Hotels Make Play for Robust Short-Term Housing Market
Demand for short-term housing has grown so much, it has outpaced the availability.
New York, NY—There has been a major industry shift with hotels now entering the home-rental market space. One of the best examples is Marriott International’s new platform populated with approximately 2,000 high-end homes across the US, Latin America, and Europe. Its launch is a significant enhancement to its existing 1.3 million global guest rooms.
The definition of short-term rentals is the use of residential dwelling units for 3-31 consecutive days. Most rentals are around 7-15 days. Typically more affordable than traditional hotels, a lot of travelers enjoy the comfort of an actual residence and these spaces enables them to interact with neighborhood residents and explore local, previously untapped attractions in and around their destination.
“Hotels are built to captivate the guests and have them utilize amenities such as restaurants, happy hour, gyms and entertainment. With short-term rentals, the consumer has the flexibility to shop in community stores and help bolster the local economy,” explains Brian Ferdinand, managing partner of CorpHousing Group, a newly-launched national short-term rental operator.
There is a high demand for short term rentals yet there may be several risks for real estate owners and aggregators. One is simply the cost of inventory. There has be capital to acquire the homes and master leases. There also has to be a focus on compliance in each city, Ferdinand tells GlobeSt.com.
The outlook for short-term housing is rosy as there is a fairly limited supply of inventory and a huge demand for the product. CBRE recently released research indicating that, by itself, Airbnb has approximately 4 million listings located in more than 19 countries and accommodating over 160 million stays for the duration of its lifetime. Founded in 2008, Airbnb numbers are more than the top three hotel chains combined. These numbers do not include other services such as VRBO nor HomeAway. In short, short term housing demand is huge and here to stay. Indeed, demand has grown so much, it has outpaced the availability.
This demand, for multifamily developers, is helping to drive real estate and development in core cities as it can be very profitable, says Ferdinand. “The short term housing industry will continue to be successful if they stay focused on certain issues such as taxes, safety and background screening, plus compliance. This niche Is only going to create additional revenue for local governments and economies.”