Under-the-radar vacation rentals

Interested in renting a house or apartment for your next vacation, but nervous about dealing with total strangers in a rent-by-owner arrangement or a big agency? Don't despair. According to a new PhoCusWright study of the vacation rental market, there are 1.26 million homes available for short-term rental in the U.S. alone and--here's the interesting thing--about a quarter of those are rented out on a casual basis. In other words, they don't show up in home rental directories and websites.

So how do you find out about them?

In many cases, the owners rent them out only to friends, acquaintances, friends-of-friends and relatives. So if you're interested in staying in a chalet in Vail, a cottage in the Muskokas or a villa in Tuscany, get the word out among your social network.

Ah, I hear you say, "I don't know anyone who owns a second home."

Don't be so sure. Once you start (discreetly!) letting it be known that you'd like to rent a vacation property, you may well be surprised. Where I live in Ontario, for instance, few people don't know someone--a neighbour, a business colleague, a cousin--with some sort of stake in a nearby lakeside cottage. And don't forget that it's not just who you know, it's also who your friends know. Six degrees of separation can take you a long way from home.

Of course, not everyone who owns a second home is keen to rent it out. Also, not everyone wants to rent to just anyone. Many people will be justifiably nervous of casual acquaintances who are overly pushy about their desire to move into their foreign pied-a-terre.

And while there are many advantages to renting from someone you know, there are also particular pitfalls. What happens to your relationship, for instance, if the house's microwave breaks down on your watch?

All of this being said, many people with second homes are eager to earn a little extra income from them when they are not in residence. And a private rental from a friend can be the perfect way to get your feet wet in the vacation rental market. Just approach it as you would a rental from a stranger, complete with written contracts and the understanding that this is a business arrangement.

Vacation rentals are a $24.3-billion industry

Tourism market research company PhoCusWright has released some preliminary figures from its forthcoming report, Vacation Rental Marketplace: Poised for Change. According to the study, vacation rentals are a US$24.3-billion industry worldwide, with online rentals accounting for about 12 percent of those revenues. 

Given the plethora of online vacation rental sites, I'm surprised the figure for online rentals isn't higher. PhoCusWright predicts it will rise to 17 percent by 2010.

At the minute, about two-thirds of people who book vacation rentals do their research online, but most people use traditional methods (such as phone, fax and snail mail) to make the final reservation.

Other notable figures from the report: 20 percent of all people who researched travel online booked a vacation rental last year, and 89 percent of all people who booked a rental plan to book another one within the next three years.