Quote from @Kyle Smith:
So, essentially only 956 cabins have entered the market since 2016. Figure in the incredible amount of newcomers to this area and its growing popularity, exposure, new attractions coming etc, I’d say… not bad at all. I think the saturation argument does not hold water. The cabin market looks pretty balanced to me.
Saturation is not only numbers, it's quality as well. As much as many markets have been saturated with numbers, many have also been saturated with quality.
Remember, the selling point in the Smokies in 2019 was that the cabins were run by dinosaur PM companies that charged 40%, didn't list on Airbnb/VRBO, didn't use dynamic pricing, didn't have any unique features to the cabins, didn't respond to guests quickly, had poor ratings, etc. So if you came in and self-managed, threw a $200 Arcade 1up (now $600 each, because everyone is buying them) in there, responded to guests quick and got good reviews, you could stand out.
But that's no longer the standout feature it once was. There are a lot of people doing that. Just like in 1995 if you had a hot tub you couldn't swat away the bookings fast enough, but now a hot tub is no longer a standout feature, but a minimum barrier to entry. Every year we creep closer and closer to self managed, 4.99 review score, fast response times, game room/theater becoming the standard rather than the standout.
The Smokies, at least, is better than a lot of markets on that front. I have 10 properties in Orlando and who-wee, let me tell you, if you're only putting 150k into crazy cool upgrades on your property when you buy it, you're lagging behind.
This is one of my properties in Orlando: https://www.airbnb.com/rooms/52612233
Three years ago I would have said that's a 98th percentile property in quality. Now I would say maybe 75th percentile? 70th? We built a 3/4 size X-wing AND Tie Fighter, built a full commercial retro arcade, toddler secret clubhouse, coffee bar, etc and I would say we're maybe 75th percentile on a good day. Because there are houses with bowling alleys, laser tag arenas, lazy rivers, etc IN THEIR HOUSE now.
5 years ago if you threw a pool table and a foosball table and a dart board in the garage in Orlando you had a "game room". Now if you do that you have a piece of trash that no one is going to book for $99/nt despite your $800k mortgage at 7.5%.
Orlando is ahead of the curve on that because that kind of thing is the main selling point there, but it's coming everywhere. I've used my STR host knowledge to aid in our traveling. This year we took a family vacation to Lake Havasu because I knew it was oversaturated with awesome pools and great hosts, and I knew we could get an amazing place at a cheap price. We stayed in a place with a full on resort style backyard (I actually asked the owner what it cost....$800k just for the pool area!!!) like we had our own private Hawaiian resort. For $249/nt. OVER SPRING BREAK!
Again, it's market dependent, but it's coming everywhere. 3 years ago if you had a pool cabin you had to beat off the bookers with a stick, even in the slow season. Now there are more and more of them, all with the same arcade machines, all with the same 5* reviews. It's all a matter of time. The things that made a super property 5 years ago make an average property now. And the things that make a super property now will make an average property 5 years from now. The secret is out, and people are going to have to constantly stay 3 steps ahead unless they have a 2018 mortgage that allows them to book at rates that drag the whole market down, all while they tell new investors about how their property is "crushing it" and getting new people in over their heads.
