Vacations are changing — and the tourism industry is changing along with it. The pace of innovation and disruption only promises to get faster as more travelers choose adventure over mere relaxation, and as urban experiences attract more travelers at the expense of, say, a traditional week spent along the beach or at a lake house.
All of this means that payments, commerce and travel platform operations must work hard to keep up and gain — and retain — their edge.
Chief of Commercial Staff and General Manager of eCommerce Mike Sutter for short-term vacation rental service provider Vrbo has a prime view of all that action. PYMNTS recently caught up with Sutter for a discussion of all those changes — taking place amid an evolving regulatory environment for short-term rentals secured online, as well as changing travel and payment habits.
For Vrbo, the coming year — which, of course, is also the start of a new decade — will bring a continuing push into Europe and Asia, more options for urban adventures, and an ongoing focus on getting payments to be even more efficient and seamless, as well as to reflect evolving consumer desires.
Role Of Payments
“We’ve been working on a new payments platform over the last couple of years,” Sutter told PYMNTS, but, of course, making the payments experience as seamless as possible is a never-ending job.
For example, he spoke about what he called the budgeting aspect of vacation planning, and how it is changing. Many consumers, especially younger ones, view travel not as some reward, luxury or one-time thing, but as a part of regular life — and they want to budget accordingly. That, in turn, means an opportunity for those travel industry players that can offer installment payment plans to appeal to those travelers.
“It’s an option especially attractive to millennials and younger demographics,” Sutter said.
That’s one way to keep an edge via payments. Another way is to make sure consumers — that is, consumers from around the world — have multiple options to pay, whether that means via local currency options or even payments from bank accounts, which can be much more difficult than many people might assume, depending on the specific market involved.
“It’s different in every region,” he said, referring to the legal requirements and other logistics.
In one sense (if you take out the digital aspect), Vrbo provides services that wouldn’t seem terribly alien to the Founding Fathers, or even their parents or grandparents. After all, in Colonial America, travelers needed a place to sleep. However, there were not many lodging establishments, so some Americans opened their homes to travelers seeking to get rest.
What Vrbo does with vacation rentals can be traced, at least in part, to the needs of that long-ago period. Indeed, Americans opened their homes once again to earn some much-needed income during the Great Depression. Following those difficult economic times, however, staying in someone else’s home conjured up the image of drifters or lower-income travelers.
Now, it’s much more about established households seeking extra income, or retired people seeking to supplement their savings and pensions. In addition, the business is becoming much more centered around cities and international markets, not just those relatively empty spaces between destinations.
That’s where Vrbo and other such operators are headed when it comes to endeavors in the 2020s. Not only are younger people spending more vacation time in cities, but travelers from Asia are accounting for more inbound travel, Sutter said — and want the experience of having a whole house or property to themselves, instead of sharing it with others. (Vrbo’s focus is not on those shared spaces, but on the experience of renting out an entire property for a single person or unified group of family, friends or workers.)
Visual shopping — which is the case throughout all of retail — is also becoming more important to the consumers served by the likes of Vrbo. Indeed, the company recently launched a virtual tour service that enables renters to check out prospective properties from afar.
Sutter described the inspiration behind the idea that any parent would probably understand. He has three daughters, he told PYMNTS, and knowing in advance where the master bedroom is or where the closets are can make a big difference in ensuring a successful, happy vacation. That service can be expected to roll out across the globe in the coming months, he added.
“Try it before you buy it,” is how he described the appeal of the virtual tour tool.
All this is happening as cities start to crack down, in one way or another, on short-term rentals, which are blamed for a variety of problems, including driving up rents for local residents. That trend seems all but certain to intensify as more consumers use such online services as Vrbo. As Sutter told it, the best remedy — the one used by Vrbo — is to have a team dedicated to keeping up with regulatory changes, and do everything possible to follow the rules instead of look for loopholes.
Travel is changing, and for various reasons. Expect more innovations in this area of commerce and payments, and much more disruption as well.