Fears Of Short-Term Rental Culture Clash Are Overblown, Study Says
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More multifamily developers are considering opening chunks of their buildings to short-term rental operators. By dedicating a few floors of apartments to short-term guests, they can shorten lease-up, increase operating income and reduce tenant churn.
Some developers are holding back due to a common fear: a potential culture clash in their luxury buildings between guests and residents.
But a study compiled by Stay Alfred suggests that today’s business and leisure travelers look a lot more like full-time residents than developers may think. Fears of infighting seem to be largely overblown.
“There’s a misconception that guests are different from residents, but that’s no longer true,” said Eric Anderson, who led the study for Stay Alfred, which partners with luxury developers to turn units in their buildings into vacation rentals.
The study collected feedback from over 4,000 guests who have booked rooms with Stay Alfred. The vast majority of these guests — 76% — are over the age of 35, with a median age between 45 and 54. Most are high earners, too: 67% had annual household incomes over $100K. While most were using Stay Alfred for leisure, 30% were business travelers.
Especially in cities like Nashville, New Orleans and Denver, which attract visitors who like to celebrate, developers are often wary of opening up their buildings to short-term rentals. The study should give developers peace of mind; Stay Alfred’s guests are largely indistinguishable from their full-time counterparts.
That the vacation rentals offer guests more space and amenities tends to attract a clientele outside of the weekend visitors.
“Most of our guests are looking for a longer stay,” Anderson said. “They may be here for a several days, so they appreciate having in-unit laundry and a little more space to spread out.”
Still, he said, full-time residents may not want to hear the whirr of rolling suitcases outside their doors. One tactic that has proven successful in preempting conflict is building out a separate entrance or lobby area for short-term guests. Stay Alfred works to lodge guests on different floors than full-time residents. At shared amenities like fitness centers and pools, the company limits guest usage.
Further, Stay Alfred screens guests before they can reserve apartments, and keeps tabs on their stays to address any issues.
In some cases, guests are not just behaving like residents, they are becoming residents. At the 505 Nashville, a luxury multifamily development where Stay Alfred leases 10 floors, seven Stay Alfred guests signed yearlong leases within the first six months of the building’s opening.
“The main boosts we gave to the 505 Nashville team were helping them lease over half the building within its first two weeks, and helping them refinance 18 months ahead of schedule,” Anderson said. “But our guests becoming full-time residents was a lovely bonus, and it shows the success of the model.”
Anderson believes that within a few years, offering short-term rentals will be “de rigueur” for new luxury multifamily buildings, but Stay Alfred has even bigger plans.
The company’s eventual goal in the multifamily space is to partner with a developer to build a cooperative network of properties. Residents of one building could use a version of Stay Alfred's recently launched rewards program to receive highly discounted stays at the company's other locations.
While most amenities are on-site, Stay Alfred is hoping to give these developers a leg up by giving residents an amenity that follows them around the country.
“This is a totally new weapon in the amenity war,” Anderson said. “You’re not just getting guaranteed rent from Stay Alfred, you’re also getting access to a whole network of other properties.”
This feature was produced in collaboration between Bisnow Branded Content and Stay Alfred. Bisnow news staff was not involved in the production of this content.