Vacation Rental Management 411: A Comprehensive Overview of Best Practices for Renting a Room or Home to Guests for Profitable Short-Term Stays.

By Julie Davies and Breanne Ellis

Renting a room or an entire home to guests for short stays can be profitable, or it can create loss and liability. Understanding and applying proven strategies can benefit you and your guests. This book presents best practices for vacation home / short-term rental management, including an overview of this industry, regulations, accounting, marketing, reservations, guest and neighbor relations, maintenance, housekeeping, design, decor, security, technology, opportunities, challenges, and more! This is a valuable resource for all hosts, as well as the approved textbook for college courses, industry seminars, and the STR certification course. Whether youve been renting your home for years or are new to this emerging industry, there is much within these pages to help you become a better STR host.

If you think you cant learn any more about the short-term rental business, think again. You can! This book runs the gamut of advising you how to operate a short-term rental with professionalism and class! This is a must for anyone in the hospitality industry; I highly recommend this small investment to better your business (Mike Jensen, longtime vacation rental host and travel broker, Fine Travel Experiences).

The vacation rental class and the valuable information in this book exceeded my expectations! Learning guidelines and standards are essential to professionalizing this emerging industry (Paula Caballero, realtor, property manager, and international STR host).

Often the most complicated of issues unravel unless a new course is achieved through education and open communication. Once everyone is educated on an issue and is willing to discuss it rationally, a compromise can be found (Mayor Carolyn G. Goodman, city of Las Vegas).

• Language: English
• Publisher: iUniverse
• Release date: Jul 12, 2018
• ISBN: 9781532052811

Julie Davies

Julie Davies and Breanne Ellis combine decades of lodging management experience with respected research, case studies, resources, and practical tips you can use to make your STR more successful.

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Copyright © 2018 Julie Davies and Breanne Ellis.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

The information contained herein is shared to support the educational process and promote discussion. Resources and references may be the work of authors and contributors with varied opinions. The sharing of this information is in no way to be construed as a recommendation, agreement with, adoption by, mandate from, or endorsement of the views and materials in this textbook (by the authors, editors, contributors, links, or educational institution). Some of the content involves regulatory and legal issues of interest, but it is not designed to give specific legal advice pertaining to any particular circumstances. It is essential that readers obtain professional legal counsel before acting upon any of the material contained in this book. Information is provided to aid the reader in his or her continuing education, discussion, and individual research.

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ISBN: 978-1-5320-5280-4 (sc)

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Library of Congress Control Number: 2018907195

iUniverse rev. date: 07/10/2018

CONTENTS

Preface

Introduction

About The Authors

SECTION I: AN OVERVIEW OF THE TRAVEL AND TOURISM INDUSTRY

Chapter 1 Businesses That Serve Travelers

Chapter 2 The STR Industry Evolution

Chapter 3 The Vacation Home/Short-Term Rental Industry

SECTION II: REGULATORY, FINANCIAL, AND SAFETY CONSIDERATIONS

Chapter 4 Laws and Regulations Affecting STR Businesses

Chapter 5 Accounting, Financial Statements, and Reporting

Chapter 6 Policies and Procedures

Chapter 7 Safety and Security Practices

SECTION III: DEFINING THE PRODUCT AND SERVICES

Chapter 8 Design, Decor, and Equipment

Chapter 9 Amenities and Special Features

Chapter 10 Food and Beverage Considerations

SECTION IV: ORGANIZING THE MANAGEMENT STRUCTURE

Chapter 11 Internal and Contract Support Teams

Chapter 12 Human Resources

Chapter 13 External Support Teams

SECTION V: MARKETING STRATEGIES

Chapter 14 Market Research

Chapter 15 Forecasts and Pricing

Chapter 16 Promotional Strategies

SECTION VI: RESERVATIONS

Chapter 17 Reservation Sources and Procedures

Chapter 18 Systems and Agreements

SECTION VII: MAINTENANCE AND HOUSEKEEPING

Chapter 19 Housekeeping Procedures

Chapter 20 Regular and Preventative Maintenance

SECTION VIII: TRENDS AND OPPORTUNITIES

Chapter 21 Multiple Properties

Chapter 22 Industry Trends, Tools, and Resources

PREFACE

When I am asked how the idea for this book came about, the simplest answer I can provide is this: Because there’s a need. While this answer is short and sweet, it couldn’t be more true.

More and more individuals are renting out their vacation homes or bedrooms on a short-term basis (STRs), and more and more travelers see this as an affordable and exciting option. In many cases, it’s a positive experience for both parties. However, sometimes it can be disappointing for the guest or disastrous for the host. How many of us have heard stories from friends and family members about negative experiences from a stay at a short-term rental home that was ill-equipped, poorly maintained, or just plain sketchy?

Conversely, from a homeowner standpoint, I’ve heard countless stories about kind people whose beautiful homes are not securing the bookings they need in the sea of vacation rental options. Those receiving reservations are having an increased challenge to ensure that guests behave properly while staying in their STRs. Additionally, many are unable to obtain good reviews or repeat bookings because they aren’t equipped with the tools they need to create a positive and inviting experience for their guests, along with a streamlined hosting experience for themselves. And many hosts are not able to obtain an STR business license.

I opened my first B&B over thirty years ago, and I’ve owned and managed many sizes and types of lodging options for guests over the years. As a former hotel general manager and senior housing executive, I understand the training, regulatory compliance, and education that needs to take place to create a positive, comfortable, and safe environment for each guest. I also know how to market that experience to the public.

Most vacation rental owners don’t possess this level of experience, but they’re expected to manage a professional hospitality property without the resources to provide the best possible experience for their guests—so it’s no wonder many guests and owners have had negative experiences with STRs! Something needed to change. Education is the key to positive outcomes.

My thirty-plus years of hospitality, education, marketing, and public relations experience has been applied to my own rental properties and contributed to my family’s success in filling reservation calendars at healthy rental rates while obtaining five-star reviews from our guests. Behind the evident success are also examples of problems we’ve encountered—and mistakes I’ve made that I worked through, corrected, and aimed never to repeat. Some of the best lessons I share with other hosts resulted from challenges, and the strategies we developed to overcome them.

I’ve also been heavily involved in my community and in municipalities across the nation to help shape legislation to protect the rights of vacation rental owners, neighbors, and guests. This work continues to allow me to see the broader scope of the industry from many viewpoints and ask hundreds of owners about their experiences. Some of their stories have been heart-wrenching; while others are delightful. I knew that I had to do something to share proven best practices and experience with other owners. In addition to drawing much of the information from decades of my knowledge, education, and experience, I’ve enlisted the help of others, such as industry-specific experts and my team.

My family and I daily experience what all STR managers encounter, and we see industry trends from this practical perspective—as current STR hosts. My youngest daughter has contributed education and experience from her degrees in Hospitality Management and International Affairs and Global Enterprise as well as her work in the international sector—both within our STR management and in writing this book. She has won awards and esteem for her hard work, education, and research dedicated to topics such as hospitality, international business, and social media as a tool for marketing in the travel and tourism and international education industries.

We’ve scoured books and articles to include industry standards and statistics in our research. My oldest daughter is a talented photographer. In addition to contributing quality images, she has shared expertise in enlivening marketing materials and promotional strategies through stories, music, and visual images. My husband has been a great support and lends the perspective of a professional from an unrelated industry who learns and applies hospitality industry standards within his contributions to our endeavors.

Finally, since there few accredited resources available that are dedicated to short-term rental management, much of our research has come from educational resources and time-honored practices within the hospitality industry in general (including my decades of educating and certifying hotel industry professionals). We’ve also invested in qualitative research: interviews, case studies, and stories obtained from hundreds of short-term rental owners, property managers, hotel professionals, service providers, real estate agents, educators, city and state legislators, investigative reporters, and guests. We’ve been busy!

So as you can see, while the question of how we came about the idea for this book might be simple, the process of creating this informative book actually stems from decades of experience from many individuals, combining knowledge, research, and passion to create a resource that is not only useful but essential in building an industry that holds incredible potential for both owners and guests.

Education is a proven catalyst for creating positive outcomes. I hope our work to appropriately fill these pages will help you propel your endeavors into an enjoyable and enduring success story!

Julie Davies

Author, Educator, and STR Host

INTRODUCTION

This textbook is designed to provide readers with an overview of vacation home/short-term rental (STR) best practices and information that will assist with successful operation, regulation, marketing, general management and hosting enjoyment of short-term rental (STR) properties. The information is based on quality research and proven success regarding this emerging STR industry.

If you already host or manage guests for short stays in a home or home-like setting, this book allows you to learn time-tested principles as well as insights and innovations from people who share your interest. And if you serve this growing industry as a property manager, real estate agent, regulator or code enforcement officer, reservations agent or hosting platform, web designer, housekeeper, another service provider—or as a guest—there is sure to be something within these pages that will help you.

Topics covered include an overview of the Travel and Tourism Industry, important laws and regulations, financial considerations, and safety and security practices. We walk you through aspects of how to ensure your STR is visually-appealing and hospitable to guests while understanding food and beverage regulations to keep both you and your guests safe. We help you figure out if you should seek outside assistance and what resources are available to you from both an employee and independent contractor standpoint. You will learn how to price your unit so that it is competitive while still being lucrative, and how to market your home to the public. We also discuss how to manage your guests once they have booked your property, housekeeping procedures, and what to do if something happens to your home during a guest’s stay. Once your property reaches success, we walk you through the potential to manage multiple properties and provide you with tools to stay on top of industry trends so that you can continue to provide an excellent experience for your guests. What you find in this book can enhance an ongoing educational journey to better understand this exciting, emerging industry as a trusted and respected STR professional.

The text was originally written to accompany an intensive course for industry professionals who wish to earn the use of the respected STR Certification Seal, which shows that course graduates have taken their industry knowledge to a professional level. We thank the College of Southern Nevada (CSN), the Nevada Division of Higher Education, and the City of Las Vegas for understanding the community and educational benefits of supporting this course when we launched it in 2017. Since then, the response from communities across the USA, and even internationally, has been incredibly positive! We appreciate all who have provided input into this process and who have supported our courses and this book.

Part of our research included interviews with hosts and guests, whose stories validated and better-defined industry best practices. You will read some of their stories. As we share time-honored strategies for increasing profitability, we also explore industry innovations and even offer tips for avoiding burnout. In our interviews, hosts repeatedly noted the value of being able to create unique and enjoyable experiences for their guests. Hosting a home requires more work and interaction than generic lodging operations—but creating a special experience for guests and seeing their delight from our work can be wonderfully rewarding! We expanded this thought with the addition of cinematic twists to chapter headings that are meant to help transition to a new topic, add another layer of meaning, inspire a smile, and lend a reminder that hospitality management should be creative and uniquely enjoyable. There’s an art to hosting well.

Some of you will use this work as your textbook for a semester course or the two-day intensive STR Certification Course. Many of you will use it as a reference that you can go to when you have a question or are working on an aspect of your business that we cover in detail within these pages. We have included links to sources for more information, realizing that this book couldn’t hold every detail of the many topics we introduce.

We realize that most people don’t read a textbook like a novel, from cover to cover, and some of the sections will deal with the same concerns but from different angles. We may repeat information at times within a different context, which can enhance learning and allow for you to concentrate on a particular aspect of your business. We encourage you to use the resources in this book and come back to the index often, as various questions within your STR management arise.

Education can open our minds to new opportunities and success. Visit www.scriptsandtrips.com/promotions or www.strcertification.com for a calendar of classes and events. We have an e-course, as well as live classroom sessions of the STR Certification Course available in several areas of the country. Also, watch for intensive courses that cover specific topic sections in more depth.

Thank you for participating in this educational adventure!

1STRCSeal.jpg

This STR Certification Seal is awarded to vacation rental/short-term rental (STR) owners, managers, and agents who have taken their industry knowledge to a professional level by passing a certification examination after attending an intensive course taught at colleges and universities. (STR Certification Seal artwork created by Jennilyn Watson for ELDERxL, 2017)

ABOUT THE AUTHORS

Julie Davies opened her first bed & breakfast inn over thirty years ago while she was a hotel executive. With degrees in public relations, psychology, international relations, and hospitality management, she has used her knowledge to manage successful companies and educate within the hotel, retirement, assisted living, dementia care, and short-term rental industries—varied types of lodging. She’s authored textbooks, travel guides, articles, seminars, curriculum, policy manuals, and legislation. Julie was designated a permanent faculty member of the American Hotel & Lodging Association Educational Institute (AH&LAEI and EI of AH&MA) and is an adjunct professor at several colleges and universities. Her research and trending skills, along with the ability to translate her findings into quality curriculum and sound business practices, has earned her professional awards, designations in several fields, and longtime consulting clients. Her passions are travel, education, networking, literary adventures, and her faith and family. Having created successful businesses in several states, Julie and her husband enjoy the benefits of STR ownership, frequently gathering three generations under one roof for family meals, games, hikes, theme park adventures, and bedtime stories together. What Julie enjoys most about teaching is learning from discussions that extend beyond the classroom, allowing beneficial networking with industry friends. She recognized the need for continuing education and communication among STR professionals as well as those working with and governing this emerging industry. Julie hopes this book and the STR courses will help all find common ground and create positive interactions that benefit our industry and our communities.

Breanne Ellis grew up in hotels and inns and has traveled to nearly every continent, immersing herself in customs and cultures. She received her ATA in culinary arts and hospitality management when she was sixteen years old and was one of the youngest professionals to earn the Certified Culinarian designation (CC) from the American Culinary Federation. Breanne went on to study hospitality management and Spanish at the University of Nevada, Las Vegas. While at UNLV, Breanne and her teammates won several first place awards at the International Tourism Student Conference in the Netherlands for their research on the use of social media for destination marketing, becoming a published scholar at age eighteen. Her fascination with other cultures led her to a Master of Science in International Affairs and Global Enterprise at the University of Utah. She worked at both the University of Utah and Drake University as a Study Abroad Advisor, helping students identify options for academic programs and housing abroad as well as orienting them regarding the ins and outs of international travel. In addition to exploring the world, Breanne enjoys instructing in the group fitness setting and in higher education, and spending time with family and friends. She loves how managing STRs has allowed her family to connect in spite of living long distances away from one another by creating a home-away-from-home that all can enjoy.

SECTION I

AN OVERVIEW OF THE TRAVEL

AND TOURISM INDUSTRY

Chapter 1: Businesses That Serve Travelers

Chapter 2: The STR Industry Evolution

Chapter 3: The Vacation Home/Short-Term Rental Industry

Be our Guest!

—Beauty and the Beast

Guests are the prime reason for hospitality industry businesses. People from varied backgrounds and professions are becoming STR hosts. You bring a wealth of experience, cultural diversity, and knowledge to this emerging industry.

New hosts can learn much from the seasoned professionals who have weathered the many challenges and changes within the entire travel and tourism industry. Also, those who have worked in this industry for many years can learn from the fresh perspective, insights, and skills that newcomers share.

Here’s a look at the history of tourism, the diverse mix of businesses and industries that serve travelers, historical and recent developments, and how short-term rental (STR) homes fit within this exciting and ever-changing industry.

2.%20airplane.jpeg

Travelers are discovering the benefits of staying in unique short-term rental homes.

CHAPTER 1

Businesses That Serve Travelers

LEARNING OBJECTIVES:

1. Review the foundation and roots of the travel and tourism industry.

2. Define tourism industries and lodging categories.

3. Introduce industry statistics and trends.

4. Explore hotel industry categories and development.

5. Discuss some of the economic and technological changes that affect STRs.

While we may come from different places and speak in different tongues, our hearts beat as one!

—Harry Potter and the Goblet of Fire

While many of us who have hosted STR guests understand our role within the world of hospitality management, some STR hosts new to hosting may think that you are just renting out a room or a home as a way of earning some extra money. It may not even seem like a business at first, let alone part of the largest and fastest growing industry in the world, the travel and tourism industry. However, it is!

Mahatma Gandhi said, I do not want my house to be walled in on all sides and my windows to be stuffed. I want the cultures of all lands to be blown about my house as freely as possible. But I refuse to be blown off my feet by any.

You can share your home with guests and enjoy the benefits of their association—as well as their payment for the privilege and comfort of an overnight stay within a home-like setting. Knowing and working within your role as a member of the travel industry and business community will help you avoid being ‘blown away’ by changes in these industries and regulatory agencies that govern vacation home/short-term rental businesses.

The Travel and Tourism Industry

Travel and tourism is a term that covers the many industries that support travel to an area. Our businesses can be as diverse as the many types of people we serve and usually blend into a harmonious balance of service and hospitality. A variety of businesses and attractions make up this massive industry that provides products and services to travelers, such as:

• Lodging/Accommodations: facilities that provide overnight accommodations for guests or residents. Lodging industry categories, including vacation homes and other short-term rentals (STRs), will be detailed later in this section.

• Food and Beverage Establishments: restaurants, fast food, bars, clubs, lounges, snack bars, convenience stores, grocery stores, food trucks, delicatessens, tasting tables, culinary tours/adventures, festivals, and other places that provide food and beverages.

• Entertainment/Recreation/Activities: theaters, showrooms, clubs, recreational facilities, athletic arenas, gaming/casinos, cultural/ethnic/holiday events, parks (neighborhood, state, federal, amusement, water, theme, etc.), sports fields and stadiums, celebrity shindigs, galas, fairs, festivals, spas, museums, galleries, health retreats, reunions, trade shows, charitable fundraisers, landmarks, and other entertainment and recreation.

• Transportation: taxicabs, rideshare services, buses, airplanes, trains, ships, cars, trams, trolleys, people movers, bicycles, motorcycles, scooters, horses/donkeys/camels, helicopters, and other means and modes of transport.

• Retail Stores: malls, gift shops, markets, clothing and shoe shops, warehouse and box stores, boutiques, galleries, department stores, discount malls, mega-marts, specialty stores, and other places to shop.

• Service-Related Tourism: medical tourism, shopping tours, conventions, corporate meetings, trade/tech shows, educational sessions, historical events, tours, causes/charitable efforts, and other services that support and entice travelers to an area.

Businesses and Industries that Benefit from Tourism

In many areas, tourism is the primary industry, and it also has a significant ripple effect on the local economy through related industries. Businesses that may appear at first glance not to be part of the hospitality and tourism industry are, in fact, likely related.

Dock workers may not feel they’re in the tourism industry, but without them transferring goods onto a hotel delivery truck, there may not be food in the restaurants for tourists to purchase. A floral shop may receive a majority of orders from wedding chapels that specialize in pricy, themed weddings for out-of-town visitors. A bike repair shop, located a distance from hotels, may receive the majority of rental and repair business from tourists who are staying in nearby STRs.

The last example brings up one of the strengths of a vacation home/short-term rental. STRs often channel new customers to local business owners who are not situated in high-density tourist areas, such as grocery stores, boutiques, specialty shopping centers, restaurants and delis, sports shops, and a variety of other services and retail stores. They also increase visitor volume to state and national parks, museums, and other attractions.

STRs Support Local Businesses

STR guests don’t travel with all of their food and equipment in their suitcases. They purchase essentials and visit local restaurants and stores. They rent cars and sports equipment. They shop in grocery stores and pharmacies.

STRs provide needed lodging near senior care communities and hospitals where families may visit loved ones who are undergoing medical treatments. Youth groups or sports teams can travel with fewer chaperones when they are sheltered together in a home rather than in separate hotel rooms linked to all hotel guests by a common hallway. Convention vendors may need extra space to store equipment.

There’s increasing demand for the alternative forms of accommodations available within the STR lodging segment due to societal changes and elevated awareness of the benefits of renting a home for short stays.

Industry Predictions and Trends

Statistics regarding the lodging industry often included hotels, motels, and perhaps some timeshare properties and long-established bed & breakfast inns. Charts rarely include STRs, and particularly homeshare/owner-occupied short-term rentals. However, as the STR industry started tracking its own data, other organizations began incorporating them within lodging analytics.

Statista analyzed STR growth and predicted that the industry would continue to grow by over six percent annually and reach over $23 million in U.S. market volume in 2022. Average revenue per user (ARPU) is estimated at $450.

According to Skift, "this cottage industry (STRs) has blown up. The industry is believed to be worth $100 billion, with the U.S. accounting for just over a quarter of that—and Research and Markets predicts the global vacation rental market will close in on $170 billion by 2019. Meanwhile, Skift calculates that in the first four months of 2016 alone, vacation rental startups attracted nearly $100 million in venture capital funding, concentrated in the U.S. and Europe."

These results reportedly didn’t consider homeshare/owner-occupied rentals as part of the vacation home/STR market (which would increase their conclusions). Also, they reportedly didn’t account for villas and cottages that may be licensed differently than other STRs in some countries. You can learn which lodging subcategories are included in the studies by checking the notations on the statistical reports.

STR-focused organizations, like AirDNA, Airbnb, HomeAway, and other businesses also show statistical reports quoting varied results. The way they define whole home STRs or homeshare/owner-occupied rentals can dramatically change the conclusions.

STR Demand is Rising

Even though the statistics show slightly different totals (based on varied sources or core data), all appear to agree that STRs are on the rise and are capturing an impressive amount of visitors and revenue. The conclusions also indicate that STRs constitute a respectable amount of tax dollars for local municipalities, infrastructure, community programs, and tourism bureaus as well as significant revenue for local businesses and economies.

Statistics show that vacation home/STR renters stay longer, spend more, and bring more travelers with them than those who rent hotel rooms. STR visitors and owners may also spend more money in businesses not directly considered to be in the tourism industry, but which strengthen the overall economy of the area.

Homeshare/Owner-Occupied Rentals Leveling Off

Another consistent finding among the reports is that experts predict the STR industry to continue to grow at a rate that is higher than that of other lodging categories. However, homeshare/owner-occupied rental has shown a slower growth rate (despite some municipalities setting regulations that only allow for this category of STR licensing). Demand for homeshare rentals has reportedly leveled off and may be on the decline. However, demand for whole home rental has reportedly continued to grow at a rapid rate.

Reasons for travel vary by the traveler, region, profession, interest, travel partners, age group, purpose/business, internal or external motivations, and other factors. It’s important to explore why people travel to understand what kind of accommodations and amenities a visitor, or guest, might need. Moreover, it helps to determine why there is increasing demand for STR reservations.

Lodging Categories

Let’s look at different categories within the lodging and hotel/motel umbrella of businesses and review lodging industry history. Lodging categories within this industry may include:

• hotels (full-service, select service, limited service, chain, independent, airport, commercial, residential/suburban, casino, convention, resort, elegant boutique, ski, beach, suite),

• motels (budget, economy, luxury motor lodges, themed),

• extended-stay properties,

• inns (country, Bed & Breakfast Inn (B&B), ranch, summer/winter),

• cottages,

• dormitories,

• clubs (men’s clubs, country clubs, YMCA),

• timeshare properties,

• corporate apartments,

• hostels,

• campsites/tents,

• retirement homes (assisted living, group home, guest quarters),

• RV Parks,

• condohotels,

• vacation homes/STRs,

• homeshare/owner-occupied rentals,

• tepees, spas, yurts, communes… and innovative forms of lodging.

Hotels

Hotels are the largest segment, and it includes many subcategories. This industry continues to develop new types of hotels and amenity packages as the market changes. Most traditional hotels were designed with a grand main entrance and lobby, front desk, restaurants, gift shops, a beauty salon, recreation/spa facilities, and other amenities. Indoor hallways often afforded alcoved entries into hotel guestrooms.

Motels

In the 1950’s, people traveling by automobile inspired the development of motels, which seemed at the time like a drastic change to the lodging industry when they designed rows of rooms with doors opening to the parking lot using outdoor ‘hallways’ (for convenient access from their cars). Motels had a small registration area (usually with a cot behind the desk for the clerk). Most didn’t have restaurants or gift shops, but some later included recreational amenities.

Inns

Hotels and motels were similar enough to be listed separately but considered as businesses within the same category. Bed & breakfast and country inns were usually considered another category of lodging since they usually required less regulation than hotels and were often located in resort or historic neighborhoods. It took some time for the hotel/motel industry to grant inclusion of inns within their umbrella of lodging businesses.

Market Segmentation and Added Amenities

With market segmentation (and competition), hotels announced more subcategories, such as all-suite, convention, luxury, budget, city-center, airport, and suburban. These properties specialized in specific market segments, reflected in the unique designs and amenity packages. Women began traveling more for business, so hotels added things like skirt hangers, conditioner, sewing kits, and hair dryers. Increased family travel added another set of amenities to certain properties.

Chains purchased many independent hotels and motels or signed up as franchise properties within chains. Technology changed the way reservations were made (and many other traditional tasks within hotels).

Changes in the traveler needs and demands caused some hotels to renovate and add additional services. Increasing demand for larger guest accommodations and more room/beds for families traveling together inspired the innovation of suite hotels that offered the standard bedroom and bath, but usually also included a sitting area with a pull-out bed in the couch, a desk or dining table, and a small kitchenette. Due to increased demand for bed & breakfast lodging and the desire for more convenient morning amenities, some hotels started to offer free breakfast to their guests.

Timeshares

Some hotels were sold as timeshare properties to deal with the overbuilding of hotels in the 1970’s and 1980’s. Timeshare units were divided by the week (and later by point systems), allowing individuals to own a piece of the property, such as the use of a specific unit during a set week every year. The week or points could be used during their owned week each year, and some companies allowed owners to trade weeks so that they could use units at other resorts (through elaborate scheduling systems).

Economic Influences and the Lodging Industry

There seem to be waves of development over the years that affect some industries more than they affect other industries. The Economic Recovery Act of 1981 created tax incentives for new builders, which is said to have caused the overbuilding of hotels and other lodging properties.

The Tax Reform Act of 1986 reversed some of the incentives, which slowed growth. Competition and advancements in technology also significantly changed the lodging industry during the 1990’s and into the new century.

Many lodging industry experts believe that the Financial Crisis of 2007—2008 (said to be the worst financial crisis since the Great Depression of the 1930’s), and technological advances that allowed hosting platforms to book reservations through online purchases, caused the surge in STR openings, especially homeshare ‘bnbs’ or owner-occupied rental homes.

Homeowners who could not sell their homes or find long-term renters began offering a room or their whole house for guest stays of less than thirty-one consecutive nights. Most felt that it was part of the sharing economy or their right as a property owner to earn money through such rentals and many did not obey local laws.

This disruption caused and continues to produce great concern in many communities. In the case of this ongoing STR trend, overall economic recovery has not appeared to slow the growth of this emerging industry as it did with the hotel industry in the 1990’s.

Vacation Rental Homes and Hosting Platforms

Bed & breakfast inns and vacation rental homes have been operating for decades in resort and historical districts (and for many centuries in many cities). In 1995, VRBO (Vacation Rentals by Owner) developed a reservation network among property owners who wanted to rent their home to guests for short stays. HomeAway (funded in 2005) acquired VRBO in 2006 and later aligned with Expedia.

TripAdvisor added STRs to its inventory in 2000. Booking.com (which aligned with Priceline) was established 1996 in Amsterdam as more of a fair aggregator, but it expanded to become another leading hosting platform. Dozens of other hosting platforms and STR booking sites merged with these and other larger entities, but many smaller hosting platforms and STR reservation websites remain independent.

Some organizations established reservation networks long before hosting platforms dominated STR bookings (using