Short-term rental owners are ready and waiting in Scottsdale, Arizona, a city with year-round sunshine and bachelorette parties.
Their homes are designed with bright interiors, including vibrant wallpaper, neon signs, colorful murals, and pops of pink, as well as resort-like outdoor spaces. There’s a makeup studio with mirrors, ring lights, and swivel chairs to get everyone ready for a night on the town. The listing highlights a pool, fire pit, and yoga area, designed to catch bridesmaids’ eyes with glossy magazine-worthy photos.
“We didn’t just design a house,” says Carissa Vivirito, an Airbnb host in Scottsdale. “We designed the whole brand.” With partner Nicole Zopoulos, she owns three homes dedicated to bachelorette parties under the name “Pink Cactus.”
The short-term rental industry, which rents out furnished rooms, apartments and homes on platforms like Airbnb and Vrbo, has grown rapidly in recent years, with supply outstripping demand across the U.S. and homeowners rushing to convert them into second homes. It has become. Or convert your investment property into cash. But with three consecutive years of declining occupancy rates, more hosts are competing for fewer guests, prices are falling, and hosts and the platforms they utilize are finding new and creative ways to attract renters. are forced to explore.
Last month, perhaps in response to creepy headlines and sketch show hype, Airbnb announced a ban on all indoor surveillance cameras (“in order to prioritize the privacy of our community”). The company, an industry leader with more than 7.7 million properties, also introduced a new guest cancellation policy that allows for refunds in the case of foreseeable weather events such as hurricanes.
Vrbo, which specializes in vacation rentals, now imposes harsh penalties on hosts when guests cancel, including fees and suspensions. To accommodate this growing market segment, Vrbo also advises hosts to consider bringing pets.
To stand out, hosts are further responding to guests’ concerns about safety and sustainability, as well as guests’ desire to stay with extended family, including their pets, under the same roof. Successful hosts identify potential guests and design their properties to be the star of their guests’ vacations.
“They really want an experience,” says Annette Grant, co-founder of Thanks for Visiting, an online community and podcast for short-term rental owners. “It’s not just about joining Airbnb.”
Wendy Dorris, who owns short-term rental properties and manages 13 other properties in Scottsdale and other cities in Arizona, says a simple farmhouse-style rental might do the trick in 2021. says. In 2024, the farmhouse will still be rented, but it will no longer be at the top of the market. “Now we have to push harder,” Doris said.
Her company, Mostess, offers concierge services in addition to nightly rentals, including a charcuterie board, fully stocked refrigerator, s’mores kit for the fire pit, and margarita bar upon arrival. Her next project is her four-bedroom home with an infrared sauna and a cold plunge pool, aimed at spa enthusiasts.
“People want their home to be part of the adventure,” she said.
Jamie Lane, senior vice president of research and chief economist at AirDNA, which tracks industry data, said that even with the additional perks, hosts are seeing prices fall as more inventory lands on the platform. He said he was witnessing this. Supply increased by 24% in 2022 and by a further 12% in 2023. It’s up 10% so far this year. Demand is also increasing, but not at nearly the same pace.
As a result, short-term rental prices have fallen an average of 1.3% in 2023 and 1.6% so far in 2024, Lane said.
“Competition is increasing,” Lane said on a recent AirDNA podcast. “Investors who are designing or doing some kind of ‘amenitization’ or creating accommodations to meet the needs of their guests are doing just fine. Performance is down and continues to get worse. People want new things. They want attractive properties.”
Leverage swings significantly in the guest direction, and guest reviews can make or break a property. Airbnb — Last year we introduced “OMG!” The special properties section encourages hosts to ask renters for five-star reviews by highlighting 2 million properties as “guest favorites,” a feature the company rolled out in November. That’s what I added. To become a guest favorite, you need high ratings, positive reviews, and a trusted host. At the other end of the spectrum, he removed 100,000 listings in the past year because the company didn’t satisfy guests. Vrbo also has the best host program with requirements that become more stringent over time.
Five stars are the new four stars, and hosts need to deliver a “six star” experience, says the co-founder and CEO of Rent Responsibly, a company that brings together short-term rental hosts and industry insiders. said David Krause, an expert in the field. . “We need to do more than that,” he said.
Kraus said appeals to sustainability-minded guests are also becoming more important, such as adding electrical outlets for electric vehicles and limiting single-use plastics.
He advises hosts to be as transparent as possible in their listings, and to practice staying as a guest at their own property to see things from a renter’s perspective.
“The days of surprises are long gone,” he says.
