Let preface this conversation with the fact that I dont own vacation rentals or know much about them. I am down here in corpus on work assignment and I am staying in a hotel. I began to think is there anyway I could start to stay in a vacation rental for a night instead of a hotel.
How many of you out there with vacation rentals are focusing on the business traveler niche? I would imagine it would be a strong opportunity for investors. Are prices comparable to a hotel for one person traveling alone?
Honestly, not so much for a 1 person staying 1 night. If the hotel is $125 a night for a standard room, you are paying that plus the tax. If the VR is $125 a night, you are paying that plus the $150 cleaning fee, plus the security deposit and/or the non-refundable damage insurance. Now an Airbnb host may be cost effective, but that is not a vacation rental by definition. The business traveler will see the most bang for their buck by placing multiple people in one home. A hotel that sleeps 2 comfortably will be $125 a night per room and a vacation rental that sleeps 4-6 may be $210 a night. And from my experience, VR owners and managers may be willing to waive part of the deposit, extra persons fee, or even the minimum stay amount for business travelers. You just have to ensure it is still cost effectivene after the cleaning and additional fees.
I do rental my vacation homes to groups of employees, which seems to work out well but does not make much sense for a single traveler.
To William's point, it's not cost effective to stay in a VR for a single night. However, a VR for the right person, might make a lengthy trip more cost effective to the business. If I were traveling alone on business, which I sometimes do, I'd be more interested in putting groceries in the fridge and cooking "at home". The cost savings to your company for the trade off in meals eaten within a restaurant (plus gratuity), vs. cooked within the VR, might be a good selling point if it's something you need to build a case for.
@Steve Dove I already typically go to the grocery store for my meals instead of restaurants. Much cheaper and healthier food.
I looked at AirBnB in Houston and saw some single night stays that made sense price wise. I may do this next week as an experiment. I will keep you updated.
I have several airbnb units in Indianapolis which are mostly rented by business travelers for periods of time from 1 night to several months. It is working well for me!
That is my next goal! The key is it has to be longer term or the cleaning fees kills it.
@Joseph Weisenbloom , when looking on AirBNB for properties, did you focus on ones close to where you'll be working, or did you use a larger radius? We are preparing a tiny house vacation rental, but since we are about 20 miles south of Houston, I doubt we'd be able to draw in a business traveler.
I usually stay close to where my business is. You would be suprised where they send me. I have recently stayed in pearland so I am not sure how close that is to you.
I have given it some thought, especially with a quicker than expected recent turnover in a couple of units. I really do think it could be done in cities where the hotel prices are significantly higher than the vacation rental prices, which signals a mismatch between supply and demand.
My ultimate decision was related to a desire for simplicity and steady cash flow. One lease with one set of tenants for one year made more sense than the unknown of vacation rentals.
One other consideration - in many states a long term stay automatically turns into a long term lease, instead of a hotel stay. See this link from another BP post:
Join the Largest Real Estate Investing Community
Basic membership is free, forever.