13 Mar Vacation Rental Week
Happy Vacation Rental Week! This week, March 9-13, is the inaugural Vacation Rental Week – put on by VRMA (Vacation Rental Management Association), this week is intended to spread awareness about the positive impact that professionally-managed vacation rentals have on guests, property owners and local economies worldwide. According to the Vacation Rental Management Association, 2019 revenues reached $58B and is expected to grow significantly.
A Quick Introduction
For those of you who are not familiar with Model55, we are an interior design firm specializing in designing, purchasing, and installing model apartments, common spaces, and vacation rentals for the very large umbrella of multifamily housing providers. Our roots come from the senior housing industry, and through the years as our organization has grown, some of our providers have asked us to provide our services in other types of assets they own -particularly in the market-rate multifamily housing industry.
So with that, we took our process and just translated it into what their design needs are. In the past year, more and more of our multifamily clients have been exploring this new market segment called short-term or vacation rentals and today, I’m sitting down with Pauline Cabotage, our short-term and vacation rentals Practice Leader to explore and investigate this marketplace some more.
Sue Durfee (SD): Hi Pauline, thanks for joining me today.
Pauline Cabotage (PC): Hi Sue! Thank you so much! I’m so excited we’re getting a chance to talk about this more in depth.
SD: I think a great place to start would be to define what is the professionally managed vacation rental/short term rental market?
PC: Sure! Vacation and short-term rentals are types of “alternative accommodations” in the hospitality/lodging sphere. Vacation rentals are, like, the classic beach house a family might rent down at Cape, while short-term rentals specifically are these new, trendy, “apartment-hotel,” types of spaces often located downtown. STRs, while relatively new, is already 10% of the market, and as our traveler needs and preferences change, so will the landscape of hospitality accommodations.
SD: I can imagine, with this rapid growth there have been a lot of questions or thoughts for traditional multifamily operators. How do I get into this game? Where do I start? Based on your experience can you share with us a little bit how multifamily operators can enter into this segment?
PC: It’s been a bit of a recent trend that multifamily operators are coming into the STR sphere. In the past, we’ve seen them sign master leases with large operators, but more and more, they are choosing to manage their own short-term rentals in addition to their standard model. At its very core, it’s a smart business decision. It diversifies their income, it accelerates the return on their investment by decreasing the lease up period and generating income during that time. For multifamily developers and operators looking to enter the STR space, I would say… Start with checking your local legislation!
SD: I can imagine government is starting to create legislature as they start to see the rise of opportunities in this market space, too.
PC: Yes, and it’s important for city legislators to consider how STRs might affect a city overall, so their involvement makes sense. With the recent regulation and enforcement in the short-term rental industry, it’s very important to be cognizant of what we can actually do, in order to provide travelers and the transient population with this kind of accommodation.
SD: Keeping in mind that we are a design firm, and that we love to create beautiful spaces, tell me about design from the perspective of an operator offering short-term rental lodging options.
PC: I think to cover that, let’s first talk about what makes these vacation or short-term rentals so much more appealing than a traditional hotel. Their primary demographic is a younger traveler, and so, speaking from the point of view of millennials and Gen Xers, cookie-cutter design with a million clones throughout the brand isn’t necessarily appealing. We are looking for a more unique experience that speaks more to our style and lifestyle. The design factor of a short-term rental is critical to how I make the decision on which one I’m going to book when browsing through AirBnB or any other platform. I’m looking for that Instagram-able moment. I love a good Insta-story!
SD: That always makes me think of the famous painted wings in Nashville, TN. When you talk about an Instagram-able moment, that brick wall is such a destination for visitors to that city so I can imagine that the interiors have to speak to the target guest profile to be hip and cool. If a bunch of girlfriends are headed to Nashville for the weekend, they want this really cool interior that they can photograph and post on Instagram and Snapchat with all their friends.
PC: Absolutely! What we’ve found is that vacation and short-term rentals are uniquely-positioned to really embrace that local aesthetic and vibe because of the neighborhoods that they can be in. A lot of STRs are in really cool downtown neighborhoods or historic areas, where, often traditional hotels are just too big for. Traditional hotels have a lot of overhead, they need to be able to support a lot of staff for their in-house services, and not everyone needs that. The draw of STRs and Vacation Rentals is, “Here’s a unique space. You’re in the heart of downtown, you’re 10 steps away from that city’s hotspot.” They’re in more interesting and vibrant neighborhoods.
SD: I know that there’s a really interesting section of Brooklyn called Williamsburg which is now a huge destination for folks who are visiting New York City. So people are really making the effort to cross the Brooklyn Bridge and visit this community. So I can imagine there are a lot of STR options in that space.
PC: Absolutely. And speaking of design, we talked about just cool parts, but I want to highlight that to Model55’s credit, we have an experienced team of professional interior designers who know and value not just the insta-story factor, but also the practicality of the space. At the end of the day, something might be beautiful, but if I knock down a lamp every single time I open a closet door, or if I have to crab-walk between the TV and coffee table, I’m not going to have a good time.
SD: Our years of experience here at Model55 and our expertise in the space planning, it definitely translates to this industry to make sure that the guest is comfortable in the space.
PC: And that goes so far towards crafting a delightful experience for your guests. At the end of the day, for every vacation rental and short-term rental operator that we work with, we want to help you get those 5-star ratings. Thoughtful design sounds very basic, but it’s surprisingly easy to overlook for non-professionals. I admire the folks who love to roll up their sleeves and DIY it, but at the end of the day, a lot of people underestimate the time, labor, and quite frankly, skill that goes into one: math — making sure that all the furniture pieces fit, and two: tracking all the items as they come in, installing them, it’s really a herculean effort.
SD: It is a very time-sensitive endeavor and it takes a lot of human labor hours to manage the process from inception to installation. And if you’re looking to enter into this space, or a multifamily provider is looking to take a floor to convert a number of units very quickly from a traditional lease where the resident would be bringing in their furniture, to a furnished environment, where they’re hosting guests, they need a lot of bandwidth. So, Model55, because we’ve been in this space so long, we have these best practices in place that we can help them ramp up faster and more efficiently.
PC: I agree. And to build on that, I think one of the key strengths that we can offer is our network of partners — of furniture manufacturers, stagers, and installers. It’s easy to jump on any e-commerce site and purchase a dresser, but a cheap dresser can take 4 hours to build and fall apart in two days. Being cognizant of the guest use is so important in making the decisions of which products to buy. We don’t just ask, “does this piece look good,” or “will this piece fit in the space,” but we also ask, “will this piece stand the test of time?” And the verdict varies per manufacturer of course, but we have our experience to see if an item is structurally sound.
SD: That is great to keep in mind. So I’m going to ask you, from personal experience, share with me some of those a-ha make it memorable interiors or elements of an interior design that you experienced out in the field.
PC: During my travels, I’ve really come to appreciate the basics of thoughtful and holistic design. For example, I once stayed in a small studio with dismal closet space. But, the dresser which doubled as a TV stand worked well for clothes storage, and there was also a luggage rack. In another property I visited, it was an industrial loft with polished concrete beams and floors. Throughout the apartment, there were layered rugs and throws, which really warmed the place up. The rugs were especially helpful in keeping my toes from touching the cold floor! My last practical example is super basic, but draperies. I’ve visited a lot of properties that either didn’t have any draperies at all, or, had drapes that were too long and had definitely been dragging on the floor a while. I appreciate when I feel I can enjoy a private space and sleep in!
I’ve also been fortunate to experience some “wowza!” moments. I love collage walls – they can be time-consuming for the installer, but they can be a great focal point. I‘m very indiscriminatory when it comes to design. I love different styles! As long as its authentic, and feels like the city I’m in. I’ve been into “luxe chic” recently, with a lot of soft pastels and different textures contrasted with shiny metallics. Overall, I feel super fortunate I’ve experienced a lot of different styles, and am excited to create more beautiful spaces.
On top of the furniture and decor, though, I value the personal touches that an operator would provide. Like good coffee or ear plugs, and a fully-stocked kitchen I think goes a long way. Not everyone wants to have to eat out every meal when traveling. It’s a good feeling to know that when I am in a place not my own, the person who put it together thought about it as if they were staying there, too.
And that’s part of what Model55 offers! We have a fully curated list of things that make a home a home. Good design can get you far, but now let’s make it functional, and let’s make the guest’s stay great!
SD: You made a point that it might not just be someone reaching a tourist destination, where they plan on eating out multiple meals. Perhaps it could be a business traveler who is there on a ten-week assignment, and they’re tired of eating out, and they want to cook for themselves and eat at home. Or perhaps its’s a relocation where a family is being moved across the country and they’re going to be in these short-term rentals for a period of time. They don’t want to be driving around and going out for every meal. So thinking about what that guest experience is going to contribute to them getting that 5-star rating that we talked about earlier.
PC: Absolutely! And I think what’s really cool is that I feel I’ve experienced the short-term and vacation rental industry on both sides of the coin. Both as a traveler, because it’s my preferred type of accommodation, and also, as an operator. In a previous role, I managed launching new cities and new properties for a global short-term rental operator. To me, when I experience a space that I feel is thoughtful, it makes me think very highly of that provider.
SD: So if we have multifamily operators, owners, or developers who are interested in exploring this space of vacation and short-term rentals, how would they go about doing that?
PC: You can e-mail me at firstname.lastname@example.org, or head on over to Model55.com and click on the Vacation Rentals page. On the form, enter your name, company, and project information. Obviously, the more info, the better — for example, project size, location, budget — is super helpful in crafting a personalized and thoughtful strategy on how we can get design and furnish your space with the products and timeline that you want. One of the things I want to highlight is that here at Model55, we want to get you to market as quickly as you do. We want to help you start generating that income as soon as possible.
SD: Absolutely, sounds great. Well Pauline, thank you so much for taking the time to meet with me today. I’m really excited to share this information with the folks out there and happy vacation rental week!