Short Term Rentals Taking Off!

“Short term rental is a great alternative for all the travelers out there.”  — Glenn Haussman (16:34-16:38)

Have you ever wondered why short-term rental is better than a traditional hotel room? In today’s episode, you'll hear stories from people who've seen the ins and outs of the travel business. Gone are the days when conventional hotel rooms make you feel like a stranger in a strange land.

Today, you can rent all over the world. That is way beyond a hotel booking concept. It’s more a personal and community concept. In this week's episode, Glenn Haussman talks about short term rentals together with his special guest, Jaime Lane.

Part One of ‘Short Term Rentals’

Glenn shares how he found his way into his first short term rental property. He emphasizes short term rentals are an excellent opportunity for hotel investors. It’s a lot better than a traditional hotel room. It's a great alternative for travelers out there. As a hotel guy, Glenn didn't want to stay in one. He couldn’t just go ahead and support the competition.

Glenn went to a big conference in Boston with his producer. He had to choose between $4000 for four nights of stay for two separate rooms. Or, $2,500 for a two-bedroom apartment with a complete package. Glenn considers himself one of the most fervent supporters of the hotel business. The first time he went to London, he worked on a new site that focused on service departments and short-term rentals. During his stay in London for that particular job, he had the opportunity to rent a place in an old building. This was like his own home in New York City, and similar to a lot of modern travelers.

“Short term rental industry is expanding to roughly 650,000 rented units this year in the United States.” – Jamie Lane (18:56-19:02)

Jamie talks about how they got an astonishing number of 650,000 rented units in the USA. You'll hear major operators like Airbnb, Booking.com in the millions of units. So, 1.5 million units in the USA and 7 million units worldwide. Those numbers aren't incorrect and somehow a little bit inflated.

How did that happen? They checked how many units traditional hotel operators are competing with on a nightly basis. Most people think that 1.5 million units in the USA are roughly 30% of the hotel supply. The inactive units get removed. Let's say you've got a unit you just rent out during the summer, and it goes empty during the winter.

This means that months with no booking got removed from the supply number, including the unavailable units. In terms of growth, anywhere from a hundred to 120,000 net new units are being added every year to this sector. This is on par with traditional hotels. Roughly 2% is the same number of units being added in the non-traditional hotel sector. That leaves about a 4% supply growth per year.

Part Two of ‘Short Term Rentals’

There's an option for travelers to rent houses, apartments, condo units, or even private rooms that offer a significant discount compared to a traditional hotel room. If you're to explore major cities like New York, San Francisco, and Miami, considering the continuous growth of the economy, it could be a much more viable option as people look into their travel expenses.

“Considering the continuous growth of the economy, short term rental could be a viable option as people look into their travel expenses.” – Jamie Lane (23:55-24:07)

All of the demand that's being accommodated today in cities couldn't be accommodated in traditional hotels. Look at the short-term rental demand added to the hotel demand and then divide that by hotel supply. Sometimes, the supply of short-term rentals is in areas where there aren't hotels. 

This means that approximately 35% of short rentals are more than a mile from the closest hotel. If you move outside of the cities, that gets to 57%. It's allowing travelers to explore areas that they wouldn't necessarily have been able to. There has been a tremendous innovation when it comes to matching potential hosts with potential guests through booking apps. A lot of the major hotel companies ignore this. They don't think they're in a competition against someone renting out a spare bedroom. 

Most of the customers nowadays prefer short term rentals for a lower price compare to a small hotel room that's been around ten years but is more expensive. Jamie also highlights the importance of incorporating this data into their forecast to understand how it impacts traditional hotel performance what hotel owners, operators, and managers need to know as they budget as they price going forward. Lastly, the short term rental business has the potential to force the traditional hotel industry to change how they operate.

How to Get Involved

No Vacancy with Glenn Haussman is the travel industry's most exciting podcast. A fun, fast-paced genre bending program peeling back the travel business veneer. Perfect for road warriors, leisure travelers, and industry insiders, we look behind the scenes of the travel business by sharing stories, experiences, and interviews featuring the industry's biggest names. https://novacancynews.com/no-vacancy-podcasts/