What Hotel Executives Know About STR Future

Welcome back to the Short Term Rental Riches podcast. Here again, another week, I'm trying to provide all of you the best insight I possibly can. My team and I have managed over 20,000 guests in my own personal portfolio that's spread across multiple cities. As most you know, I've managed and set most that up living abroad. So I'm coming to you from Columbia right now. But I've got some great data from a recent conference that I joined, data from some of the biggest hotel companies in the world and some of the biggest players in the industry. And it's exciting. And so this is going to be a bit of a hodgepodge episode where I'm going to be giving you some stats that they talked about. Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick actionable items to acquire, manage and scale your portfolio. I'm your host, Tim Hubbard. But I think the over impression is that we're in a pretty good position if we are operating short term rentals or if we're considering it. People are traveling. It's there's no doubt about it. And all of the big players at this conference are very bullish, very bullish in the future. Even if we have a recession, they still think travel demand will be high. Why? Because. Because travel and life are merging. Right. So they started this conference off with what they call the great merging. And we already know this. We already know that a lot of people are working virtually. In fact, Kayak's CEO, who was also at this conference, and they have over 2,000 employees, they're all virtual, which means we're going to be getting longer reservations because people can stay longer. We know that, we've talked about that in prior episodes. But that's great for us as short term rental operators because it cuts down on our operating expenses and it increases our revenue. Right. Because our occupancy is staying higher if we have longer term stays normally. Right. So I want to give you some stats, some information just kind of randomly pick out from this two day conference that I joined. I guess one of the really exciting pieces is that these big hoteliers are seeing the return of corporate travel. So MCR Hotels, which has over 22,000 rooms in the U.S. or I think the top third in the U.S. in terms of hotelier. And they said before the pandemic, 70% of their profits came from work travel and the other 30% was leisure. During the pandemic, corporate travel dropped to 10% and leisure 90%. So they're seeing a big return to corporate travel. And most or the best places they're saying for corporate travel or to invest in the future are places, urban places that have a leisure component. Because if they can attract business travelers, those travelers now have the flexibility to stay around for the weekend or to stay longer. And so if you can couple both those together, that is a good place to be looking, good place to hone in on for potential investment in the future. As you know, if you've listened to podcasts for a while, I like these same places. In fact, most all my properties are in a somewhat urban area and I would say with a leisure component too. So in cities that have a decent population, 500,000 or more I think provide some really good opportunity for investment. Now, it depends on the affordability of the city. We know inflation, everything's just jacking prices up so people are moving to more affordable places. So consider that if you're still on the search, if you found an urban place that's good for corporate travel but also has the leisure component, that's a double win. So that was exciting to see that they've, they're seeing a lot of corporate travel come back already. Kayak, for example, said that 30% of their searches now are for corporate travel. And they have a really easy way of seeing all this data, right? They have this platform just like Airbnb does, and on the backside they can do data mining. They can, they can track where these searches are coming from and what they're searching for. And so they have some really, really good insight. Right now, 30% of their searches are for corporate travel. So along the lines, with this great merging, there's also a sense of professionalism that guests are now searching for, right when, when hotels and short term rentals were not thought of at all in the same picture, a lot of people, the, the quality is kind of has been missing, not across the board, of course, but someone that stays in a hotel for a long time and hasn't stayed in a lot of short term rentals doesn't necessarily trust the quality of short term rentals. So that is a big component in the future or the future success of our short term rentals is making sure that we have that quality. And you're seeing a lot of big brands pop up that have been able to prove that. So Selena, for example, they are, they have over a hundred properties, thousands of rooms. I've stayed in them myself. It's a really cool sort of short term rental living work environment. They've incorporated a lot of things but they're branding and they're growing very quickly and they're. One of the reasons they're growing quickly is because they're able to provide the quality and consistency. So there's some other ones like Blueground has thousands of rooms. Again, they are.

Providing quality and consistency and that's what's allowing them to grow a lot. The VP of Marriott was also on the conference and get this, they started their own short term rental or vacation. It's called Homes and Villas by by Marriott. They started with about 2,000 units in 2019. So before the pandemic they have 60,000 plus properties now. So they have grown 30 times in the last few years. So you better believe they are bullish on short term rentals as well. Of course they've partnered with professional managers so they haven't picked up these properties one by one. But they're really growing this segment because they realize that a lot of people that were staying at their hotel are preferring short term rentals. And now there's different use cases for short term rentals, right? Sometimes it's much better situated for a family versus a hotel room. So depends on the use case too. Marriott sees a lot of their bonvoy members which they have a lot of good data on. They see them booking hotels but they also see them booking the short term rentals. So they have different use cases. Right? So I thought that growth was exciting with Marriott. There is a lot of room for all of us, the little guys in this industry as well. People just enjoy staying in short term rentals and they provide something different. But there is a bit of merging going on between hotels and between short term rentals and that's where we're seeing these brands pop up that can ensure quality. That's where we're seeing things like Marriott Homes and Villas where they're managing their own short term rentals. Now another thing I thought was interesting and this was data from Skift research. They do tons and tons of research on short term rentals and surveys and all this all throughout the year. So check them out. If you haven't heard of them before, you can check out some YouTube videos. Skift Research is the name. But they said by 2025, 62% of over 600 hoteliers that they interviewed said that they would have a fully 100% contactless experience by 2025. So over 600 hotels said by 2025 they were going to have an experience for their guests where there was no contact. So they're not Handing over a key or anything like that. Very similar to our short term rentals are, right. Unless you have a giant villa that has a lot, you know, or a mansion or something that requires a lot of attention. Most of us have a keyless entry system and our guests are checking in and we're not meeting most of them. So hotels are kind of merging in that space a little bit too. So we also heard from Sonder on that call. You may have heard of Sonder before, but They've got over 8,000 rooms now and they've been growing really, really quickly. They are also placing a big emphasis on corporate travel. So I know we all thought corporate travel is gone forever, but it's just changed. You know, there are companies like Kayak that have gone completely virtual, but that doesn't mean people aren't going to travel for work. And when they do travel for work now, they want an experience. So even though a lot of the jobs are gone in a physical office, the jobs that are still traveling for business are staying longer and they want a little bit more of an experience. So I think these urban areas that have a leisure component are really good. I'm excited that the biggest hotel names in the world are super bullish on travel even if we have a recession. So, so real quick episode this week, I'm trying to stay on top of as much information as I can. I am in this industry, I'm growing myself and so hopefully this that provides a little insight for you or some valuable feedback. Hopefully it motivates you that this is an industry that's not going away. And I think it's still a great time to jump into short term rentals if you haven't already. So until next time, I hope you're having a wonderful day and we'll talk to you soon. If you're looking for a ton of free resources, well, you can check out the links in the show notes or head to our website, restmethods.com where you'll find free guides, how to house rules, and my ebook on finding the best short term rental properties. Thanks for tuning in.