting the cost.
Distinguish your home from the others.
Many vacationers are coming from a distance and will be renting a home based on
what they see on their computer screen. You will want to portray your home in
its best light; at the same time, be accurate and forthright. You want your
tenants to walk into your home and say, "Wow! This is even nicer than I thought
it would be!"
(This article also appears in the March, 2007 issue of
CapeBusiness magazine.)
For underlying data, see a companion press release "2006
in the mirror, 2007 in the looking glass"
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WeNeedaVacation.com is where
vacationers go for vacation rentals on Cape Cod, Martha's Vineyard,
and Nantucket, and all of Florida. The website's strengths are its
state-of-the-art, user-friendly Power Search, which allows vacationers
to select homes based on preferred dates, location, price range, and size, and MyVacations,
which enables vacationers to save favorite properties and share their vacation
with family and friend. Founded in 1997 by Jeff and Joan Talmadge,
WeNeedaVacation.com now represents over 4,000 vacation homes, which
were viewed more than seven and a half million times in 2006. It is owned and
operated by All Seasons Vacation Rentals, LLC of Wellesley, MA.
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