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.

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.

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...!"

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.

@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 :-).

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.

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.

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!

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.

Is the shine wearing off on STR's?

Bruce WoodruffPro Member

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

4y

Quote from @Michael Baum:

Yeah @William Arrington, that is not how it works. Ours in the "wild west" and we have no problems. There aren't arbitrary decisions with no reviews.

Yes there are restrictions here and there, but it is much worse in the larger cities on the east coast from what I have read here and elsewhere.

We're as 'wild west' as it gets with no problems. Heck even our themes are all 'wild west'. I think the more remote and countrified you get the less Govt restrictions you will get. Generally speaking that is....

1 Reply

Ashton Cleveland

Rental Property Investor · Bend, OR · Member since 2016 · 27 posts · 26 votes

4y

Bottom Line: If you're hosting on AirBnB then you're running a business and need to treat it like one!

I think a lot of the negative stigma that AirBnB gets is from travelers who stay with a host that has a "you are staying in my home" mentality. This is not rental property investing so much as it's buying a hospitality business.

3 Reply

John WilliamsBusiness Member

Property Manager · Clarksville, TN · Member since 2018 · 443 posts · 210 votes

4y

Unpopular opinion: STR's are hyped up and oversaturated. It is the next cool thing and everyone knows it. Once the guru's start teaching it, you're already too late. Sure, you can make decent money... with a decent amount of effort. Many STR's do not work as long term rentals as an exit strategy.

Long-term, buy-and-hold, traditional rental properties! That's the way to go!

[email protected]931-272-3065

Rent My Home - Property Management4.8211 Reviews

Website View Page

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Jon Martin

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

4y

An STR buy and hold is also perfectly viable in lots of markets. I'm not sure why it has to be an either/or. Given a choice I'll go for the option that provides the best returns.

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Alex Talcott

Attorney · Durham, NH · Member since 2019 · 292 posts · 126 votes

4y

My observation is of the major borrowing-economy companies in car rides and real-property rentals moving in inverse:

--Not uncommon for Uber experience to have slouched to taxi driver inconsideration

--AirBnB expectations and fees creeping up toward hotel standards/charges

2 Reply

Bruce WoodruffPro Member

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

4y

Quote from @Jon Martin:

An STR buy and hold is also perfectly viable in lots of markets. I'm not sure why it has to be an either/or. Given a choice I'll go for the option that provides the best returns.

Yessir. That's why we're all doing this right? To make a buck. A properly chosen and properly run STR will run circles around a LTR all day every day....

1 Reply

Carolyn Fuller

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

4y

Quote from @Alex Talcott:

My observation is of the major borrowing-economy companies in car rides and real-property rentals moving in inverse:

--Not uncommon for Uber experience to have slouched to taxi driver inconsideration

--AirBnB expectations and fees creeping up toward hotel standards/charges

That is absolutely true for my small urban unit. I am still well below the nightly rates for the nearby hotels but my rates are definitely creeping up and I am definitely focused on providing hospitality industry services. I am also getting some of that hotel business.

I suspect the people who are posting on social media are complaining about the rising nightly rates in regulated blue cities. Since our STR competition is disappearing, we are able to raise our nightly rates. But we also need to up our hospitality industry game or our ratings will suffer. We can no longer get away with “Welcome to our home. Please treat it accordingly.” mentality. We need to constantly ask ourselves how the 4 star hotel down the street would handle any given situation and follow suite when possible. I might not be able to offer an indoor pool or gym but I can offer early / late luggage storage. I can also offer a washing machine, dryer and detergent. Those might be more popular than that indoor pool & gym!

1 Reply

Melissa Joyner

Member since 2020 · 1 post · 0 votes

4y

@Robert Willard

For consumers perhaps, but I think a little of this is going on the investor side as well. I am in some STR specific social media groups and the amount of people trying to sell their Airbnb's fully furnished (at a premium) after 6-8months is of concern. It's possible that they didn't do their numbers correctly but it makes you wonder.

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Leo R.

Investor · Member since 2021 · 591 posts · 695 votes

4y

@Robert Willard interesting topic!

You mention that "the overall point people were making in the comments page was they prefer working with hotels"

I assume that AirBnB is aware of this sentiment among customers.

Is it possible that AirBnB's recent changes to their platform are in response to those sentiments?

I've heard that AirBnB recently changed their platform so that super high-rated, super high quality spots get listed at the top of their search results. In other words, it sounds like they're trying to direct customers to properties that share a lot of similarities with hotels (i.e.; professionally managed spots that are not someone's home, spots that have high quality amenities, excellent service, A+ furnishings, etc.) ...conversely, it sounds like AirBnB is also trying to direct customers away from the lower quality spots that those commenters mentioned (i.e.; spots where you have your own cleaning responsibilities, spots that are connected to someone's home, etc.). ...and, as others like @Carolyn Fuller have mentioned, these days, customer expectations are higher and STRs usually have to be high quality to succeed...

If this is all true, then it would suggest that the future of STRs is mostly in professionally managed, high quality spots that provide a similar level of experience (or better) than a hotel. Lower quality spots (like those connected to someone's home) may not be as successful anymore...

I wonder if Vrbo will follow a similar model, or if they will go in a very different direction?...Is decreased demand for lower quality spots just an AirBnB thing, or is it occurring for all STRs?

(I don't know).

But, it definitely seems like the STR market (like most markets these days) is evolving!

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William Arrington

Gainesville, VA · Member since 2021 · 82 posts · 72 votes

4y

Quote from @Michael Baum:

Yeah @William Arrington, that is not how it works. Ours in the "wild west" and we have no problems. There aren't arbitrary decisions with no reviews.

Yes there are restrictions here and there, but it is much worse in the larger cities on the east coast from what I have read here and elsewhere.

I think your miss understanding what I wrote. Iam on the east coast. My AIRBNBs are in areas that need tourism and have had rental houses for longer than AIRBNB has been a thing. They have standards with rules in place and they do not change them because they are established so no surprises. I would not say that I would never buy one in a city but the reward would have to be pretty amazing for that risk. California is also starting to get more strict on AIRBNBs and Joshua tree is about to lock down permits.

0 Reply

Michael BaumPro Member

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

4y

I hear ya @William Arrington. I really don't consider CA the wild west. It is a different animal all together. You really can't base all other western states by what happens in CA.

In Idaho where our lake house is, there isn't any restrictions where we are at. This year was the first year our little town required registration. It was $35 and zero issues getting it.

I understand that by buying in established STR areas (like Pigeon Forge) you take less risk as things have been sorted for years and there might be more risk in other areas where STR's are a new thing.

I just don't think it should preclude buying in up and coming areas.

1 Reply

Leslie Anne Morris

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

4y

Quote from @Michael Baum:

I hear ya @William Arrington. I really don't consider CA the wild west. It is a different animal all together. You really can't base all other western states by what happens in CA.

In Idaho where our lake house is, there isn't any restrictions where we are at. This year was the first year our little town required registration. It was $35 and zero issues getting it.

I understand that by buying in established STR areas (like Pigeon Forge) you take less risk as things have been sorted for years and there might be more risk in other areas where STR's are a new thing.

I just don't think it should preclude buying in up and coming areas.

You never know the next big thing right!?

0 Reply

Bruce WoodruffPro Member

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

4y

Quote from @Carolyn Fuller:

I think one of the most valuable things you/we offer is just the extra space. And the feeling of a home instead of a sterile single room. And the kitchen...even though I don't usually cook when I travel, I like having the fridge and microwave, full size trash cans, etc...

0 Reply

William Arrington

Gainesville, VA · Member since 2021 · 82 posts · 72 votes

4y

Quote from @Leslie Anne Morris:

Quote from @Michael Baum:

I hear ya @William Arrington. I really don't consider CA the wild west. It is a different animal all together. You really can't base all other western states by what happens in CA.

In Idaho where our lake house is, there isn't any restrictions where we are at. This year was the first year our little town required registration. It was $35 and zero issues getting it.

I understand that by buying in established STR areas (like Pigeon Forge) you take less risk as things have been sorted for years and there might be more risk in other areas where STR's are a new thing.

I just don't think it should preclude buying in up and coming areas.

You never know the next big thing right!?

Pay attention to local elections. You might want to go to a few and you might be able to start the regulations and keep them fair. What you dont want is for them to adopt a homestead-type policy because it could ruin you. In places, where that has happened people, could no longer afford their properties because it basically says 1 or 2 things of the following.

1. You have to live at the property you rent out and limit it to 90 days a year.

2. You can only rent the property for 30 days a year.

3. Existing owners that have permits could be exempted which would make your property cash cows but its rare.

Basically.. you want to be part of the conversation because if people on the other side of the argument start it... you're done.

0 Reply

Michael BaumPro Member

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

4y

@William Arrington, I agree. I was at the council meeting when they were talking about STR regs and I just told them I bring in over 40k in revenue to local businesses based on talking to guests. I did think that a registration was OK. That way they can keep track of who is doing STR and how to get a hold of them.

I will also say that some of the things you are talking about would never happen where we are at. We are in rural Idaho and that sort of regulation just doesn't happen here. Hell next month starts hunting season and there are kids 10 years old toting 7mm rifles and 12g shotguns all over the place. School is out for hunting season. I grew up here and I brought my hunting rifle or shotgun to school. There were 4 big safes and they went in there. Dad picked us up and we were ready to go hit the fields. People drive around in UTV side by sides and ATV's.

Personal responsibility is paramount and people don't go to the county or city for problems. I just get a call if someone is driving to fast on our road etc.

Now I can't speak to the Boise area. With all the Californians moving in, things change.

2 Reply

Bruce WoodruffPro Member

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

4y

Quote from @Michael Baum:

@William Arrington, I agree. I was at the council meeting when they were talking about STR regs and I just told them I bring in over 40k in revenue to local businesses based on talking to guests. I did think that a registration was OK. That way they can keep track of who is doing STR and how to get a hold of them.

I will also say that some of the things you are talking about would never happen where we are at. We are in rural Idaho and that sort of regulation just doesn't happen here. Hell next month starts hunting season and there are kids 10 years old toting 7mm rifles and 12g shotguns all over the place. School is out for hunting season. I grew up here and I brought my hunting rifle or shotgun to school. There were 4 big safes and they went in there. Dad picked us up and we were ready to go hit the fields. People drive around in UTV side by sides and ATV's.

Personal responsibility is paramount and people don't go to the county or city for problems. I just get a call if someone is driving to fast on our road etc.

Now I can't speak to the Boise area. With all the Californians moving in, things change.

That's what it's like up here in N Arizona, more side-by-sides than cars, more trucks than side-by-sides. Everyone is carrying. The only regulation is so the city has some info incase something goes south.

Hopefully at this point most of the Californians moving there will fit in, if ya know what I mean....

1 Reply

Cliff H.Pro Member

Rental Property Investor · Nashua, NH · Member since 2014 · 598 posts · 477 votes

4y

Circling back on the trends of twenty-somethings complaining on social media about having to strip a bed… it’s worth pointing on that asking guests to do simple things strip a bed or throw towels in a washer before they checkout is actually a way many hosts like myself pre-screen guests they don’t want. If you run a tight ship you do not want or need to accept everyone who comes knocking at your door.

Being clear about expectations up front may turn some guests away that think cleaning fees are a “license to loaf.” but it can also be the difference between hosting higher quality guests with a psychological stake in the space, who come back again the next year, and ensure you’re not managing constant turnover in cleaners tired of picking up after poor quality guests.

As with any market, there’s countless ways to run your business and others may well be chasing higher occupancy rates by running a space like a hotel, but I’m not terribly interested in competing with the scale of a Marriott or Hilton, but rather providing a more personalized XP at a higher price for travelers willing to treat that space like their home.

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Is the shine wearing off on STR's?

Is the shine wearing off on STR's?

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