Seizing the $60 Billion Goldmine: Niche Marketing’s Power in Short-Term Rentals

Uvika Wahi

Seizing the $60 Billion Goldmine: Niche Marketing's Power in Short-Term Rentals

A market that’s not just lucrative, but also vastly unexplored, valued at a staggering $60 billion? This isn’t just a wild guess – it’s a revelation from Heather Bayer, a titan in the short-term rental industry and the Co-Founder of Vacation Rental Formula

At the 2023 Direct Booking Success Summit, Bayer delivered an insightful presentation titled “Tightening the Niche: A Journey in Focused Marketing.” She peeled back the layers of the short-term rental landscape to reveal the immense potential of niche marketing, demonstrating that in business, it’s often the path less taken that leads to success.

The full presentation can be accessed using an all-access pass for the summit. In this article, we’ve distilled select highlights from Heather’s enlightening discourse with examples of successful niche marketing in short-term rentals, why working within a niche is worth considering, and the untapped niche potentially worth $60 billion.

What Bother With Niches At All?

Niche marketing presents a unique opportunity for businesses to thrive in an overly saturated market. In her presentation, Heather Bayer outlines four compelling reasons why someone should consider niche marketing:

  1. Less Competition: By focusing on a smaller market segment, businesses can significantly reduce the number of competitors they face. Bayer uses Sue Allen’s East Ruston Cottages as an example. By catering specifically to people with multiple pets, Sue has carved out a micro-niche where competition is scant. This strategy allows businesses to differentiate themselves and attract a dedicated customer base.
  2. Better Customer Relationships: When businesses cater to a specific market, they naturally engage more with their customers who have unique needs and expectations. This increased interaction fosters a deeper relationship and understanding between the business and its customers. It also creates an immediate rapport among customers who share a common interest.
  3. Higher Profits: While Sue Allen doesn’t charge a pet fee, she charges higher rates for her specialized services. Her customers are willing to pay these rates because they value the unique amenities and warm welcome that East Ruston Cottages offers for their pets. As such, offering a specialized service within a niche allows businesses to command higher prices and increase their profit margins.
  4. Cost-Effective Marketing: Marketing within a niche can be more cost-effective. Instead of targeting a broad audience, businesses can focus their marketing efforts on a smaller, more defined group. This targeted approach can result in lower advertising and marketing costs.

Carving Your Niche: Finding Where You Fit In

Finding your niche is a strategic move that can significantly influence your business trajectory. Here are some best practices and guidelines to help you pick your niche wisely:

Analyze Your Location:

  1. Leverage Local Attractions: Consider the unique attractions and features of your property’s location. Are you near a beach, a ski resort, a vibrant city, or a peaceful countryside? Your geographical setting can be a natural starting point for niche selection.
  2. Local Events: Pay attention to local events, festivals, and activities that draw visitors to your area. Hosting events-focused rentals can be a niche in itself.

Understand Your Property: 

Property Features: Assess the unique features and amenities your property offers. For instance, if you have a spacious backyard with a barbecue area, it could be ideal for family reunions.

Research Market Demand:

  1. Google Trends: Use tools like Google Trends to identify trending keywords and topics related to your location or property features. This can reveal potential niche interests.
  2. Competitor Analysis: Study your competitors in the vacation rental market. Identify gaps in their offerings and explore whether you can fill those gaps with a niche focus.

Stay Trend-Aware: 

Keep an eye on industry trends, especially post-pandemic shifts in travel preferences. Trends like eco-friendly stays, wellness retreats, and remote work-friendly accommodations can inspire niche ideas.

Be Authentic and Passionate: 

If you’re genuinely passionate about a particular niche or topic, it can translate into authentic and memorable guest experiences. Authenticity often resonates with guests.

Picking the right niche for your short-term rental business requires careful consideration and research. By aligning your property’s strengths with market demand and guest preferences, you can carve out a niche that not only differentiates you from competitors but also delights your guests and drives success in the vacation rental industry.

The Niche Marketing Nesting Doll: Niches Within Niches

Niche marketing, at its core, is a strategic approach that focuses on a distinct segment of a market. It involves tailoring your marketing efforts to a specific subset of customers who share unique needs, preferences, or characteristics that aren’t being adequately addressed by mainstream providers.

Macro vs. Micro Niches: Pet-Friendly Example

Heather Bayer, in her presentation, beautifully illustrates this concept using the example of pet-friendly short-term rentals — a substantial macro niche within the rental industry. This macro niche caters to pet owners who wish to travel with their pets, a market segment that’s growing exponentially. Bayer cites that in Europe alone, more pets than children exist in households, with 63% considering pets as family members and 50% taking holidays with them. With 64% of millennial dog owners choosing not to travel without their pets, the potential of this niche becomes evident.

Multiple Dog Friendly East Ruston Cottages in Norfolk England

Yet, within this macro niche, there are micro niches waiting to be discovered and capitalized on. Bayer introduces us to Sue Allen, the founder of East Ruston Cottages in Norfolk, England. Sue identified a gap in the market for accommodations that not just accept, but warmly welcome multiple pets with minimal conditions. She filled this gap by creating a company focused solely on such properties, thereby carving out a successful micro niche within the broader pet-friendly macro niche.

Bayer also mentions Diane Denton from Seahorse Diamond Beach, who has found her own unique micro niche catering to horse lovers who dream of riding their horses on the beach.

These examples highlight the potential of both macro and micro-niches within the short-term rental industry. Macro niches like pet-friendly rentals are broad and cater to a large customer base, while micro niches are highly specialized segments within these broader categories. By identifying and serving these micro niches, businesses can differentiate themselves in a competitive market and cater to underserved customers with unique needs.

Uncovering the $60 Billion Birdwatching Niche

In her presentation, Heather Bayer introduces us to an untapped market within the vacation rental industry – the birdwatching niche. With an estimated net worth of $60 billion, it’s a lucrative market with massive potential for short-term rental hosts and property managers.

The Growing Popularity of Birdwatching

Birdwatching has seen a significant surge in popularity, particularly during the pandemic when people sought solace in nature. An astonishing 18% of all Americans are birdwatchers, amounting to millions of individuals. Moreover, there are about 30 million wildlife photographers in the U.S., many of whom are bird photographers.

Interestingly, millennials have overtaken boomers in this market. The pandemic-induced lockdowns prompted many to explore birdwatching as a solitary activity that allows them to enjoy the outdoors while maintaining social distance. Even post-pandemic, this interest has persisted, with many incorporating birdwatching into their travel plans.

Birdwatching: A Macro Niche with Micro Niches

Although birdwatching is a sizable macro niche, within it exist several micro niches that short-term rental hosts and property managers can target.

  • Hardcore Birders: These are typically male baby boomers who often travel alone. They spend most of their budget on high-end birdwatching equipment rather than accommodation. As such, they may not be the ideal target audience for short-term rental businesses.
  • Casual Birders: This is the largest specialized niche within birdwatching. These individuals enjoy birdwatching during their vacations but also engage in other activities like wildlife watching and exploring cultural attractions.
  • Enthusiastic Birders: This group could be the most lucrative target for short-term rental businesses. They are passionate about birdwatching, conservation, and sustainability. With an average age of around 55, this group also includes a growing number of millennials and Gen Y enthusiasts.

Embracing the Birdwatching Niche

As people continue to seek vacations that allow them to escape and connect with nature, the birdwatching niche is poised for growth. The rising interest in outdoor activities, conservation, and sustainability that emerged during the pandemic remains strong, suggesting a sustained demand for this niche.

By aligning their offerings with these interests, short-term rental hosts and property managers can attract more bookings. For instance, they can incorporate conservation and sustainability themes into their website content and property features to appeal to enthusiastic birders.

To tap into this niche, businesses should research local birdwatching sites and Facebook groups to understand what attracts birdwatchers to their area. Unless located in a city where pigeon-watching is the only option, most properties have the potential to cater to this niche.

Conclusion:

Niche marketing is a powerful strategy for short-term rental businesses seeking to differentiate themselves, meet specific guest needs, and achieve sustainable growth. For an in-depth exploration of this approach, we highly recommend watching Heather Bayer’s full presentation. Bayer offers detailed case studies of successful operators and provides expert guidance on identifying your target guests’ preferences, deploying effective market strategies, and engaging with passionate enthusiasts. This comprehensive guide is invaluable for anyone looking to navigate the complex terrain of niche marketing in short-term rentals.

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