Airbnb, the online short-term rental marketplace, started a revolution among the hospitality industry! Their ground-breaking concept to open up an online marketplace where homeowners and property managers can rent out their properties just like hotels has helped the platform generate 2.7 billion in sales since its inception in 2008.
That number does not even include what all the individual property owners have raked in since that time either! With so much profit being produced, the short-term rental property industry does not seem like it is going to slow down anytime soon.
Short-Term Rentals: A Different Approach
Historically, property managers made most of their money on long-term leases but now have figured out that there is as much or even more money to be made with shorter ones. Bed and Breakfast accommodations used to be considered a mom-and-pop market but rental professionals are joining this secret cash machine in large numbers as of late and will most likely continue to do so as long as the money keeps flowing into the short-term rental business model.
No longer are short-term stay accommodations dominated by single-apartment flats or vacation homes. Now, multifamily buildings comprise the majority of short-term rentals. The National Multifamily Housing Council has stated that 65% of Airbnb bookings came from apartments, condos, and even hotels.
Property owners and managers have found that turning a portion of their apartments into hotel-style, short-term stays produced higher income at lower costs. Essentially, they are able to play both the long-term lease and short-term rental game and profit from each. Hedging their rental bets, they can maintain a positive ROI even in the worst of rental markets.
Trends Property Managers Should Consider
More money means more competition! While property managers and other professional renters are profiting big-time from the current short-term vacation and urban rental boom, more of them are entering the market which makes for steeper competition. Property managers have doubled their listings across all online travel platforms in the last two years (2017 & 2018).
As competition continues to increase, property managers have to continue to find ways to keep their short-term rentals profitable. To stay ahead of the short-term rental game, property managers and other rental professionals leasing their properties for short-term stays have to be able to cut down on their overall tasks while at the same time provide that “homey” feeling short-term accommodations are so well- known for.
This is no small task but the following short-term rental trends and predictions for the upcoming year should help anyone wishing to reap the monetary rewards from short-term stays stay in the know and ahead of the competition.
Property Management & Real Estate Service Mergers
Property managers have already started joining forces with real estate developers and agents to help increase short-term rental yields.
Case in point:
Airbnb Backyard: Developing homes with shared-living accommodations.
WhyHotel: Turning un-leased residential units into fully-furnished hotel accommodations through the help of real estate developers.
It is expected that more of these creative partnerships and mergers between real estate services and property managers will continue in 2019 in order to increase short-term rental supply.
Third-Party Technology Solutions
As property managers increase the number of their rentals and renters, their workload will also naturally increase. If they continue to use their old-fashioned ledgers and tracking systems to stay up with the ever-increasing turnover, they will not be able to keep up with the demand and their rental quality and service will suffer.
Enter third-party solutions.
Property managers would do well to employ technological solutions to handle the following aspects of their business:
- Task Automation
- Competitive Price Listings
- Optimized Online Bookings
- Online Communications
Some of the key technology tools property managers will most likely employ this upcoming year to ease their workload and provide better quality stays for their renters include the following:
- Temperature Controls
- Keyless Locks
- Carbon Dioxide & Noise Monitors
- Dynamic Pricing Software (real-time market price measuring systems)
New & Improved Property Managers
It is expected that many of the individual short-term stay property owners will step up their game this year and become full-time professional property managers.
Technology, as previously discussed, is making it easier for anyone who has even a little rental experience to fulfill the duties of a property manager and thus reap the higher monetary rewards!
These new property managers will not only be tech savvy but also forward-thinking as they will have most likely entered the short-term rental market in its latest hybrid-version, meaning they can potentially offer a better guest experience at a higher ROI for themselves.
Property investors are likely to continue to buy up more properties that can be used both as an urban and vacation short-term rental since the profit margins on such units are currently very high when compared to more traditional rental models.
Ultimately, this means that property managers have no choice but to step up their game as well by either partnering with investors, developers, or real estate agents to provide more creative short-term rental solutions or investing in technology and similar hybrid-properties that can double as vacation and urban home.
Preferably, do both!
Regulation & Education
As many local and national governments are not aware of the boost short-term rentals bring to their respective economies in creating new jobs and encouraging more tourism, property managers and anyone looking to be a part of this industry should get involved in associations that represent the short-term rental industry.
The positive impact of doing so will be twofold:
- Educating both local and national governments on the positive effects short-term rentals have on local and national economies.
- Fighting for better regulations for both renters and rentees within the industry so as to provide a better environment for both.
Rising Guest Expectations
As more and more rental owners and property managers step up their “short-term rental game” to stay ahead of the competition, so too will guests’ short-term rental expectations.
Guest expectations will be primarily focused on the following areas:
- Rental Property Quality
- Guest Communication
- Owner-Property Manager Relations
- Overall Experience
The increased expectations will also be encouraged by former hotel-stayers who now prefer the “hometown” feel of a short-term rental over a hotel but still want the same amenities and services that they receive from their hotel stays.
To keep up with such demand, rental owners and their property managers will have to supply more hotel-like products such as slippers and bathrobes, as well as services like in-room dining and concierge-style communication. Therefore, costs and commissions will most definitely rise but so will bookings as long as the property keeps up with the above expectations.
There is no denying that the short-term rental industry has grown leaps and bounds since 2008. This growth, however, has sparked an increasing number of interested parties that wish to profit from this rental boom. With competition comes innovation! Property owners and property managers alike must keep a vigilant eye on specific trends affecting the short-term rental industry on a year-to-year basis to stay on top of their game. If they miss out on the latest happenings, they put themselves in a position to possibly miss out on all the profits short-term rentals currently have to offer.