The Rise of the Vacation Home: From a Single Lodge to a $85 Billion Industry

by  Christine Dayao | Mar 30, 2015
Family packing for vacation
Family packing for vacation / Halfpoint/iStock

These days, most of us are pretty familiar with the value-packed perks of a vacation rental: immersion in local residential neighborhoods, the conveniences of home like kitchens and more living space, and general lower cost. And it's becoming easier than ever to find the perfect option for your trip, too. Type in a query online, browse photos, perhaps message a homeowner if you have any questions, and then book the rental, all from your keyboard and at your own convenience.

But it wasn't all this easy. The internet gives us near-instant verification these days -- but imagine life in the 1800s, when sending out queries via horse-and-carriage mail carts took weeks on end. And after your letter arrives, there's another long stretch before receiving a reply. How did we get from that to a booming industry worth $85 billion, with dozens of websites like Airbnb, VacationHomeRentals, and FlipKey?

To find out, we partnered with HomeAway, which is celebrating its 10th anniversary this year. We were surprised to find that the beginnings of the vacation home began a whopping 400 years ago, with not-so-humble beginnings at one of France's most storied properties. Here's how the story goes:

1600s  -- Did you know one of the most famous palaces in the world was originally a vacation home? King Louis XIII builds a hunting lodge, which turns into the first recorded vacation home in 1624, before becoming the Palace of Versailles that we know today.

1700s  -- The Apostolic Palace of Castel Gandolfo is constructed, serving for centuries as a vacation home for the pope. During his time as leader of the Catholic Church, Pope John Paul also has a swimming pool built in the palace.

Early 1800s  -- Europeans continue to stay in vacation rentals. The homeowner receives a letter from a friend, requesting to spend time at his or her property, and waits weeks for a response to be sent back via horse-and-carriage mail carts.

1850s  -- Communication becomes much quicker thanks to the invention of the telegraph. Would-be renters can now use this technology to send long-distant messages to the homeowner, inquiring if they can vacation in their countryside retreat. The response is much faster compared to a half-century earlier, as they can hear back right after their wire response is delivered.

1950s  -- Vacation rentals make their way across the Atlantic to the U.S. Travelers scour newspapers for rental listings or even phone real estate agents to find available homes for rent.

1995  -- The advent of dial-up internet access by America Online, Prodigy, and CompuServe brings vacation rentals to the World Wide Web. This leads to the creation of Vacation Rentals by Owner (VRBO), which lists just one property, a Breckenridge condo.

2000  -- The vacation rental industry continues to grow. Renters still use a combination of local websites, skimming the classifieds, and using real estate agents.

2003 -- Couchsurfing is founded. The website is a networking platform that connects travelers who are largely younger and on a shoestring budget, who don't mind sleeping on sofas of hosts willing to open up their living rooms to guests.

2005  -- HomeAway becomes one of the first behemoth vacation rental sites, focusing on allowing travelers to rent out whole homes, created by acquiring five individual sites with a collective 60,000 listings. A year later, the site purchases VRBO and more than doubles their inventory.

2013  -- Fourteen percent of travelers book a private home, condo, or apartment rental for at least one trip this year -- a 6 percent jump from just three years prior.

2014 -- The popularity of the "sharing economy" becomes undeniable, to the point where hotels begin to copycat the model.

2015 -- The vacation rental industry is worth an estimated $85 billion. HomeAway alone boasts more than 2.8 million rooms across 190 countries -- more rooms than the four largest hotel companies in the world have combined -- just one decade after its inception. And the experience becomes much more about a place to stay. Guests can also get transportation and concierge services with 21st century integration with companies like Uber and Gogobot.

2020 and beyond -- Here are just some predictions for what using vacation rentals will look like. For starters, research will become a more personalized experience, with technology that curates recommendations based on past trips. And as homes get smarter, stays can become further customized to personal preferences, too -- perhaps thermostats and pools will be set to your preferred temperature, and your favorite playlist will be ready to broadcast as soon as you walk through the door.

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