I have been lurking around this site for a couple of years now. In 2020 my wife and I were seriously considering doing a STR. We picked Nashville as the market we wanted to pursue. Long story short, the market was not attractive to us. Nashville was booming. Multi-Unit STR's were going up as fast as they could build them. Sale prices were high. To this day I remain interested in real estate. I was shocked recently when I saw a post on Social Media that was mocking Airbnb. I went into the comments section and could not believe that pretty much all of the comments were negative. People did not like the fees they were being charged to rent them. Paying a cleaning fee and then having a list of cleaning responsibilities before check out. People were even dismissive about the idea of it being someone's home. They felt they were the customer but were not being treated like one. Objectively, I felt like they were making some good points. I bring this up for two reasons. I am curious as to what people think is the future for STR. More cities are restricting or limiting new STR's. Is the STR as good of an investment today as it was say 5 years ago? What about 5 years from now? I think the overall point people were making in the comments page was they prefer working with hotels. You come and go as you please. When you leave, you walk out and are not responsible for the trash, sheets, etc. Personally, I continue to be a customer for STR's. I believe it is the best option for larger groups. As my wife and I become empty nesters and travel more just the two of us, I am not sure if we will continue to use them as much.

Is the shine wearing off on STR's?

Investor · VA AZ, SC · Member since 2017 · 173 posts · 172 votes

4y

Robert,

Airbnb trades at Price to Earnings ratio of 66. The stock market still thinks that there is plenty of room for that business to grow. Without a doubt regulations will be introduced to better manage STRs, and in the long run that will help stabilize the business and hopefully create more certainty for all stakeholders as to what they can expect.

Many others have commented that STRs that are "just a room" are going to face tough competition. There has to be some kind of appeal to put up with the costs and responsibilities of staying in a STR. As you mention, they make a lot of sense for families versus getting two rooms at a hotel. 77% of people have pets in the US. STRs can be pet friendly versus hotels. Unique stays are something that you don't find at many hotels. Plus STRs offer a wider range of price points in some markets where there is limited hotel availability. Maybe some of the "shine" has worn off, but it is like Uber. The sharing economy will continue to grow and become more mainstream.

7 Reply

John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

4y

STR'S are here to stay.

A massive amount of people prefer to rent a house than a hotel room.

When you travel with friends and family it is usually cheaper and you all get to hang together.

I have a cabin that sleeps up to 23 people. This place stays booked and it is always a large group of people that apparently like to vacation together. Fond memories are created and many of these people come back every year.

A hotel room cannot match this.

18 Reply

Carolyn Fuller

Cambridge, MA · Member since 2015 · 651 posts · 736 votes

4y

I think as the years have gone by, STR bookings have gone up but so have customer expectations. I never felt like I was in competition with hotels until this year. Now, I'm definitely getting bookings from people who use to stay exclusively in hotels, including business travelers.

In order to maintain high ratings, which in turn impacts bookings, this year I had to focus more on hospitality industry standards and less on "you are staying in my home" type standards. I dropped all my "check out" requests other than "please lock up" and I emphasized the option for a self-checkin. I also implemented other small, hospitality industry amenities. My ratings have steadily gone up since implementing these changes.

But, no, I don't think STRs are going away because too many of us prefer the STR experience over the hotel experience. I do think regulations will continue to rise which will increase nightly rates by reducing competition.

7 Reply

Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

4y

Looking in Nashville was your first mistake. That's one of the worst places in the nation to try to short term. It's no surprise it left you disinterested. Short term belongs in vacation towns with very few hotels. Not big cities.

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JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

4y

My first thought is "Are you kidding?" There is going to be *more* demand for STR, at least "whole house", in the future for the following reasons:

1. Traveler psychology about being around other people due to COVID, Monkeypox and other diseases;
2. The ability to limit some of your fixed costs (eating, doing laundry) by staying in an STR rather than hotel;
3. The ability to have perks and amenities impossible in a hotel (how many hotels give you your own private pool?);
4. The value to cost ratio achieved with an STR versus a hotel.

#4 is still probably the biggest selling point. I have an STR in the Four Corners area that's 4br, 3ba, on a lake with a private pool and 3,000 sf that rents for $150-200 average per night depending on season. The closest hotel to me, with crappy reviews, is $100 per night for a single room (Quality Inn). That's out of season. In season is closer to $150. There's absolutely no comparison to the value proposition. The only thing you don't get in my STR versus Quality Inn is someone to come in and change the sheets and bring fresh towels every day. That's it.

I've stayed at a lot of hotels & motels in my life, and a few STRs. The only way I could envision going back to a hotel is if I had to be in a geographically specific area that only a hotel could offer.

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Leslie Anne Morris

Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes

4y

I live in Nashville but don't have STR here. It's highly restrictive as @Luke Carl mentioned. STR investing should still be a good bet for you, definitely consider to pursue it if it’s a dream. My investing in this asset class has changed my life. I was able to quit my job and go full time with my passion.

5 Reply

Dave StokleyBusiness Member

Property Manager · Cleveland, OH · Member since 2015 · 705 posts · 799 votes

4y

Welcome to social media, the nastiest cesspool of negativity imaginable! Probably not a great place to get investment advice or even take the temperature of the market.

In Cleveland we are still seeing good results in downtown which is underserved by overpriced hotels, but we are also shifting our focus to "drive-to" vacation-y spots within an hour or so of the city, and unique stays.

2 Reply

Robert Willard

OP

Member since 2020 · 29 posts · 18 votes

4y

Quote from @Carolyn Fuller:

I think as the years have gone by, STR bookings have gone up but so have customer expectations. I never felt like I was in competition with hotels until this year. Now, I'm definitely getting bookings from people who use to stay exclusively in hotels, including business travelers.

In order to maintain high ratings, which in turn impacts bookings, this year I had to focus more on hospitality industry standards and less on "you are staying in my home" type standards. I dropped all my "check out" requests other than "please lock up" and I emphasized the option for a self-checkin. I also implemented other small, hospitality industry amenities. My ratings have steadily gone up since implementing these changes.

But, no, I don't think STRs are going away because too many of us prefer the STR experience over the hotel experience. I do think regulations will continue to rise which will increase nightly rates by reducing competition.

Very interesting. I think you are ahead of the curve. Congrats!

0 Reply

Robert Willard

OP

Member since 2020 · 29 posts · 18 votes

4y

Quote from @Dave Stokley:

Welcome to social media, the nastiest cesspool of negativity imaginable! Probably not a great place to get investment advice or even take the temperature of the market.

In Cleveland we are still seeing good results in downtown which is underserved by overpriced hotels, but we are also shifting our focus to "drive-to" vacation-y spots within an hour or so of the city, and unique stays.

You're not wrong about Social Media. Still, I was surprised by people's comments. I keep seeing that Cleveland is a good market for STR. My own backyard. Who would have thought?

0 Reply

Robert Willard

OP

Member since 2020 · 29 posts · 18 votes

4y

Quote from @JD Martin:

My first thought is "Are you kidding?" There is going to be *more* demand for STR, at least "whole house", in the future for the following reasons:

1. Traveler psychology about being around other people due to COVID, Monkeypox and other diseases;
2. The ability to limit some of your fixed costs (eating, doing laundry) by staying in an STR rather than hotel;
3. The ability to have perks and amenities impossible in a hotel (how many hotels give you your own private pool?);
4. The value to cost ratio achieved with an STR versus a hotel.

#4 is still probably the biggest selling point. I have an STR in the Four Corners area that's 4br, 3ba, on a lake with a private pool and 3,000 sf that rents for $150-200 average per night depending on season. The closest hotel to me, with crappy reviews, is $100 per night for a single room (Quality Inn). That's out of season. In season is closer to $150. There's absolutely no comparison to the value proposition. The only thing you don't get in my STR versus Quality Inn is someone to come in and change the sheets and bring fresh towels every day. That's it.

I've stayed at a lot of hotels & motels in my life, and a few STRs. The only way I could envision going back to a hotel is if I had to be in a geographically specific area that only a hotel could offer.

I think you have hit on something as others have on this thread. As @Ian Tyndall said, people offering "just a room" will have a problem. I think it is important to offer a larger space to offer something hotels cannot and will accommodate larger groups. That plus amenities like a private pool or location like on a lake would make it tough to beat.

1 Reply

Jeremy Horton

Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes

4y

I think we've seen "shine" wear off due to a couple of things - average profit margins are lower than they were several years ago and even compared to a couple years ago, STRs became a lot more mainstream (you can talk to average people and lot have heard or do invest in short terms - or rentals as a whole) - this is due to many varying reasons - social media gurus, housing market getting more popular in the media, side jobs etc. You have companies that are getting very large owning a lot of STRs in destination locations, uncertainty about future zoning due to housing "shortage"...the list goes on

You do have that set of people that are mad that they cannot afford a house due to corporations and STRs driving competition and prices up. This is a minority population as loud as they may seem at times.

I don't own a STR, but I have several LTRs. The thing for me is I can rehab a house, have some leftover equity and rent it out for pretty close to what a lot of STRs are making these days minus all the risk and the workload.

I still like STRs and I think decent deals are starting to come back - but it is nearly a full time job to get them set up - especially if you're doing a long distance one. Once you get rolling it's less work IF you have a property manager. If you manage yourself you are looking at quite the workload - throw in a couple kids, a full time job etc. The thing is - a property manager likely will not be able to achieve the revenues you can IF you self manage well. And you lose a big chunk to property management in a market that already is seeing tighter returns than it has see in the past.

In the future I see them being more regulated, more stable, and bigger companies taking over more of the share.

That being said I still like them and plan to get one in the near future - but it has to be a great deal!

4 Reply

Robert Willard

OP

Member since 2020 · 29 posts · 18 votes

4y

Quote from @Luke Carl:

Looking in Nashville was your first mistake. That's one of the worst places in the nation to try to short term. It's no surprise it left you disinterested. Short term belongs in vacation towns with very few hotels. Not big cities.

Of all the cities in all the world right? There are vacation towns with few hotels?

0 Reply

Wayne Marques

Investor · ME · Member since 2022 · 18 posts · 18 votes

4y

@Robert Willard regarding your concern about cities restricting or limiting new STR's, I had this same discussion with my fiancé and we decided would only consider a STR if the property would cash flow if we had to switch it to a MTR or LTR. The supply of LTR's would increase considerably, or there would be more homes listed for sale, within an area if STR's were banned out right. With that being said, I know some areas already have restrictions, but are we finding that bans and, or, limitations are increasing in some areas?

0 Reply

Carolyn Fuller

Cambridge, MA · Member since 2015 · 651 posts · 736 votes

4y

Quote from @Wayne Marques:

@Robert Willard regarding your concern about cities restricting or limiting new STR's, I had this same discussion with my fiancé and we decided would only consider a STR if the property would cash flow if we had to switch it to a MTR or LTR. The supply of LTR's would increase considerably, or there would be more homes listed for sale, within an area if STR's were banned out right. With that being said, I know some areas already have restrictions, but are we finding that bans and, or, limitations are increasing in some areas?

Once Airbnb lost the court cases against the NYC & Boston regulations, I think a lot of smaller cities decided it was safe to regulate. So I suspect that smaller cities around the country are looking at regulating.

Given the fact that so many people have jumped into the STR market, as if it were the next gold rush, even traditional vacation destinations must be contemplating regulations to protect at least some work force rental properties. I know that places like Martha's Vineyard and Nantucket are hurting because they can't hire enough seasonal staff whose families own 2nd homes on the islands. There is nowhere for the staff to live while they are working in the restaurants, etc.

3 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

4y

@Robert Willard

As a consumer, I way rather prefer bnbs over hotels. In fact, I never look for hotels when travelling. With two small children, a bnb is so much better than a hotel.

As mentioned in above posts, the value you get in a bnb is way better than a hotel. The price per person is so much lower than a hotel would be and you getting more/better amenities.

In terms of Nashville STRs right now. @Luke Carl is an avid hater of them due to restrictions. However, there are many STR specific developments going up throughout the city that are built for that specific purpose. In residential zones they are no longer allowed as NOO.

It's an expensive game to get into in Nashville, but if you go downtown on any day of the week you will understand why. There is an ocean of tourists and events happening in Nashville every single day.

2 Reply

Randy Gutierrez

Investor · NY · Member since 2019 · 171 posts · 80 votes

4y

When it's just my wife and I we typically stay in a hotel. As soon as family gets involved or another couple tags along it automatically goes to Air BnB. It's hard to recreate the ambience and environment of an Air BnB in a hotel when it comes to larger groups. Additionally STR's can be located just about anywhere giving them an advantage over hotels. STR's are definitely here to stay.

0 Reply

Villy Ellinger

Real Estate Agent · Fort Walton Beach, FL · Member since 2018 · 219 posts · 275 votes

4y

@Robert Willard excellent post to ruffle the feathers in the forum! Love it!

Ok, to the matter at hand. STR is my bread and butter and I strongly believe it is an excellent investment and business strategy IF DONE RIGHT. Short-term-rentals/vacation rentals are a subsection of the hospitality industry. Airbnb DOES NOT equal or represent the STR industry as a whole. Airbnb is just one TOOL that travelers can utilize to find and book vacation rentals. Even if Airbnb completely went away, others will take it's place. The demand for non-hotel lodging is here and here to stay with a vengeance. I'm living it right now here on the Emerald Coast of FL. That does not mean that hotels are going to go away. Hotels are also evolving as is the STR industry. In many ways hotels are copying some of the features provided by the STR accommodations. And YES, some people prefer hotels. And yes, some people hate Airbnb and the experience of staying in an STR. Some people also hate steak. But, steak restaurants still do well :-).

I do agree, however, that there was a period of exaggerated hype over STRs, which attracted people to the field who were ill-suited or ill-prepared for it. Of all real estate investment options, STR is the LEAST PASSIVE one. Especially if you self-manage, which is the best way to maximize cashflow. People who had no time or no desire to learn about the industry bought in, did it wrong, got burned and decided STR is no good as an investment option.

If you're interested in STR, yes, definitely read online reviews of travelers. But be fair. Get on VRBO, or Airbnb and check out all the listing and the bazillion positive reviews. There's a passenger for every train, and the STR train has lots and lots of passengers :-).

7 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

4y

from my perspective a traveling business dude.. I much prefer a hotel.. I know the quality going in I can buy expensive or cheap depending what I want to do .

its easy to find.. its always open the keys always work.. and for the brand I stay at the beds are nice and such. Now hotels suffered in the GFC and some still have not got back to full service just experienced that in KC last week. plus i get my points and I stay enough for business that I earn enough points for one or more very nice free stays ( usually internationally when hotels are very expensive) so that's a great perc and an important one.. If as a business traveler you use the CC and air-miles for free tickets then hotel points for free stay.. I mean I have done 2 weeks in Thailand and only paid for food :) same With Europe so you cant get that by just staying at a random airbnb.

I have owned a few short term rentals and when using PM it just was not worth it.. of course this was not prime Airbnb area.. And I have another prop we have done a little short term but still not for me personally the guest are too needy for my liking. What I have liked though is the fully furnished medium term rental we have one in Vegas and it does exceedingly well. double what normal rent would be with very minimal interaction in managing it.

Lastly agree though if your going with large group Airbnb is much better than hotel and better bang for the buck.. or if I go to say Montana to fish hotels are not very nice so the airbnb we use there is pretty cool and worth the money cheaper than the hotel and right above a wine bar so that's a plus.

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Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

STRs are not only here to stay, I believe they are still in their infancy, relatively speaking. Boomers are just now discovering them and are realizing the benefits of staying at one.

1) You made the mistake of having anything to do with social media, and 2) You are looking at AirBnB which is kinda the poor white trash of the business.....sure they're huge, but look at the reasons why......you can rent someone a room, a tent, a cot in your backyard.......renting out substandard places to stay leads to p**sed off clients.

Anyone that thinks about this with any amount of reason will understand that vacation rentals are not going anywhere. The cities that regulate against them will lose them, and their revenue, until they wake up and allow them again. The bad hosts will fade away and be replaced with people that care and are not looking to just stuff 'heads in beds'. Those hosts ruin it for everyone - "just cram heads in beds, man...!"

9 Reply

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

4y

@Robert Willard not at all

0 Reply

Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

4y

You're not wrong about Social Media. Still, I was surprised by people's comments. I keep seeing that Cleveland is a good market for STR. My own backyard. Who would have thought?

There is a false consensus bias effect with social media. All it takes is 1-2 dozen debbie downers getting nasty in the comments to all of a sudden make it feel like everyone feels a certain way. Twitter is a perfect example of this. Where in reality, it was confirmation bias and insidious algorithms that led those people to that post and motivated them to leave a comment, while those who don't feel that way would've never known about it.

I also wouldn't put it past the hotel industry and their associated PR and trade associations to hire some paid trolls, whether with their existing PR people or farming it out.

2 Reply

Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

4y

Another funny thing is how easily people forget that STRs are nothing new. Growing up I stayed in a lot of lake cabins in the summer and ski condos/cabins in the winter. Most were not private family homes and often had identical units nearby, and in some sense they operated like a hotel with a front desk and onsite management. However they did have a lot of the same amenities as STRs that are almost unheard of in hotels such as kitchens, separate bedrooms with a shared living space, grills, private outdoor space, etc. Then you had the rental agencies that did rent out private homes and were basically a manual version of what AirBNB is today. I'd be surprised if there was a single summer or winter vacation destination in the US where some form of this was not already in place long before AirBNB.

All of those places were infinitely more enjoyable than having to share 2 queen beds in a Holiday Inn next to the freeway with my Dad snoring in one bed next to my Mom and my sister and I yanking the sheets from each other all through the night. We simply didn't have the option for the above in those situations, or it wasn't convenient/practical at the time. I don't ever want to have a vacation like that ever again with my wife and kid(s), and thankfully with the current STR infrastructure I don't have to!

5 Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

4y

I was staying in short-term rentals in Europe back in the 80's and 90's. They are here to stay but I do predict a slow-down. Markets are getting saturated. Cities, counties, and states are pushing back with regulations, fees, and taxes. The hotel industry is lobbying against them (successfully in Hawaii). Vacation rentals used to be as cheap - or cheaper - than a hotel with the benefit of a kitchen, laundry, privacy, yard, spa, or other amenities, but prices are starting to creep up and make hotels feel more attractive.

Go away? No. Slow and change, yes. But it may take 3-5 years to see any real impact.

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Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

4y

As you can see @Robert Willard, most of us are full on STR and see no sign of anything slowing down.

Seeing as there are literally millions of guests who stay in STR's each year. Even 1000 negative responses to a negative post is statistically nothing. Literally nothing.

Bottom line, don't look at social media and expect good, reliable info.

1 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

4y

Great comments in this thread. I agree with @Jay Hinrichs that hotels can be better for the solo business traveler and STRs are better for families.

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Is the shine wearing off on STR's?

Is the shine wearing off on STR's?

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