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Quantifying the Rental Condominium Segment of the Hospitality Industry. Funded by: American Hotel & Lodging Educational Foundation For the American Hotel & Lodging Association November 2002. Principal Investigators Pilot Study: Ed Merritt, California Polytechnic Institute

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Quantifying the rental condominium segment of the hospitality industry l.jpg

Quantifying the Rental Condominium Segment of the Hospitality Industry

Funded by:

American Hotel & Lodging

Educational Foundation

For the

American Hotel & Lodging Association

November 2002

Quantifying the Rental Condominium Segment of the Hospitality Industry


Slide2 l.jpg

Principal Investigators Hospitality Industry

Pilot Study: Ed Merritt, California Polytechnic Institute

Hawaii: Glenn Nakamura

Colorado: Robert Benton, Robert S. Benton & Associates

Mississippi/Alabama: Douglas Viehland

Oregon/Washington: Douglas Viehland

Compilation of Results: Douglas Viehland

Staff Liaisons

AH&LA: Taffy Davies, Director Member and State Relations

AH&LEF: Michelle Poinelli, Director of Foundation Programs

Quantifying the Rental Condominium Segment of the Hospitality Industry


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AH&LA Condominium Committee Hospitality Industry

  • Verlin Abbott Cendant

  • Robert Buntz Bluefin Bay on Lake Superior

  • James Burke The Collins School of Hospitality Management

  • John Curry The Curry Company

  • Sharon Drechsler Concord Servicing Corporation

  • Terri Haack Kingsmill Resort & Conference Center

  • Jack Healan Amelia Island Plantation

  • Michael Justin Mountain Management Services

  • Ilene Kamsler Colorado Hotel & Lodging Association

  • Roy Kennington Educational Institute of the AH&LA

  • Randi Kirshbaum American Express Establishment Services

  • Edward Merritt California State Polytechnic University

  • John Munro Sea Pines Resort

  • Glenn Nakamura Hawaiian Islands Hospitality Group

  • Jack Rush Port Royal Ocean Resort Condominiums

  • John Russell Hospitality Artists, LLC

  • James Scavo Weinstock & Scavo, P.C.

  • Joe Shackleton Beaver Run Resort Breckenridge

  • Andre Tatibouet Aston Hotels & Resorts International

  • Louis Ventresca The Sherry-Netherland New York

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Timeline of Study—Phase I Hospitality Industry

  • April 2000 — Request for study approved by Condominium Committee

  • November 2000 – Pilot Study Approved by American Hotel & Lodging Foundation

  • April 2001 -- AH&MA name changed to AH&LA reflecting broadening of scope of envisioned activities.

  • June 2001 --- Pilot Study Completed.

  • November 2001—Up to five additional studies authorized by AH&LF.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Timeline of Study Hospitality Industry—Phase II

  • April 2002 – Condo Committee selects locations for additional studies and taskforce to meet during 2002 to monitor progress.

  • Summer 2002—Studies conducted in Hawaii, Colorado, Oregon, Washington, Alabama and Mississippi.

  • September 2002 -- Final studies submitted and preparation of compilation authorized.

  • November 2002 – Final report submitted to Foundation and to AH&LA Condo Committee.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Purpose of Study Hospitality Industry

  • Identify the extent that condominiums are used for transient guest rental.

  • Determine various methodologies to be used by AH&LA member state associations to identify condominiums for transient guest rental in their states.

  • Develop a database of condominiums available for transient guest rental in targeted states.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Purpose of Study Hospitality Industry

  • Quantify the number of condominium units available for transient guest rental in the area in contrast to the number of hotel rooms.

  • Quantify the number of AH&LA members in contrast to the number of non-AH&LA members in the condominium units identified.

  • Analyze the potential for AH&LA membership in the condominium segment with recommendations to AH&LA and member state associations.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Purpose of this Presentation Hospitality Industry

  • Provide results in graphic and lecture format for presentation to a variety of audiences.

  • Provide a basis for interested parties to compare their operations.

  • Inform member state associations on the potential for membership in this segment.

  • Complete copies of the five submitted reports are available at www.ahla.com\?????.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Definition of Condominium Hospitality Industry

A condominium for the purposes of this study is a dwelling that is owned by an individual or corporation who is a member of a mandatory membership association comprised of all owners within the same development. The dwelling is made available for guest rental for a period of less than 30 days. It is part of a larger complex of similarly situated units. It is not used as timeshare or fractional interest.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Characteristics Hospitality Industry

  • Bylaws of homeowners association will permit rental of less than 30 days.

  • Common practice for rental is a minimum number of days such as three nights.

  • Located in resort destination area such as coastal, ski, lake recreational areas. Not located in urban or roadside markets.

  • Available for rental through the onsite manager or a realty company.

Quantifying the Rental Condominium Segment of the Hospitality Industry


Condominium services l.jpg
Condominium Services Hospitality Industry

  • Often functions without:

    • bell service, but carts are available;

    • daily housekeeping services;

    • guest services such as a concierge;

    • on site food service;

    • a formal check in desk and may be at another building such as realty office.

  • However, notable exceptions that are important include.....

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Services Hospitality Industry

....large developments with sufficient units to justify these services such as Gulf Shores Plantation in Alabama.

....condominiums offered in same develop-ment with traditional overnight lodging such as Sunriver Resort in Oregon.

…condominium motels which function and by all appearances are typical lodging properties, but are actually condominiums such as the Canterbury Inn in Ocean Shores, Washington.

Quantifying the Rental Condominium Segment of the Hospitality Industry


Transient guest rental l.jpg
Transient Guest Rental Hospitality Industry

  • Owners make decision to place unit into transient guest rental.

  • Decision often based on desire for income, purpose in purchasing (investment or personal use), and desire for privacy inherent in personal use.

  • Rental may be for full year or partial year, choosing to rent during time of highest rates and personal use during other times.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Transient Guest Rental Hospitality Industry

  • Owners place their unit for rent for using one of a variety of methods including:

    --on site manager;

    --off site manager;

    --off site realty firm which may be developer and/or involved in resale of units and may or may not be the property manager;

    --vacation rental companies;

    --on their own through Web sites, visitor guide listings, newspaper ads, word of mouth.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Sources of Data Hospitality Industry

Marketing and Promotion

  • Internet Web sites

  • CVB/Chamber Visitor Guides

  • Yellow Page Listings

  • State Lodging Guides

  • State Visitor Centers

  • AAA Tour Guides

  • USA Reference (electronic database of yellow page listings available in libraries)

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Sources of Data Hospitality Industry

Government Sources

  • County Assessors Office

  • County Business License Section

  • State Department of Health/Licensing Office

  • State Equalization Boards

  • City Business License

  • City Planning and Zoning Offices

    Other

  • Vacation Rental Managers Association

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Database Development Hospitality IndustryCalifornia

  • Sources for database development included government agencies with city and county being most valuable.

  • Mail surveys to verify data received less than 10% response causing phone call and on site observations to validate responses.

  • Data collected was only property names and addresses, using statistical methodology based on number of units in a sample to determine the total number of units.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Database Development Hospitality IndustryAlabama

  • Source for database was Gulf Coast Conven-tion and Visitors Bureau.

  • Phone calls and personal visits to realty and property management firms verified number of units being used for transient guest rental and to secure other missing information.

  • Total inventory of condo units and hotel rooms was obtained from the CVB and the number of AH&LA members was provided by the Alabama Hospitality Association.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Database Development Hospitality IndustryColorado

  • Research was conducted on a county by county basis. There are 33 counties in Colorado.

  • Contact was to community tourism bureaus in each county to ask about short term condo-minium unit rentals, collecting information from their local visitor guides and Internet sites.

  • Other sources utilized to identify units included the Colorado AAA Tour Book and Yellow Page listings.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Database Development Hospitality IndustryHawaii

  • State government studies provided baseline data, however, use of Internet and visitors guides were most valuable.

  • Phone calls sought information on number of rental units but securing this was difficult due to tax collection issues, conformance to legal usage and competitive concerns.

  • As in all seven studies, an Excel database was delivered to AH&LA and the member state association.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Database Development Hospitality IndustryOregon

  • Source for database was county assessors office in five counties and a database from the Central Oregon Visitors Association. Other key sources were Internet sites for Wild Rivers Coast and each county/city chamber or visitors bureau.

  • Phone calls collected majority of information.

  • Personal visits to visitors centers along coast was very valuable as was personal stop to meet managers and request data.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Inventory of Condo Units Hospitality IndustryDatabase Fields

All studies collected the following data:

  • Name of Company/Property

  • Street

  • City, State Zip

  • Contact Person

  • Contact Person Title

  • Phone Number

  • Fax Number

  • E-mail Address

  • Management Company/Corporation

  • # of Units Available for Transient Rental

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Inventory of Condo Units Hospitality IndustryDatabase Fields

Additional data collected during several of the studies:

  • Website Address

  • Total Number of Units

  • Toll-free Number

    Data not collected:

  • Number of Bedrooms was too complicated for response and deemed not valuable.

  • AH&LA Member Status was more easily available through state associations.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Inventory of Condo Units Hospitality IndustryUse of Database

The database for each state has been provided to the state association and the AH&LA. The information will be used to:

  • Determine condominium properties that are already members.

  • Determine the potential for condominium member-ship within their state or local associations.

  • Create awareness among staff, leadership and members of this important component of the lodging industry.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Inventory of Condo Units Hospitality IndustryUse of Database

  • Provide updated information for visitors and lodging guides.

  • Be a source for additional information not collected as part of this survey but suggested for this study including rental rates, number of bedrooms, pet policy, distinctive features, activities and special amenities.

  • Database information is not part of available documents, although certain information may be released through the state association or the AH&LA.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Development Hospitality IndustrySeven States—Three Large States

Number of Number of

Developments Units

California 502 40,260

(California includes all units, not just transient guest rental units)

Colorado 205 17,859

Hawaii 243 18,532

(These two states were part of Phase II that sought to document only transient guest rental units.)

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Development Hospitality IndustrySeven States—Four Small StatesTargeted to specific areas in state

Number of Number of

Developments Units

Gulf Coast Alabama 44 7,015

Gulf Coast Mississippi 31 1,030

Pacific Coast, Mt. Hood,

and Central Oregon 81 2,342

South Pacific Coast,

Puget Sound, and ski

areas of Washington 47 1,550

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Development Hospitality IndustryTotal Units vs. Transient Guest Rental

Total Guest Rental

Units Units Percentage

Alabama 11,028 7,015 64%

Mississippi 1,314 1,030 78%

Oregon 4,338 2,342 54%

Washington 1,550 932 60%

Guest rental units and percentages are understated due to exclusion of individuals renting their own units and rental agencies outside the geographical area.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Development Hospitality IndustryTotal Units vs. Transient Guest RentalSeveral Determining Factors

  • Purchase decision was for vacation home/personal use or investment/income.

  • On site management/services increases likelihood of rental program use.

  • Location near urban area created better access as vacation home and personal use.

  • Restrictions on rental length deters guest rental such as minimum of one week.

  • Higher purchase and maintenance costs may cause increased use as rental.

  • Rental percentages increase during high season to secure premium rates with the unit converted to personal use during other times.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Alabama

Subject Area is Gulf Coast

Condo Hotel Ratio

Units Rooms Condo:Hotel

7,016 2,617 1:0.37

Colorado

Subject Area is 26 communities in 13 counties

with significant condo development

Condo Hotel Ratio

Units Rooms Condo:Hotel

17, 859 19,500 1:1.09

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Hawaii

Subject Area is Six Islands as documented in 2001 Visitor Plant Inventory

Condo Hotel Ratio

Units Rooms Condo:Hotel

16,545 55,659 1:3.36

Mississippi

Subject Area is Gulf Coast

Condo Hotel Ratio

Units Rooms Condo:Hotel

1,030 15,448 1:15

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Oregon Counties

Condo Hotel Ratio

County Units Rooms Condo:Hotel

Curry 39 1,176 1:30

Deschutes 821 3,051 1:3.7

Lincoln 659 4,019 1:6

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Oregon Cities

Condo Hotel Ratio

City Units Rooms Condo:Hotel Brookings 12 381 1:32

Lincoln City 379 1,559 1:4.1

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Washington Cities

Condo Hotel Ratio

City Units Rooms Condo:Hotel

Blaine 95 244 1:2.57

Chelan 180 556 1:3.09

Ocean Shores 319 1,095 1:2.93

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of Condo Units Available for Transient Guest Rental compared to Number of Hotel Rooms

Condominiums as a Percentage of Hotel and Transient Guest Rental Condominium Inventory in Subject Areas

  • Alabama Gulf Coast 72.8%

  • Colorado communities 47.8%

  • Hawaii 22.9%

  • Mississippi Gulf Coast 6.2%

  • Oregon counties 18.4%

  • Washington cities 34.2%

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of AH&LA Members compared to Number of Hotel RoomsIn Subject AreasSeveral Determining Factors

  • Presence of off site management primarily through realtors in Alabama and Mississippi. Realty and property management firms do not perceive themselves as lodging properties, but as rental properties.

  • Colorado offers an array of benefits and recruits membership from condominium properties.

  • The larger properties in Oregon are members of OLA and conduct business as lodging properties, not rental properties. Nine of the 10 largest condo properties are members representing 1,184 rental units and 1,828 total units. None of the 40 smallest properties are members.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of AH&LA Members compared to Number of Hotel RoomsIn Subject AreasSeveral Determining Factors

  • Washington, like Oregon, has an abundance of large properties that operate as lodging properties, especially condominium motels.

  • Hawaii has 43% of the total condominium units in the state as member. This percentage does vary dramatically from island to island.

  • The percentage of AH&LA membership among condominium units is approximate to AH&LA membership penetration of hotel/motel rooms in Colorado.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of AH&LA Members compared to Number of Hotel RoomsIn Subject Areas

Condo AH&LA Member

Units Properties Units

Alabama 7,015 1 320

Colorado 17,859 100 10,354

Hawaii 18,532 53 8,036

Mississippi 1,030 1 70 Oregon 2,342 24 1,379

(total units) 4,338 24 2,134

Washington 932 6 228

(total units) 1,550 6 498

Condo Units are Transient Guest unless except as indicated

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Number of AH&LA Members compared to Number of Hotel RoomsIn Subject AreasPercentages of Condo Units that are members based on previous slide

Alabama 4.5%

Colorado 58%

Hawaii 43%

Mississippi 6.8%

Oregon 59%

(total units) 49%

Washington 24%

(total units) 32%

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Condominium Activity in compared to Number of Hotel RoomsOther States

  • Florida: State law requires the licensing of condo as rentals for transient guests. The state reports nearly 9,000 separate developments representing nearly 89,000 units.

  • South Carolina: South Carolina has a member category for realty firms. Some of these firms engage in vacation rental management.

  • Other States: Wyoming and Maryland reported the presence of condos, but do not have a separate category or definite numbers among membership.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipColorado

Colorado treats condominiums in the same manner as traditional lodging. Condominium operators serve in the same capacity as traditional operators. However, there is a strong presence among the leadership. The current Executive Committee has three condo operators serving and one-third of the Board are condo operators. CH&LA has a Condominium Segment Committee that meets twice a year and annually hosts a one-day workshop for condo operators. A section of each seminar presented by CH&LA focuses on the condominium segment.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipDifferent Models

  • Condominium owners are represented by their own association, the homeowners association. Issues of training, sales and marketing, legislative advocacy are remote from their interest as owners to be effective in terms of potential membership.

  • Condominium Homeowners Associations have their own association, the Community Associations Institute. Again, the issues of training, sales and marketing, legislative advocacy are too remote from their interest as an association of owners to be effective in terms of potential membership.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipDifferent Models

  • Vacation Rental Manager is the best candidate for membership. This may be on-site or off-site property and rental managers. The manager is typically not represented by an existing association. Most important, the issues of training, sales and marketing, legislative advocacy are important to their interest as owners to be effective in terms of potential membership.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipCreating the Condominium Segment

Strategies to bring condominiums into membership suggest recognizing differences in needs of condo operators and traditional lodging operators.

  • Creating a condominium committee to be a voice for this segment while treating condominiums in the same manner as traditional lodging.

  • Creating a separate category of membership for vacation rental managers limited to managers who rent/ manage condos from an off-site location without certain services such as check-in, bell service, on site food service.

  • Creating a separate category of membership for operators of condominium properties.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipRationale for Membership

Some of the benefits that could be offered to this segment include:

  • Management training to improve the management of vacation rental properties.

  • Line level and supervisory employee training for housekeeping staff, security staff, spa and pool staff and a host of other staff.

  • Condominium management companies benefit from networking with hotels in anticipation the hotels may find themselves in an oversold or a referral situation.

    (continued to next slide)

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipRationale for Membership

(continued from previous slide)

  • Advocacy on issues such as bed tax and Labor Day opening for the school year.

  • The group purchasing of a hotel association can aid the management company in securing discounts it would not otherwise achieve or to find a variety of companies to provide any number of services.

  • Listing in state lodging guides as a separate category or as traditional lodging.

  • To gain a competitive advantage by promoting their membership to homeowners associations and the general public.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipSteps to Build Membership

Some of the specific steps to recognize the needs of the segment are:

  • Educational tracks at state and national meetings.

  • Networking opportunities specific for these members.

  • Promotion of the existing Educational Institute textbook on vacation rental management.

  • Creation of certification or similar designations for the vacation rental manager and staff.

  • Segment leaders integrated into existing committees such as government affairs, membership, technology, etc. (continued to next slide)

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipSteps to Build Membership

(continued from previous slide)

  • Inclusion as a separate listing in state visitors guides.

  • Officers for the segment including Chairman, Chairman-Elect and other positions.

  • Decals, logos and wording that can be used to promote their membership.

  • Articles in publications focus on this segment.

  • Inclusion of this segment in national research projects such as industry trends or compensation.

  • A review of the dues amount that may be different from the dues amount of traditional operators.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipCompetition Analysis—Local

  • Lodging Associations: This study was unable to document any city or county lodging associations operating exclusively for vacation rental management. Entities operating like lodging properties are often part of the local association.

  • Visitors Bureaus: Vacation rental managers and condo operators use bureaus as their main source of marketing. They also provide benefits of information sharing and networking.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for compared to Number of Hotel RoomsCondominium MembershipCompetition Analysis—Local

  • Chamber of Commerce: In many areas the chamber operates the visitors bureau and offer the same benefits or more that are offered by visitors bureaus.

  • Realty Associations: Vacation rental managers and property management companies are often involved in the sale and resale of condo properties. They will be members for this reason. A search of various Web sites of local realty associations notes an absence of benefits related to the vacation rental management aspect of this business.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for Condominium Membership compared to Number of Hotel RoomsCompetition Analysis—State

  • Vacation Rental Managers Associations: This study discovered two states, Florida and North Carolina, that have a statewide association designated for vacation rental managers. In several states such as Oregon there are rental and property managers associations, but are typically focused on residential housing.

  • Realty Associations: Just as noted with the local associations, a search of various Web sites of state realty associations notes an absence of benefits related to the vacation rental management aspect of this business.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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Strategies for Condominium Membership compared to Number of Hotel RoomsCompetition Analysis—National

  • Vacation Rental Managers Association: This national association reports a membership of 500. The presence in the states that are a part of this study is:

    --Alabama: 10 --California: 72 --Colorado: 11

    --Hawaii: 21 --Mississippi: 0 --Oregon: 9

    --Washington: 4

    The VRMA Web site is www.vrma.org

  • Realty Associations:A search of the National Realtors Association Web site for terms such as “vacation rental” and “condominium rental” resulted in a “no items were found” response on each occasion.

Quantifying the Rental Condominium Segment of the Hospitality Industry


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