From TravelTech to PropTech: Three Reasons Why The Short-Term Rental Discussion Is Shifting Towards Real EstateUntil recently, the conversation around short-term rentals (STR) has centered around travel & hospitality. What began as a fragmented cottage industry (vacation rentals) for independent owners has now ballooned into something much more pervasive. Now, there is another side to this story developing. The corporate real estate industry is more vested in the topic, particularly as consolidation, flexible leasing, and space-as-a-service become more prevalent across various commercial and residential ecosystems in urbanized markets. So what are the key trends now merging these two worlds closer together? And where do these two sides meet? 1. Consolidation More recently, it has become widely apparent that the short-term rentals segment (outside of traditional hotels) is a massive category and part of a bigger paradigm shift in the way that housing and accommodations are managed more generally. Supply has barely kept up with demand. Airbnb, Booking.com, Expedia, Google and other online marketing & distribution platform revenues have soared over the last decade. During this period of growth, the industry has also become much more professionalized with institutional owners, operators, developers, and property management companies getting into the STR mix. That's because STR is now working its way into the real estate conversation as a real metric used by asset managers to calculate Net Operating Income. What started with peer-to-peer rentals and private owners has quickly evolved, with new operating models and partnerships stretching from corporate real estate to nationwide multi-family housing builders. This shift opens up a big can of new industry terms, concepts, and relationships that should be cultivated for longer-term success in the space. Consolidation and technological integration will continue to sweep across the built environment. This convergence will become the lead story driving the future of STR, hospitality, and housing more broadly. 2. Technology Technology is at the center of this convergence. The pace of innovation is intense on both sides. Generally speaking, proptech is more focused on the building management side, while traveltech is more focused on customer acquisition. Further consolidation will take place, as these two sides of the same coin move closer together. PropTech One term that the travel and hospitality industry should track: PropTech. Just as the travel industry has gone through its digital transformation over the past decade, so too has the real estate industry woken up to the digital revolution. Over the past couple of years, the Real Estate community has rallied around this buzzword. Run a Google search and you will find mountains of blogs, publications, startup competitions, and conferences dedicated to PropTech. The term is broad and roughly encompasses the impact that technology has had on how the world finances, designs, builds, manages, markets, and brokers real property (I suggest following cretech.com to get in tune with the ecosystem). Understandably, short-term rentals are now part of that PropTech discussion. A few real estate terms for the travel industry: Tenant experience, asset utilization, NOI, multifamily, real property, single-family rentals, smart buildings, cash flow modeling. TravelTech One travel industry term that the real estate industry will get more familiar with: Revenue management. Much of STR tech discussions now focus on understanding supply and demand and optimizing pricing and marketing to maximize profit. What originated in the airlines industry has pervaded into traditional hotels, and more recently into short-term rentals. Many third-party revenue management solutions now exist, with some operators building their own technologies. Institutional owners, developers, and big property management groups will grow along side this ecosystem, as buildings become more flexible with integrated STR impacting investment performance. Other TravelTech terms for the real estate industry: Channel management, online distribution & marketing, metasearch, mobile bookings. A Word On Mobility Airbnb is still a 'travel' app, but mainly by industry association and the manner in which the company markets itself to the end consumer. In a seamless platform-driven world where housing is universally accessible, 'travel' takes on a new meaning which is more akin to seamless mobility - in the general sense. In other words, distance traveled no longer defines the industry category. Traveling between cities is mostly the same experience as traveling from one side of town to another. Different modes of transport, but with familiar digital interfaces, apps, and service providers. The same applies to length of stay. Short-term rentals and long-term rentals once kept everything in their neat industry categories. Short-term belonged to travel. Long-term belonged to real estate. Technology is now reworking the way we think about space. 'Flexible' is the new buzzword. Flexible also means that industry coverage of the short-term rentals phenomenon will move further into Real Estate territory. Those working in the space have a lot of reading on their hands. In this context, Airbnb becomes a short-term tenant acquisition platform, as much as a travel marketing and distribution platform. Recent partnerships and acquisitions point to a clear new focus on professionalized rentals and connecting to bigger property management groups. 3. Space-as-a-Service (SpaaS) Hotels and inns were the first space-as-a-service providers. The term "hospitality" is really another word for division of labor and outsourcing of certain tasks to third parties. When traveling, we outsource the construction, maintenance, and service provision of our accommodations to trusted hospitality brands. We share this supply with others, and, when the need arises, we utilize those services at a premium. Adding multifamily and converted commercial inventory into the STR/hospitality mix has spawned an entire ecosystem of new operators and firms. Legacy hotel players, with their huge capital reserves and existing infrastructure, have been slow to integrate into the category, or are gobbling up market share through investments and acquisition. Space-as-a-Service more generally is a total paradigm shift in the way that the real estate industry finances, designs, builds, fills, and markets spaces. What started with freelancers, startups, and coworking has now become a pervasive office space model for larger enterprises. As in hospitality, SpaaS brings various segments of the RE value chain closer to the customer. Investors, developers, landlords, and other actors now need to consider 'operations' - on top of leasing, maintenance, and rent collection. Fundamentally, SpaaS changes how real estate is packaged making it easier for existing players to consolidate and grow into new categories. WeWork tried to go all in with their WeLive concept, but their 'blitzscaling' approach with its office product stretched the company too thin with limited capital and management experience to execute on the full vision. As the big get bigger, various SpaaS operators and brands will inevitably seek opportunity to branch out and franchise into new categories. Just as hospitality went through a massive wave of consolidation, so too will other categories of SpaaS operators become open to new mergers and strategic partnerships. Conclusions Categorizing the bigger transformation now taking place across the built environment is a challenge. The pace of change is extreme. Industry classifications fall in and out of mode. The world is no longer flat. Technology has completely upended notions of real estate that have pervaded modern culture for centuries. Stay anywhere, sleep anywhere, work anywhere. Business-to-business media and events are also the highways and byways of modern global business. This will not change. However, the short-term rentals discussion will certainly expand beyond its traditional travel & hospitality roots. Fascinating times. Stay informed! | 
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