By 2022, global short-term rental sales could reach $132.5 billion, tripling what they were in 2012, according to Skift, a company that offers global travel industry intelligence.
Heading into 2020, experts were predicting a strong market this year, with much more competition entering the fray. Several online rental sites that directly compete with Airbnb have popped up, but we’re also seeing traditional property management companies, hotel chains, individual owners, investors with deep pockets, and multifamily owners jump into the short-term rental market.
It makes sense. Short-term rentals can make serious money, especially in urban areas and popular vacation spots. Depending on location, they could make double — or more — per month than what a long-term rental generates, even with the higher management and operational expenses of a short-term rental.
Of course, there are downsides
The most glaring challenge with short-term rentals is that they predominantly depend on tourism, with business travel being the runner-up. If tourism and business travel drop because of the economy, natural disasters, terrorism — or a large-scale pandemic — demand for these types of rentals plummets.
Also working against short-term rental owners are the regulations that vary widely depending on your location and these can change on a whim. You can see a nice break-down of the regulations here, and it is important to stay on top of them. Restrictions are largely driven by short-term rentals’ impact on the area and they can change quickly. For example, short-term rentals are prone to drive up rental rates, which can have a long-term negative impact on a community.
They also can become a hassle for the community, as reveling vacationers create noise, traffic, trash and even damage. Crime can also increase. That’s why screening is so vitally important when it comes to short-term rentals.
It’s imperative you take steps to protect the community, so find out how you can receive an instant criminal background check with TransUnion ResidentScreening.
To succeed, follow the Millennials — again
While people of all ages are flocking to short-term rentals, according to the “Airbnb and the Rise of Millennial Travel” report, Millennials and younger generations will account for 75% of all consumers and travelers by 2025. And 60% of all guests who have ever booked on Airbnb — and that’s just one provider — are Millennials.
If short-term rental providers want to succeed now and in the future, they have to cater to this market. But what are Millennials looking for? It turns out the types of accommodations they’re seeking appeal to all age groups, or at least the ones that prefer short-term rentals over traditional hotel and resort stays.
They want adventure, they want to experience the local culture, and they’d rather find a local gem than a major tourist attraction.
Tips for bringing in short-term renters
What can you do to attract short-term renters in an increasingly saturated market? Here are some best practices.
- Sell the location. People are drawn to short-term rentals because of opportunities to explore and immerse themselves in a new culture. In your marketing, you should be highlighting everything that makes your area unique, including whether that is walkability or total seclusion. List landmarks, events, galleries, theaters, restaurants and bars, attractions, outdoor and recreation opportunities, and shopping options. Don’t wait to share that information with them once they have booked; your location is key to selling them on your rental.
- Market to business travelers. If your location is ideal for business travelers (you are near an airport or downtown business area, for example), offer amenities that appeal to them, such as a small office space, a clothes steamer or to-go coffee and snack options. And be sure to explain proximity to airports, subways, bus stops and other pertinent information in your ad. Also consider actively promoting your short-term rentals to corporations in your area who will need to fly in employees, vendors or customers. That kind of partnership can keep your units full.
- Appeal to peoples’ green side. Using paints with no or low volatile organic compounds; installing tankless water heaters, energy efficient appliances and solar panels; offering recycling; and repurposing and reusing materials to decorate your rentals, can be a huge draw for environmentally conscious folks. Just make sure you market those features.
- Create an outdoor space if possible. One of the biggest perks of staying in a short-term rental, over a hotel for example, is that they often offer a yard or green space. Build a firepit, provide outdoor furniture and enhance those outdoor areas that they can get elsewhere.
- Make it feel like home. Again, another benefit of short-term rentals, as opposed to hotels and motels, is they can provide amenities like dishes and kitchen staples; luxury linens; books, toys, games and other entertainment options; in-unit washer/dryers; and more that makes the rental feel like a home away from home. Stock up on those items and advertise them.
Finally, and perhaps most important, you must offer a frictionless online experience. Short-term renters want to find and research properties online, fill out an application, have it accepted and pay online. Make sure you have the technology in place to offer them a seamless, secure experience. To learn how TransUnion’s real-time screening and identity verification can help, visit our Resident Quality Management information page.