As the Short-Term Rental (STR) industry matures, amenities and features may no longer be sufficient differentiation. The best new opportunities will combine distinctive property and disciplined operations to provide experiences guests can’t easily reproduce somewhere else.
For much of the early evolution of STRs, the proposition was beautifully simple.
Acquire or control an appealing property. Furnish it well. Market it effectively. Make it available on the platforms travelers were increasingly using to find alternatives to conventional hotels.
For RE experts like Jeramie Worley, in Branson, MO, the model has opened an entirely new category of experience, and for many investors, an entirely new way to think about hospitality assets.
But mature categories behave differently than many of the new projects emerging. As supply grows and travelers become more discerning, a nicely furnished home in a desirable location can begin to look increasingly like most every other nicely furnished house in a nice location.
The competitive question becomes more difficult: What makes this asset meaningfully different?
After roughly two decades working with vacation-rental investors and hospitality real estate, Missouri-based broker and entrepreneur Jeramie Worley believes the answer increasingly lies in the experience surrounding the real estate.
Not simply where people stay and where they sleep. It’s about why they came. How they spend their time. How consistently the experience is delivered.
And it’s focused on whether the asset contains something sufficiently distinctive it can’t be replicated merely by furnishing another house and posting another listing.
From lodging to experience
There’s an important difference between providing accommodation and providing hospitality.
Accommodation answers the question of “Where will the guest stay?” Instead, hospitality asks: “What will the guest experience while they’re here?”
Increasingly, that distinction can (and should) affect the physical asset itself.
A property designed primarily around construction efficiency may maximize beds or units. An experience-led property may place greater emphasis on gathering spaces, indoor-outdoor connection, views, privacy, shared amenities and how different types of travelers move through the environment.
It also affects operations.
A collection of individually managed vacation homes can produce very different guest experiences from one unit to another. A branded destination with centralized hospitality management has the opportunity to create greater consistency across communication, maintenance, amenities and service.
That consistency itself becomes a part of the asset, and increasingly leads to greater guest satisfaction, stronger reputation and better profitability as well.
How “place” can become intellectual property
Real estate professionals frequently talk about location as simply a coordinate. But in experiential hospitality, the more interesting question is whether the location contains something emotionally or physically difficult to reproduce.
A mountain view. A vineyard. Historic architecture. A shoreline. A remarkable geological formation. A landscape associated with generations of local memory.
Those characteristics can function like intellectual property (not in the legal sense, but in a competitive sense) for a hospitality asset. Guest experience is an aspect that can’t simply be copied across the street.
That principle is influencing the development of Victory Springs, the Table Rock Lake development Worley is advancing with his partners near Missouri’s Battleship Rock and its iconic cliffs, which have never before been accessible except via the water below.
Rather than clearing the property to create a blank development site, the team has surveyed mature trees and is using smaller excavation equipment and is advancing construction section by section. The goal is to preserve mature trees where reasonably possible, to avoid blasting where practical and to create architecture to conform to the setting, rather than requiring the setting to conform to standard residence styles.
This approach can cost more in planning and requires additional patience. But the nature-forward focus also leverages an economic truth: if landscape is one of the reasons guests will choose the destination, destroying its differentiation during development makes little business sense.
Designing from the customer forward
Worley describes the organizing principle for Victory Springs as “designing from the guest experience backward.”
In practical terms, that means beginning with questions such as Who is likely to travel here? How do they want to spend their time? When do they want privacy and when do they want to gather?
What elements of the setting should become part of the experience? Which amenities create actual differentiation rather than simply adding expense? At Victory Springs, the answers are influencing plans for original floor plans, larger windows, family and multigenerational accommodations, gathering areas, nature access and centralized hospitality services.
Longer-range plans are also considering wellness amenities, accessibility-focused accommodations, retreats and respite experiences.
The “broader principle of “guest experience first” applies well beyond this single Missouri property. When real estate is designed around an identifiable customer experience, architecture, operations and branding begin reinforcing one another.
The value of phased development
Experience does not eliminate the need for capital discipline. In fact, it may make disciplined phasing even more important.
Victory Springs is beginning with a comparatively limited Phase One of 16 structures rather than attempting to place the entire long-term vision into service at once.
That kind of staging can allow a hospitality development to move from thesis toward actual operations while later phases remain ahead.
It also forces a useful distinction between what belongs in the vision and what must exist now.
A development may ultimately envision events, wellness components, specialized accommodations and numerous additional amenities. But the earliest phase still needs to create a compelling guest experience on its own.
For entrepreneurs, this is an important discipline.
- Build enough to demonstrate the concept.
- Operate it well.
- Learn from actual guest behavior,
- Then allow later capital deployment to benefit from those lessons.
Hospitality assets need more than an investment thesis
The most interesting evolution in short-term rental investing may ultimately be a shift from thinking principally about the unit toward thinking about the ecosystem surrounding the unit.
The house remains important, along with acquisition price, financing, operating costs, maintenance and utilization.
But increasingly, the asset’s competitive strength can also depend on elements such as:
- a difficult-to-replicate setting;
- purposeful architectural design;
- centralized operational discipline;
- a recognizable hospitality identity;
- amenities relevant to the intended guest;
- and an experience compelling enough to create preference rather than merely availability.
This is a much more demanding proposition than purchasing a vacation rental that may also indicate where the category is going at large. The next generation of successful hospitality assets may be those that give travelers a reason to choose this place, instead of simply a place.
For investors and developers, that requires a new and different question at the very start:
What experience does this particular piece of real estate make possible that would be difficult to create anywhere else?
