The vacation rental market is huge and only getting bigger. It generated around $110 billion in the United States and Europe last year, and while that’s only one-third of what the hotel industry took in, the corner of the short-term sharing economy is growing by 10 percent a year.
Tapping into this growing revenue are startups like TurnKey Vacation Rentals, which launched last year, recently expanded to Santa Barbara, and this week announced $3 million in seed funding from executives and founders of Internet travel giants like Expedia, Hotwire, and Orbitz, among others. T.J. Clark, TurnKey founder and CEO, talked to The Santa Barbara Independent about how his company makes it easier for property owners to make a buck off one of their most valuable assets and why the South Coast — with its year-round sun and plethora of underutilized second homes — is a prime location for renters and travelers alike.
The whole idea behind Turnkey, Clark explained, is to digitally streamline the rental process so homeowners can keep a bigger portion of their revenue by not paying a property management firm or, alternatively, diving into the time-consuming downside of personally overseeing the logistics of guest support. While property management firms typically charge 20-25 percent of a rental’s revenue, TurnKey is able to charge only 10-14 percent because it’s heavily tech-enabled and relies a lot on its mobile services, Clark said. Austin-based TurnKey pays for and handles the home’s listing on vacation sites like VRBO, HomeAway, and TripAdvisor, takes and publishes professional photos of the property, fields all inquires from interested guests within five minutes, and coordinates and dispatches its 21 employees (two are in Santa Barbara) along with armies of local cleaning and repair vendors, Clark said.
He explained the company likes to work with properties that are “above-average quality,” but there is no minimum size they’ll contract with. On its website, there are one-bedroom, one-bathroom Santa Barbara bungalows that start at $130 a night all the way up to four-bedroom, three-bathroom estates that go for $630 a night. The goal is to generate at least $30,000 a year for each property, Clark went on, but given some of Santa Barbara’s nicer digs, that target can occasionally be reached in a month. Clark added that vacation rentals, compared to traditional lodging chains, keep the money in the area. He also said his company manages booking rates depending on the time of year, events in the area, and so on.
With 22 TurnKey homes in the S.B. area and nearly 200 more rentals in Austin and Port Aransas, Texas, Clark said they’re looking to expand to Aspen, Miami, and three more markets this year. But Santa Barbara has been especially attractive to the company because of its friendly regulatory environment (transient occupancy taxes are handled the same as hotels) and its climate and attractions, he said.
A May 30 Businessweek article noted that hotel prices are climbing to prohibitive levels for the average vacationer and that a host of industry experts are noticing and taking advantage of the fact that travelers — especially families — enjoy the comfort and amenities that a home offers. About 50 million people worldwide own more than one home, it says. Dwellable, a mobile app for vacation rentals, recently announced $2 million in financing and lists a number of Santa Barbara County locations in its roster. “The vacation rental industry is in the midst of huge creative disruption,” said Dwellable CEO Kirby Winfield in a press release, “and companies that leverage mobile to transform the discovery and booking experience are the ones that will survive and thrive.”
Another accommodation heavyweight, Booking.com, which is owned by Priceline, has launched Villas.com to similarly compete in the rental market. “We know there’s a big difference between booking a room in a hotel and planning a self-catering holiday — and that’s why we decided to develop Villas.com,” the company said in a prepared statement.
Explaining that TurnKey offers property-damage insurance of around $5,000 per stay, and has a $1 million general-liability insurance policy, Clark promised they’re very careful about who they rent to. “We don’t like to hear things like ‘party,’ ‘celebrate,’ ‘bachelor,’ ‘bachelorette,’” he said. “We’re not about not having a good time, just not in one of our houses.” Rental properties are fitted with 24-hour digital locks that open at the check-in time and lock at the end of the stay, and guests are provided an app that lets them know where to eat, drink, and play nearby.
Learn more at turnkeyvr.com.