you're doing it wrong: the market is NOT saturated

Welcome to the cashflow diary daily. I wanted to begin responding to things holding many of you back in the short-term rental industry. Recently, an article by Business Insider was making the rounds on LinkedIn, and I feel it's important to address it. In short, Business Insider is wrong again, and I want to set the record straight.

in this issue…

📢 ANNOUNCEMENTS: We have some exciting news about our upcoming Clubhouse event! Don't miss it!

🤔 YOU'RE DOING IT WRONG: Are you a short-term rental operator equating activity with accomplishment and currency with proficiency? 🤦‍♀️ Don't worry; we've got you covered.

🌟 YOUR MARKET IS NOT SATURATED: Despite what some fear-mongering headlines might say, the short-term rental market is far from saturated. There are countless untapped opportunities beyond vacation rentals.

🔗 LINKS TO HELP YOU DIVERSIFY: Looking to branch out into different types of short-term rentals? Check out our hand-picked links to help you get started, from houseboat rentals to tiny cabin vacation rentals.

announcements:

• LEDA is coming!

  • Our upcoming Clubhouse event, LEDA - Live Every Day in April! Join us for a month-long celebration. Join us on Clubhouse today; click the link of the Cashflow Diary Cartel to get in on the action!

you’re doing it wrong
your market is not saturated

As someone who closely follows the development of the short-term rental industry, I disagree with the notion that a bust is happening. While there have been some setbacks and challenges, these are mainly due to ignorance and misconceptions about the industry's workings rather than any inherent flaw in the model.

Moreover, I don't think that oversupply is a real problem, as the market is still in its early stages and has much-untapped potential. So let me tell you why you’re doing it wrong.

Many short-term rental operators are confused about their accomplishments and proficiency. Just because they are getting paid doesn't necessarily mean they know what they are doing.

It is similar to the real estate investors who thought they knew what they were doing in 2004-6 but benefited from economic forces out of their control. In economics, a simple concept of supply and demand affects the price.

High supply and low demand result in low prices, whereas low supply and high demand increase prices. However, the situation is more nuanced than this.

There are at least 60 individual use cases for short-term rentals, and a vacation is just one of them. For instance, insurance companies like ALE Solutions use short-term rentals when an insured's house floods or they are displaced in similar situations.

Anyone with a chronically ill child knows that every Ronald McDonald House has a waiting list.

By the way, you realize that those displaced by the happenings in Ukraine are staying in short-term rentals on good old USA soil (they just aren’t staying in your “Airbnb,” huh?)Can we agree these aren’t “vacations”?

Short-term rentals, just like retail stores, have variations that cater to different expectations and needs of the customers.

It's a common misconception among short-term rental operators that has operated for eight years means you know what you're doing (One or Two units or houses for eight years is barely 100 reservations served over that time, we’ve done more than that in a month).

In reality, the short-term rental industry is still in its infancy. There are countless use cases beyond vacation rentals, such as housing for medical tourism (you see what I did there?)

Just like how Walmart, Target, and Nordstrom each have their target customer and meet their expectations, short-term rentals vary from low-end to high-end versions catering to different needs and expectations of the customers in the same category of use case.

It's important to note that just because there's an oversupply of one type of short-term rental doesn't mean it will necessarily impact the success of other kinds. In the same way that having five Wal-Mart locations next to each other won't necessarily affect the target market of Nordstrom, an oversupply of one type of short-term rental won't necessarily affect the success of another kind.

It's not the city's fault if a particular type of short-term rental isn't successful; instead, it's the responsibility of the operator to understand the market and offer a unique value proposition that meets the needs of their target audience.

Although I don't have the time to expand further on this issue, it's clear that there is still much to be learned and discussed in the short-term rental industry. The industry is still nascent and barely out of the NICU and oversupply isn't possible if we consider these various use cases.

The industry has not yet reached marketplace acceptance, with the early majority still to enter the market. The lack of understanding of Jevon's paradox and the wrong economic model is causing operators to feel like opportunity is being squeezed.

Additionally, operators must understand their business and prioritize customer satisfaction over cost savings. While college degrees and newspapers may not necessarily provide the necessary tools to read between fear-mongering headlines, it's essential always to seek advice and counsel from reliable sources.

Now, go get more units.

links to help you diversify your short-term rental use cases:

Thank you for letting me know.

that’s it, for the moment…

J. Massey

PS: Here’s a way we both can grow: