Changes in the landscape of holiday rental agencies in Mauritius
August 16, 2014
This year has been a -and still is going to be a very challenging year for many holiday rental agencies in Mauritius. When I speak of holiday rental agencies in general, I mean those that act as an intermediary in proposing beach villas and apartments on their websites usually holding a tour operators licence obtained by the Mauritius Tourism Authority. There is a difference to the tasks performed by property managers who do maintenance work on site, receive clients and have exclusivity in re-marketing those units through a network of agencies with whom they collaborate. Some of these market their offers through my Isla-Mauricia holiday rentals agency websites.
To run a holiday rental agency in Mauritius means you are operating in an ever growing competitive market. The more costs you have, the bigger your team is, the more hard you will be hit once the low season strikes and if your bookings start becoming less and less. A situation I had to face myself since last November 2013. I experienced a sudden decline in bookings. November, usually one of my best months performed very badly and this trend remained on going till May. June and July have been satisfactory and I’m currently observing the month of August there are still 15 days to go and I hope for this month to end stable which could be a sign for recovery and the year ending positively. Though I speak for my own situation, it could be completely different for others.
I faced for the first time in my life this year the challenge of laying off my team that had grown to be like a family. This could make for another blog post in the context of challenges an entrepreneur faces and how to lay off and say good bye – its over!
There are various theories, scenarios that you can study, or try to put into practice but reality often has its surprises taking you off guard and handing you a slap! A slap to wake up or a slap to make you cry. When money talks, it can get “brutal”. Deal with banks and you will see, there is no love, no heart, no passion – just the figures that matter – the rest is just acting to get your business. From smile to the dagger into your back. This wasn’t my case but this is what you could face when laying off since its a very sensitive issue.
My purpose in running a business is also in creating a plus value for others, this being in the form of creating jobs, providing trainings, and bringing in a general improvement in the life’s of those that I work with and having a positive impact in society and my partners. That should be the entrepreneurial spirit of any company. For this to work it also requires a certain framework with some regulations, standards and ethical and moral values of respecting each others area of operations and not cut throat approaches to secure clients with all means at any cost. Please read my article “What are the future outlooks of agencies in the holiday home rentals industry of Mauritius?”
Agencies in Mauritius are restructuring and some are closing down
The other day I received a visit of a partner who runs a villa rental agency with whom I have been collaborating since more than a year. I was announced of some really drastic structural changes that they had to apply such as moving from a rented office back to home office, the cutting of salaries and turning these into mainly performance oriented due to a drop in bookings and reservation requests since several months. Quite similar trend like me. While this agency also maintains a much larger network than me regarding collaborating with other agencies and tour operators they were also hardly hit by Googles algorithm updates. If you don’t know what that means, it means the following:
Many agencies depend on their websites which get found in Google for keywords such as beach villas in Mauritius, accommodation in Mauritius or apartments for rent in Mauritius and more. If you don’t appear in the top 10 results of Google you will get very few requests. What has happened is that Google has applied some new filters and updates and websites that practice heavy unethical SEO (Search Engine Optimisation) get penalised and dumped on pages 5-10 or even lower in Googles organic search results. Algorithm updates come with names such as panda, penguin and hummingbird. The last one bearing the name of Pigeon. It is more and more a very high risk to depend only on Google for your business. Any agency must work out various other revenue streams and this can be quite challenging as you still cannot ignore Google as the niche of clients you might be targeting are searching daily, and every hour for your holiday rental product!
This was one partner who I know directly that has been hardly hit.
Then I have noticed that in many companies workers have left, new ones have come, there has been a high employee turnover this year meaning for many companies their employees only remained for a very short time. The job of a reservation sales agent is not a chilled and relaxing job. It is a job of heavy duty requiring strength and nerves of steel. The ability to cope with peak overload hours and intense stress such as having to jiggle from task to task. This is one reason many leave after a short time because they cannot cope and instead of learning to love the job they learn to hate it. In many situations the salary plus commission is not very tempting either. The other reason why there have been many workers suddenly not being around any more could be due to that much more companies are being negatively affected than I can have a notion of…
Then this week also I got to read some very drastic changes another partner is going to have to make. Close down and sell. Business is just not generating the same profits like it once did. I never noticed over these past years directly so many businesses being so hardly hit like this year that I know of.
While several business are facing difficult situations. For one property management company that I work with, their situation looks completely different. They underwent a complete new re branding. Got some new properties to offer and are experiencing growth. So there are winners and losers in this industry. But currently to me it looks more like there are more losers than winners.
You should read my article “What are the future outlooks of agencies in the holiday home rentals industry of Mauritius?” where address how this industry is structured and its future outlooks that look rather gloomy.
Conversion rates for confirmed bookings are lower these days
These last weeks I have had several dozen requests for beach villas in Mauritius. I have proposed them all at least up to 5 houses on the beach and still the conversion rate for a confirmed booking was practically close to zero. A few years back the conversion rate was way better. For 10 requests I would average to 4-5 confirmed bookings. Now its way less. There are also reasons behind this. There was a time, where landlords mainly worked through agencies and for clients to get a nice beach villa it would only have been possible through an agency and there were only a few owners advertising on their own. With homelidays/home away holiday rental portals the news has spread and many owners manage to fill their houses through such portals. Even if this might be sad or having a negative effect on holiday rental agencies in Mauritius and abroad. This is how the market works. Many agencies do not manage to fill properties with clients at an occupancy rate that will please the owners. An owner is happy when you reach up to 100% occupancy. Since more and more owners manage to do this on their own – they do not need the help of vacation rental agencies. I get calls from time to time from owners who do not manage to sell all their availabilities through their own website and homelidays but mainly for the low season. Sometimes it does happen that in the moment they call I do have some requests just in time handy coming in to fill their gaps which makes them very happy earning me a few more recommendations. But for me as an agency, what I need is the owners peak season in December – if agencies could benefit in selling several peak season availabilities they can build reserves for the low season. But, as you know how market works, you don’t get a favour. First come first serve.
Or as in creole: In gagne zis en ti bout!
Here again I would like to add, agencies, do not hope for some sort of regulation in your favour. Its a tough market. To survive you need to be smart and make a difference. Don’t expect a law to come into place like it was proposed in Hawaii that houses rented on short term basis can only do so by going through a property manager. See here: New Hawaiian Bills set to change the vacation rental landscape
I propose around more than 150 properties for clients to book. It is interesting to note that amongst all these offers that I have since 2 years like only a few are performing well and getting most of the bookings. This can be related in many cases to the price and the quality of the offer. Some owners and partners have found the right formula, others might not be getting their clients from agencies but through their own ads and homelidays / home away. Here again this is a signal that there is a deterioration in the market. I can at least tell for agencies, it would be good to get some infos from owners as well.
When hotels offer their public rates to agencies for reselling
It is not really in the interest of hotels in Mauritius to collaborate with small local agencies in Mauritius to supply them clients. Even though it would have been good for the local eco sphere to have some online start ups acting booking generators for the hotel industry. The few hotels that I manage to sell from time to time is only due after tedious relationship building. How am I ever going to complete that with 65 hotels? I will give you a short example. Hotels issue TO rates which are in general 30% lower than their public rates. Then tour operators mark-up around 15-20%. When I request on a case to case basis for rates for a potential client mostly all the major big groups will give me their public rates with only a 10% commission meaning there is NO way I can compete. I also perceive it as a strategy to discourage small tour operators in performing in this arena. The message is clear: we don’t want you to sell us – if you do and bring us a booking where we “the hotel” earn 20% more they’ll be happy to take your client. But clients compare prices and will figure out a better rate elsewhere anyway. Since an holiday rentals agency will need to survive and will constantly look for ways to get bookings, this will push these holiday rental agencies in proposing offers that will compete against those hotels and the impact is already present as around 50% of tourist arrivals in Mauritius do not stay in a hotel. The hotel industry is big and they have their ways of running. It’s also normal that not everyone will get a share of this cake. This is the cold reality of the business world. Therefore agency operators like you and me, do not try to change something that is to huge and bigger than you which you will not be able to handle. There are as much rooms out here on the local market as much as there are hotel rooms to sell, voilà, take your pick Monsieur.
Are you a tour operator or agency that offers vacation rentals in Mauritius – how has your company been affected these recent years?
Do you work in the tourism industry in Mauritius – which challenges have you faced or noticed market wise?
Have you seen a deterioration in business?
As I mentioned above in my text, there are some winners and losers in this industry.
Tourists will still keep coming to Mauritius
Mauritius is a tropical island with magnificent beaches and excellent holiday rental products. There will always be a demand for such a setting, service and type of product. Mauritius has always been innovative to adapt, change and try to keep business running at all means. To diversify and look for new markets. China is now the trend but unfortunately most of us in Mauritius do not “yet” understand this clientèle even though arrivals are now surpassing 40 000 guests.
Maybe in the years to come, the travelling habits of the Chinese will change and they will also opt more and more for less packaged offers?
Like vacation rentals?
Maybe they do and it only requires some agencies in china to offer or make known of such offers… Are you a villa owner and have you had any guests from China?
The island will keep on getting tourists arrivals coming to spend their holiday here. But not everybody will have a piece of that cake. And if tourists that are coming, will not spend in the country as they are already well fed in their resorts, well not only holiday rental agencies will be affected to fade away but many other businesses to. This will also destroy the multiplier effect in a certain way. Check here what the multiplier effect means:
The Multiplier Effect and the Simple Spending Multiplier: Definition and Examples
Mauritius needs more activities offers
While some business will be affected, other might have a sudden period of glory especially in the activity sector. Tourists want to do stuff, not just lie on the beach. Mauritius still doesn’t propose enough activity options. This is an area with lots of potentials. Just to give you an example, Mauritius has some great assets such as lagoons with ideal wind conditions for kite surfing. This attracts kite surfers to the island. I once had a request from a potential client from Jordan. He wanted to come with his family and was looking for activities for his kids. He then opted for Malaysia because they have amusement parks which Mauritius doesn’t. So there are certain attractions if Mauritius gets to have them, it can attract also other niches.