Hey folks – Walker here, Nectar’s Head of Growth.
Last week, I was fortunate enough to attend the (first ever!) IMN Short Term Rental Forum in Austin.
Hosted by Information Management Network, this new conference is a testament to the explosive growth we’re seeing in the short-term rental market — and the attractive opportunity that it represents for investors.
For Nectar, it was the perfect forum to engage with investors, developers, lenders, property managers and fellow vendors in the short-term rental space. And suffice it to say, we’ll definitely be back!
Between the panels full of industry expertise and (especially) a few riveting conversations at the hotel bar, I learned quite a bit about major trends and issues in the industry.
Here are our top takeaways from the event, in no particular order:
It’s an exciting time to be in the STR game. In some ways, it’s a land grab — no pun intended. There’s so much opportunity because the big-time players really haven’t entered the market in full force (yet). We’ll see how this upcoming recession plays out, but at least in the next couple years, I expect to see the industry take a large shift toward institutionalization. it will be a totally different story.
Nobody has emerged as the dominant player. Vacasa, one of the biggest operators, only has about ~1% of market share in the U.S. It’s almost a guarantee that today’s big players will continue to buy up the smaller operators as they push hard for more market share.
When it comes to underwriting short-term rentals, there’s simply no one-size-fits-all solution. There’s always going to be a push for automation and improved data, but when it comes to underwriting today, it’s still more art than science. Data like AirDNA is incredibly helpful — but it’s just one input. You still need to draw your own insights and conclusions and really dig deep into every deal.
As the top operators in the space, along with Airbnb, push toward unique experiences, I expect we will never fully reach the formulaic underwriting you see for many other asset classes. At least for the higher end assets. There will always be a need to underwrite each deal on it’s own merits.
LP investors are going to ask questions. Lots of them. Here are a few question themes I heard repeatedly at the conference:
Industry regulation is by far the biggest unknown for anyone in the short-term rental space. There’s a push toward increased regulation, especially in urban markets. At the same time, companies and industry associations are throwing major resources toward lobbying initiatives to block these regulations.
My personal thoughts about STR regulation and investment:
Did you attend the IMN Short Term Rental Form? What were your takeaways? Share with me here on Twitter!