US: STRz attended last week’s Skift Short-Term Rental Summit in New York City – the first part of our content and media partnership with Skift focusing on events this year – and there were plenty of intriguing takeaways to unpick from an agenda containing a host of distinguished industry speakers.
The Summit preceded the launch of our inaugural Short-Term Rental Summit in partnership with Skift in London, which will take place in October, with more information to be announced very soon.
Here are the key takeaways we gleaned from the New York City Skift Short-Term Rental Summit:
- Destinations are pursuing increasingly draconian regulations against short-term rentals – an industry-wide united front will be pivotal to implementing structured regulatory frameworks
STRz editor Paul Stevens co-moderated a session alongside Skift STR reporter Srividya Kalyanaraman on ‘Creating Smarter Regulatory Frameworks’ with Tiffany Edwards [Coletta Consulting] and Merilee Karr [STAA, UnderTheDoormat Group] as panellists, with the main objectives to identify what is impeding regulators and make clear how the industry can form a united front to debunk certain regulatory myths.
In a week when Airbnb filed a lawsuit against New York City Council and a licensing scheme proposed by Edinburgh City Council was deemed unlawful, with both policies being labelled as tantamount to “de-facto bans” on short-term rentals, Edwards and Karr concurred that stringent “over-regulation” is the result of governments not understanding the value of the segment to local economies, the professional standards that the industry is putting in place [accreditation / partnerships / noise monitoring pilots] and a distorted narrative being shared about the negative impacts of short-term rentals, which can lead to knee-jerk reactions from policy leaders.
To counteract this, the two panellists said that the industry collectively [including booking platforms / OTAs] had a responsibility to take account for the situation, whether that be showing communities how short-term rental hosts can benefit communities by being good neighbours or demonstrating to investors how the segment is showing no signs of slowing up despite the enforcement of draconian regulations. Karr and Edwards both agreed that the path forward includes some form of regulation, but to a proportionate level where hosts can continue to earn extra revenue streams, affordable housing supply is protected, and communities are not adversely impacted.
- AI has the power to streamline processes and enhance efficiency but its potential is still far from being realised
Addressing the topic of ‘Understanding the Potential of Generative AI’, Plum Guide co-founder and CEO, Doron Meyassed detailed how his company is streamlining the process of analysing and evaluating vacation rental photos by leveraging AI, resulting in an 85 per cent cost reduction when adding a vetted home. OpenAI tools, such as ChatGPT, have revolutionised listing production by cutting down the time it takes to create a listing and Plum Guide is building models to replicate the decision-making process without sending vetting teams into the homes themselves, while still maintaining a strong NPS [net promoter score] and improved conversion rates.
Ultimately, Meyassed observed that AI’s potential is to expose mediocrity and the need for hyper-targeted offerings in the market: “Reviews eliminated terrible experiences; AI will eradicate the mediocre ones.”
There is still work to be done to understand the potential benefits – and risks associated with AI / machine learning – as recent names generated by AI [including ‘Spanish Swinger’ and ‘The Dustbin’] show, however they also demonstrate the need to leverage the very best of human intelligence and machine learning. In future, Meyassed told STRz that he believes AI will allow people to search in a “more intuitive way” so users can conversationally describe what they want and then browse their most ideal accommodations, not matter how well indexed the data is.
- Tosi: Short-term rentals the “major winner” in the post-pandemic lodging market but issues still to solve around transparency
Laurence Tosi, managing partner of WestCap, called short-term rentals “the big winners” in the post-pandemic lodging market when one considers the booming growth the vertical has experienced since, in the form of companies going public via initial public offerings [IPOs] or special purpose acquisition company mergers [SPACs]. In particular, he sees ADRs as a major opportunity for “hyper growth” in the market moving forward as hosts look for additional revenue streams and more guests dip their toe in the segment as an alternative to traditional lodging providers e.g. hotels.
However, at the same time, the former CFO of Airbnb and investor in Sonder believes that companies that have recently gone public, such as Vacasa and Sonder [both through SPACs], will now have to concentrate on “moderated” growth to ensure they build more sustainable business models. Both firms have seen their valuations plummet since going public via the same SPAC route, with Vacasa’s share price hovering around $0.73 [from a $9.06 high] since going public in December 2021 and Sonder’s dropping 93 per cent on its initial listing price in January 2022.
Both businesses remain unprofitable, have announced extensive layoffs, and have been threatened with potential de-listing from the Nasdaq Stock Market if they do not comply with minimum bid price requirements within the 180-day warning period. Both Sonder CEO Francis Davidson and Vacasa CEO Rob Greyber will still be left with questions to answer.
- The market continues to be uncertain and volatile but continued growth in supply and revenue is expected
Many speakers at the Skift Short-Term Rental Summit referred to the volatility and uncertainty around the current economic environment but Demi Horvat and Jamie Lane from AirDNA stated the case for data-based decisions to inform scenario planning when assessing risk.
Despite the challenges facing the sector in recent years, AirDNA is forecasting that short-term rental industry revenue will reach almost $80 billion by the end of 2024 [just over double the 2019 figure]. This is backed up by demand growth remaining relatively stable and supply continuing to grow, even if that is at the expense of occupancy rates declining slightly for the foreseeable future.
Skift senior research analyst Seth Borko made some similar reservations in one of the introductory addresses to the Summit, and highlighted technology and professionalisation as vital components to shaping the future of the sector. The evidence of this is Skift Research’s newly-published Short-Term Rental 250, which is designed to map out the most influential companies in the short-term rental vendor ecosystem around the worldwide.
- Airbnb is optimistic for the future of urban rentals as a means of broadening inventory and making hosting more “accessible”
Airbnb’s November launch of ‘Airbnb-friendly’ apartments, a listing service exclusively for assets that allow short-term rentals in the United States, reflects the company’s optimism to grow its inventory in urban locations and its desire to make hosting more “accessible” to people amidst a cost-of-living crisis.
The service enables renters to find a place to live and sublet it on Airbnb part time when they are staying away from home, as well as to find commercial landlords [including Equity Residential and Greystar Real Estate Partners LLC] for revenue-sharing agreements that will give them the opportunity to earn and maximise ancillary revenue.
According to Jesse Stein, global head of real estate at Airbnb, 260 properties in 40 US markets are now actively using the service. That marked a significant change from November when Airbnb said that it had observed a 31 per cent rise in the number of single-room listings on its platform in Q3 2022 – something that it labelled as “disproportionate” as more people considered hosting for the first time.
The obvious challenge facing Airbnb is the threat of regulatory hurdles around the world, notably in cities that are notoriously hostile to short-term rentals. Despite that, Stein expressed optimism for the future prospects of the apartment listing service, suggesting that destination markets such as New York City would be an outlier, and Airbnb is keen to promote the benefits for both guests and hosts, as well as the limited disruption to local communities.
STRz will host its inaugural Short-Term Rental Summit in London on 18 October 2023 in partnership with Skift. Tickets available here.