By Nick Falcone, Rentyl Resorts Founder & CEO
The internet ushered hotels into online reservations in 1996. About a decade later, it made any homeowner a rental agent. Today, integrating hospitality and residential technologies is making a growing number of vacationers and remote workers happy, but that’s only the beginning.
Acting in concert with hotels and resorts, real estate developers and investors can generate profits from an emerging trend in vacations.
When you look at the landscape of who’s in the vacation home space, there are two major categories of players—distribution channels and property management companies. Airbnb or VRBO are built for room reservations by the door; an online listing is based on a specific address. Companies like Vacasa manage the units.
Hotel chains segment their brands using price and amenities. Online, they offer consumers choices based on features: single room or suite, king- or queen-size bed, skyline or street view, and the like. The same computer system that chooses the room for guests also reserves their dinner tables, tee times, ski-lift tickets and spa appointments.
The next iteration of vacation travel is offering the best of both at prices ranging from mid-level homes to super-luxury residences. This new approach addresses the shortcomings of vacation home distribution channels such as access to hotel amenities including food and beverage service; fitness centers, spas and salons; and activities for adults and children such as golf and tennis. For hotels and resorts, the system effectively connects those prized attractions to private homes.
To be clear, we are not talking about timeshares. They restrict where and when the consumer can take a vacation. Their access to hotel and resort services may be limited or nonexistent. This business model gives consumers the same freedom that exists now with private-home reservations.
Even though this new technology brings vacation homes and hotels closer, more needs to be done. The biggest complaint that guests have about private rentals is that too often what’s described or shown online does not accurately reflect what they see when they reach the front door. Why? Because the distribution channels do not consistently deliver quality and brand standards.
However, resorts do offer quality-controlled standards. Arrive at a Ritz-Carlton hotel and you will enjoy the same luxury experience as at any of its other 110 locations around the world. The same is true when you check in at Conrad Hotels and Resorts, Atlantis Paradise Island in the Bahamas and similar hospitality properties.
Achieving a trifecta of unlimited consumer choice, consistent quality and access to amenities profits everyone. Travelers, including the growing number of remote workers, can customize their experiences. For example, a spacious private home offers a multi-generational clan privacy not afforded in a hotel, saves money by renting one large house rather than multiple hotel rooms, and delivers a great time at a resort’s amenities. The hotel operator receives new revenue without adding rooms, the residential developer sells units, and the investor sees a healthy return on their money.
For this to all work, though, it takes more than middleware, that software that connects otherwise incompatible computer systems. A corporate go-between must make sure that the experience in the home and resort are well-matched and deliver consistent quality. That entity must attract real estate investors and developers to deliver the private
residences. And the company must properly market the experience to consumers.
That does not happen by accident. Planning is needed from site selection to home design so that the residential community is paired with the right hotel. But here’s the twist: the resort partner does not have to be a hotel. Residential communities such as Margaritaville Resort Orlando, with which our company Rentyl Resorts works, offers a lifestyle built around the Jimmy Buffett brand. Those communities were first designed for the pre-retiree and retiree crowd that grooved to the musician’s hits in the ‘70s and ‘80s. They can be just as attractive to travelers who would like the same experience but in a vacation home.
For those who prefer golf pins to pina coladas, Jack Nicklaus has branded luxury home developments under his nickname, Bear’s Den. Rentyl Resorts is now putting guests in a country club community with golf course and clubhouse privileges.
Committing to these types of projects requires rethinking a business model that has existed since 1869. When a developer creates a planned community, it commits a lot of time and capital, and it spends a lot of money on marketing and sales. All this effort is exerted to attract people who will not buy from them again for a long time, if ever. What if a developer could generate repeat business in a matter of a year or two?
That is the next evolution of the homebuilding industry—finding ways to stay close to consumers. The build-for-rent home has been one of the fastest-growing real estate products in the country for the last decade. Developers that embrace the concept can turn their buyers into repeat
customers the next time they are looking for a vacation rental by offering something remarkably similar to what they purchased.
This new approach changes how residential projects are conceived and executed. When the housing market is hot as it has been in the past year or two, a developer can push sales. When the market favors vacation rentals, the same residences can produce reoccurring revenue streams.
Complementing branded homes with vacation experiences began with companies willing to explore the opportunities the combination created. We are now moving from the experimental to the emerging phase. Over the next five years, we’re going to see this business model become mainstream and gain extreme interest from institutional capital.
While consumers enjoy a new way to vacation, residential developers who get onboard will have another market for their products. Real estate investors large and small will have new ways to generate income. And the professionals who support them—lenders, lawyers, architects, engineers, contractors and others—will have ever-expanding opportunities for growth.