Thanks to the rise of platforms like Airbnb, the market for hospitality and travel lodging has grown tremendously in recent years. More real estate investors are now looking to purchase properties specifically for short-term vacation rentals, and this shift is influencing new trends in this sector of the industry.
The experts of Forbes Real Estate Council are seeing firsthand how the lodging property market is changing. We asked them to share some of their predictions for the future of travel real estate, and how industry professionals can prepare now.
Real estate experts discuss the changing landscape.All photos courtesy of Forbes Councils members.
1. Increased Accessory Dwelling Units (ADU)Â
I believe we will see an uptick in people building or utilizing accessory dwelling units on their property as a result of the housing shortage in cities. Real estate professionals should learn how to educate their clients on the local laws around building these sorts of spaces, and how to best utilize the potential income from rentals and value in selling or purchasing properties with ADU zoning. – Beatrice de Jong, Open Listings (YC W15)
2. More Zoning And RestrictionsÂ
In resort towns that have a large amount of hospitality and short-term rentals, be prepared to see more zoning changes surrounding short-term vacation rentals (like VRBO and Airbnb). Agents must be educated about the laws and regulations within their community. – Tanya Delahoz, Dwell Summit
3. The Rise of Temporary HousingÂ
Travelers are staying less in hotels and more in temporary housing situations like Airbnb or VRBO. The privacy, ability to cook meals and larger spaces make these options more attractive than hotel rooms. Savvy real estate investors will build a portfolio of furnished rentals to cash in on this trend. – Katie Brown, Together For Vets
4. Second Homes As A Revenue StreamÂ
The resort or second home industry is already feeling the travel lodging shift by leasing out their vacation homes. Real estate professionals can market their resort properties with the sales approach of renting out by owner and making their home a revenue stream when an end user is not in residence. Checking out HOAs that disallow this use is important. Liability issues are also a consideration. – Rita Santamaria, Champions School of Real Estate
5. More Reliance On Third-Party Management PlatformsÂ
Global tourism raked in $1.34 trillion from 2000 to 2017, with millions opting for short-term rentals. As such, it’s become difficult for property managers to adhere to requests of demanding guests who expect a local feel coupled with professionalism. This will be the catalyst to property managers relying more on third-party platforms to help them to manage operations all in one place. – Vered Schwarz, Guesty
6. An Increased Need For Property Management EducationÂ
The shared-housing economy is here to stay. Virtually any home can now serve as an income-producing accommodation for alternative travelers. The key to success as a homeowner/host is management. Travelers can be finicky and the Airbnb algorithm can be unforgiving, so as a real estate pro, learn the ins and outs of property management and be the trusted resource for clients who choose this path. – Garratt Hasenstab, The Mountain Life Companiesâ„¢
7. Blurring Lines Between Hospitality And MultifamilyÂ
The hospitality industry has long embraced the power of experiences and branding to differentiate one property from another. The multifamily industry is increasingly takings cues from hospitality, and is adopting new ways to enhance the renter experience. This is already evident with the rise of the nascent co-living space and hospitality-branded projects. – Benjamin Pleat, Cobu (formerly known as Doorbell Communities)
8. Bohemian, Eclectic Bed And BreakfastsÂ
While I do love a great Airbnb, there is something special about traveling around the country and staying in a proper bed and breakfast, with local, conversational hosts who contribute to a travel experience. From website to bedspread, many B&Bs look so dated online! The future of travel lodging should be a simple and clean upgrade, fiddle leaf figs and white linens, white paint and natural wood. – Courtney Poulos, ACME Real Estate
9. Airbnb-Owned PropertiesÂ
Airbnb is in the early stages of building its own homes for rent. No more owner split — it is the owner. The company will be able to offer a consistent product with regional flavor (zoning still applies). Brokers should attempt to align themselves with this idea and present bundled deals to this type of buyer. Position for the management after that. – Michael J. Polk, Polk Properties / Matrix Properties
10. More Owners Learning The Risks Of AirbnbÂ
Education is key with Airbnb. Many people don’t know all the risks involved. For starters, neighborhood residents are not typically supportive of the idea of their neighbor’s home operating as a hotel. Following local rental legislation will save you from getting fines. Airbnb has insurance, but if stuff goes missing or new damage arises, how are you going to prove the tenant caused the damage? – Chris Ryan, BEYOND Properties Group / eXp Realty
11. Rapidly Changing Hospitality TechnologyÂ
Hotels are now competing with Airbnb. Airbnb aggressively leverages all accommodations to provide an authentic experience. Hotels need to keep up. Technology will continue to drive competition and make it easier for upstarts to compete with major hotel chains. The future of hospitality is going to have to consider demands and consumer customization in real time. – Elliot Bogod, Broadway Realty
12. Collaboration With FinTech StartupsÂ
Hospitality services will increasingly seek out fintech startups to raise money for their new projects. Crowdfunding applied to the travel and hospitality industry shall allow the management to share returns with crowd financers and create unique collaboration opportunities. Those working on new projects would want to start exploring the benefits of this type of collaboration. – Sohin Shah, InstaLend
13. Greater Growth Of Airbnb Portfolios
Today, real estate investors across the country are buying properties, fixing them up and, rather than “flipping” them, keeping them and renting them out via Airbnb. A single Airbnb property in a great location can produce several times the revenue it would produce as a traditional rental. Years from now, many will wish they had been building a portfolio of properties suitable for short-term vacation rentals. – Jeremy Brandt, Fast Home Offer
14. Cheaper, Better Service And Complimentary Breakfasts At HotelsÂ
The hospitality sector took a hit when Airbnb became a nationwide phenomenon. However, the convenience and comfort offered by hotels as a value cannot be overlooked. Hotels that implement better service at an affordable rate will thrive as guests begin to miss the services of hotels in their travel experience. All-inclusive hotels and hotels offering complimentary breakfasts will do great. – David Kaufman, Cleeman Realty Group