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Short-Term Vacation Rental Company To Standardize Guests' Experience

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Short-Term Vacation Rental Company To Standardize Guests' Experience
D. Alexander co-founders Alex Allison and Dustin Abney

A new Denver-based company is taking the uncertainty out of short-term vacation rentals by purchasing single-family homes and branding them like boutique hotels.

The company, D. Alexander, is the answer to guaranteeing a positive guest experience that companies such as Airbnb, VRBO and HomeAway cannot because they don’t own the homes they rent, D. Alexander co-founder Alex Allison said.

“We saw a gap in the marketplace from a consumer standpoint,” Allison said. “Airbnb is being treated as alternative lodging, but there are no brand standards. Over the last two years, travelers have been looking at Airbnb as hotels but they’re not getting what they expect.”

Allison and co-founder Dustin Abney are former Zillow executives.

D. Alexander buys homes, updates them, installs new, modern furniture and provides care products such as shampoos, lotions and soaps. It is a more affordable option than a vacation club like Inspirato, which caters to high net worth individuals and doesn’t own the underlying asset.

Inspirato has three membership levels:

  • The Key membership for $1,150 a month allows members to book homes up to six months in advance.
  • The Family membership for $2K a month allows members to book homes up to a year in advance and provides one complimentary Inspirato vacation. Members also can share it with their families.
  • The Executive membership for $3,250 a month allows members to book homes up to a year in advance and provides two complimentary Inspirato vacations. Members also can share with family, friends and colleagues.

After the first year of membership, members pay annual dues of $3,700.

By comparison, D. Alexander's nightly rates will range from $300 to $700 a night, depending on the size of the home, market inventory and amenities such as pools, hot tubs or golf carts, Allison said. 

The company generally looks for four-bedroom, four-bath homes that are friendly for larger groups and families. Allison declined to disclose how many homes the company has already purchased until the company officially rolls out them out for rent.

D. Alexander avoids markets like Denver that have stringent regulations that only permit people to rent their homes through companies like Airbnb if it is their primary residence. 

“We just don’t buy in those markets,” Allison said. “Usually, that occurs in major metros and urban markets. They have to regulate it to a higher degree.”

Instead, D. Alexander looks for properties in resort towns that are generally reliant on tourism as their primary economic driver and have a relatively low supply of traditional lodging. While the company is not yet disclosing the exact location of its holdings, Allison said they are, for now, primarily in the Southeast. 

D. Alexander is joining Homes & Villas by Marriott International in the home-sharing industry. Marriott’s version is in 100 markets in the United States, Europe and Latin America. Others in the space include AccorHotels and Hyatt, which operate Onefinestay and Oasis Collections, respectively. 

Marriott uses select property management companies that are already managing homes to list those homes on its platform. Marriott customers who want to list their homes must work through one of Marriott's approved property managers. The property management companies are responsible for providing professional cleaning services, 24/7 support, high-speed WiFi, premium linens and amenities. 

Allison said hotel-branded short-term home rentals will become an asset class within the hospitality sector. He said it is a similar scenario to about 10 years ago when Starwood Waypoint Homes, now Invitation Homes, acquired 17,000 single-family homes and started operating them as long-term rentals. 

“We see the same thing happening with single-family short-term rentals,” Allison said. “As the category matures, investors understand how to operate these assets more efficiently and at scale and build a hospitality brand around it.”

Alternative travel accommodations accounted for 8.6% of total revenues generated by the entire accommodation sector in 2018, according to Skift Market Report. Revenue for the sector is expected to grow 30% in 2019 to reach nearly $30B, making alternative accommodations nearly 11% of the total market.

“There are a lot of room nights being absorbed by Airbnb and VRBO,” Parker, Colorado-based hospitality consultant Bob Benton said. “In the resort markets, you can really see the impact, but it’s hard to see it in the larger, traditional markets.”

While some people like knowing the quality and level of service they get from international brands like Marriott and Hilton, Benton questioned whether standardizing short-term rental homes is a concept that will work. 

“In theory, it sounds like a good idea because you know what you’re going to get,” he said. “But if I go to someplace in China, do I really want it to look like the same place in North America, or do I want more of their local culture? How do you reflect the culture of the area in that type of a concept?"