By: Brad Greiner, CEO of Open Air Homes and OpenAiRE Brokerage
September 18, 2024
How High Expectations Are Shaping the Future of Short-Term Rentals
In the ever-evolving world of short-term rentals, one question has become increasingly relevant: Are guests expecting too much from their Airbnb stays? At Open Air Homes, we’ve thought long and hard about this question, and our answer is clear. We welcome high expectations because we have high expectations of ourselves.
Operating in the luxury space, we understand that guests aren’t just looking for a place to sleep; they’re seeking an experience that rivals or even surpasses what they would find in a boutique hotel. This mindset drives us to continuously refine our services, ensuring that our properties not only meet but exceed the high standards our guests bring with them. But let’s dive deeper into what this means for the industry and why we believe professionalism is the key to success.
The Shift in Guest Expectations: A New Era for Airbnb
The Wall Street Journal recently published an article exploring how guest expectations have risen in tandem with the prices of short-term rentals. This shift has been especially pronounced in budget accommodations, where travelers are increasingly demanding more for their money. The article points out:
- “Budget short-term rentals charged an average rate of $201 a night from January through July, a 13% increase from last year.“
- Meanwhile, luxury properties saw a slight decrease in average rates, yet guest expectations have continued to grow.
This is a trend we’ve observed firsthand. About ten years ago, we realized that budget travelers were often the hardest to please. Their expectations for a high-end experience at a budget price created friction that was difficult to resolve. As a result, we’ve shifted our focus almost entirely to the luxury market, where guests are willing to pay a premium for a premium experience. But even in this space, expectations continue to rise, and it’s our job to meet them.
The Importance of Guest Experience: Learning from Boutique Hotels
To understand where the short-term rental industry is headed, it’s useful to look at the evolution of other service-based industries. An interesting comparison is to the early days of Uber, where charging cords and bottled water were considered luxuries. Now, they’re the norm, and their absence is often met with frustration. In the same way, the amenities and services that once set short-term rentals apart are now considered standard. However, with an Airbnb rental, there are 100+ “charging cords” to make sure are included and well-maintained.
At Open Air Homes, we focus heavily on the 360-degree guest experience. During the onboarding process with new homeowners, we can often predict the success of a property based on the owner’s willingness to invest in guest experience. Homes that do well are those where the owner understands that every detail from high-quality linens to well-stocked kitchens to fast, reliable Wi-Fi contributes to a guest’s overall satisfaction.
The Challenge of Meeting Expectations: Not All Properties Are Created Equal
However, not all properties achieve this level of success. We have homeowners whose properties enjoy occupancy rates nearing 90-95% in Los Angeles, with consistently high nightly rates and five-star reviews. On the flip side, we have what we call our “problem homes” properties that struggle with lower occupancy rates and less-than-stellar reviews. These are often homes where the owner is reluctant to make necessary updates or add amenities that guests have come to expect.
Key Points for Success:
- Continuous Improvement: Regularly updating and maintaining the property is crucial.
- Guest Experience Focus: Every detail matters, from linens to kitchen supplies.
- Understanding Market Demands: Luxury travelers expect premium experiences and are willing to pay for them.
In our 13 years in this industry, we’ve learned that success is not just about setting high prices; it’s about offering a truly great experience. We are fortunate to be in a position where we can turn down properties that we believe won’t meet our guests’ expectations. But for those homes we do manage, we are constantly pushing to improve the guest experience, because we know that this is the only way to achieve long-term success.
Are Guests Expecting Too Much? We Don’t Think So
Some might argue that guests are becoming too demanding, but we believe that their rising expectations are a sign of a maturing industry. As the WSJ article notes, “Guests rated luxury properties an average of 4.87, with a cleanliness score of 4.89 in 2024, according to AirDNA.” These numbers indicate that high standards are now the norm, not the exception.
What’s needed more than anything at this time is a professionalization of the industry. Hosts need to look at great boutique hotels and see what they are doing well and strive to emulate that level of service and attention to detail. We believe that Airbnb, too, needs to invest in good hosts and recognize that not all hosts are created equal.
Unfortunately, we’ve seen instances where Airbnb’s one-size-fits-all approach to guest complaints has penalized even the best hosts. For example, we had a guest complain of a bad smell in a home that has consistently received a 5-star rating. Despite sending both a property manager and a cleaner who found no odor whatsoever, Airbnb sided with the guest and issued a refund. Airbnb, a tech company, doesn’t have a local team to check these claims, and we have seen over the past few years a consistent siding with the guest in nearly all situations. This kind of decision-making can be frustrating for professional hosts who take pride in their work and invest heavily in maintaining their properties.
The Path Forward: Professionalism and Continuous Improvement
At Open Air Homes, we’ve thrived in an industry that has seen many ups and downs, thanks to our unwavering commitment to high standards. We’re here for the high expectations that guests have, and we train our property managers to ensure every detail is covered. We believe that by continuing to raise the bar for ourselves, we can help shape the future of the short-term rental industry for the better.
Yes, guests have higher standards, but we don’t think that’s a bad thing. If anything, it pushes us all to be better. We hope that Airbnb and other platforms will start to recognize the value of consistent, professional hosts and provide us with the resources we need to succeed. In the meantime, we will continue to invest heavily in our direct booking channels, knowing that our success depends not just on meeting guest expectations, but on exceeding them.
