The Airbnb revolution is underway turning homeowners with space to spare into entrepreneurs next door. But it’s not as easy as uploading a couple photos of your guest room and waiting for the reservations to start rolling in.Why? Because today’s choosy “guests” AKA renters — led by those omnipresent Millennials — aren’t just looking for anywhere to hang their pork pie hats. They’re also looking for that also-omnipresent “experience” craved by their generation. Which may explain why more “hosts” are getting in on the home improvement game in an attempt to capture their attention…and their bookings. Let’s take a closer look at the meteoric rise of the vacation home rental market, along with its impact on the home renovation market.
A New Market Emerges
Certainly, Airbnb boasts some jaw-dropping numbers. Try 2,000,000 global listings of apartments and houses playing host to 60,000,000 guests in 34,000 cities in more than 190 countries, for starters. And then there’s that whole 1,400 castles thing. (Yes, you can actually set your search parameters to “castle.” Or “treehouse” or “igloo” or “cave” or “lighthouse” or “tent,” or “tipi,” depending on your momentary fancy.) But while Airbnb may be the the biggest and buzz-worthiest name on the vacation rental (also known as “homestay”) scene, it’s hardly alone in staking its claim. HomeAway, FlipKey, Wimdu, 9Flats, House Trip, and Roomorama have all lined up for a piece of the pie…or a spot on the sofa, as the Couchsurfing.com case may be.
And this newfound commoditization of rental marketplaces in today’s sharing economy directly correlates to a skyrocketing global vacation rental market which is anticipated to reach $169.7 billion by 2019, according to a report from Research and Markets.
But this doesn’t just mean a heyday for Airbnb, et al. According to a 2015 report from the Joint Center for Housing Studies (JCHS) of Harvard University, the home improvement industry is also far outpacing growth in the broader housing market. And while it can can be partially attributed to the recovering economy, escalating home prices, and government stimulus programs, there’s another contributing factor: a rise in property owners who are choosing to invest in enticing upgrades in an attempt to cash in on the vacation rental marketplace trend.
Getting in on the Action
Typical Airbnb hosts recoup about 81 percent of the rent on a two-bedroom home, according to Yahoo Finance. In some areas this spikes even higher. Consider top Airbnb cities like San Diego, Miami, Chicago, Boston, and San Jose, for example, where hosts are hauling in as much as $31,000 a year with average nightly rates of just under $250. Not too shabby for a space which might otherwise be left vacant. However, while location may be a primary factor in determining what connects guests with lodging, there’s more to it that that. Which brings us back to the issue of experience.
We’ve already covered location, but what else are guests looking for when evaluating vacation rental accommodations? We went straight to the source. According to a report from Airbnb, a few factors other than location lead guests to choose one lodging option over another. Other key differentiators? Parking, regarding availability as well as whether it’s covered or uncovered; ease of use in terms of both utilities and electronics; and clarity of the listing. (Saying an apartment has a bathroom is one thing; saying it’s shared with six other apartments is another.)
A few additional upgrades and renovations worth investing in, according to the experts?
- Rooms with views (think: decks and patios)
- Family and kid friendliness in the form of big-screen televisions and the latest entertainment systems, swimming pools, and pool tables
- The ability to “dine in” with restaurant-quality appliances, high-end furniture, and appealing lighting
- Other special touches — from luxury mattresses to hardwood floors
And while WiFi is a 21st century convenience, one ages-old commodity rounds out the list: peace and quiet. Windows and window treatments which block out sound and light while enhancing privacy are also must-have money-makers when it comes to getting make-you-or-break-you reviews. (Implicit in this, of course, is the ability of hosts to pitch and pitch smart.) Even in cases where upgrades don’t directly alter rental rates, they may be the tipping point in increasing occupancy during the off-season.
As Airbnb continues to transform the travel industry, its impact will also continue to be seen in the home renovation market with increasing numbers of homeowners angling to get in on the action through experience-enhancing upgrades and renovations. One last thing to keep in mind? While some turn to renting our their spaces to keep the homes they love or to generate much-needed income, others put rental proceeds back into their homes in the forms of upgrades and additions. In other words, you can get them coming and going, if you play your cards right.