The short-term rental market is having a moment in which both legacy players and new entrants are heralding a swift shift in the industry status quo. The luxury sector of this growing ecosystem is particularly vibrant.
While the luxury short-term rental market has been around for a long time, alternative approaches are proliferating. Marriott International operates Homes & Villas by Marriott International, a small set of professionally managed luxury properties. Google is boosting its roster of vacation rentals with direct connections to property managers such as Vacasa, which recently acquired Wyndham Vacation Rentals. At the same time, a host of small specialized entrants are making their mark.
The Plum Guide and Perfect Experiences are two examples of smaller luxury curation services that stand apart from larger sites including Luxury Retreats, Onefinestay, and Airbnb Plus. By staying small, they aim to differentiate themselves by developing personal relationships with property owners and guests. In that regard, they are well-placed to cater to an affluent customer base that seeks the comfort and consistency of a high-end hotel, with the freedom and space provided by a rental.
While the focus on maintaining close relationships may limit their growth, these smaller companies can have more control over the entire experience. But as competition heats up, the temptation to grow may steer companies away from their original models.
A Story to Sleep In
The Plum Guide is a high-end booking platform and collection of vacation properties in six cities. It has a vetting process in which team members visit the home and host to collect 500 data points scoring everything from Wi-Fi speed to design quality. The Plum Guide offers personalized booking assistance and 24/7 customer service, as well as the option to book daily cleanings, private chefs, babysitters, and airport transfers.
Most Plum Guide customers are 50-something city dwellers who work in creative industries and travel often. This demographic’s definition of luxury continues to evolve and prioritizes neighborhood and chic design rather than white-glove service at dinner and a turn-down service.
The Plum Guide platform initially sought to differentiate itself by adding context to the location of a home rental. “What makes a home not just beautiful but soulful?” asked Iona Carter, head of brand marketing at The Plum. “For us, that means uncovering the stories, secret histories, and colorful contexts behind the spaces that feature in our highly selective collection.”
To do that in its infancy, Plum hired production company Fugitive Media to create podcasts or audio tours for each home, which share stories about a property’s art, antiques, and history. The audio stories were part of a broader marketing campaign built around the concept that homes are unique and distinct enough that they could be gallery and museum exhibits in their own right. The vision was to scale and incorporate “bespoke pieces of content” onto every listing page.
This concept builds upon an industrywide trend in which context lends to the perceived value of a luxury experience. Beyond another awe-inspiring vista or sophisticated service, context gives history and significance to an otherwise pleasant travel transaction.
Yet as the company grew following a $18.5 million series B funding, the audio tours ended and storytelling around each property shifted — a familiar tune when looking at the short-term rental leaders of today. Growth and ambition can lead to less detail. Context and personalization can get lost as these sites seek larger collections and customers.
A Curated Real Estate Approach
Perfect Experiences, parent of Paris Perfect and London Perfect, was founded in the late 1990s, before the expansion boom in short-term vacation rentals. The company today has 300 hand-selected apartments in its inventory. What is unique is its shared-ownership scheme, as well as how growth has been managed by aiding owner purchases
While the company started as a listing and booking platform aimed at luxury travelers, it soon expanded into real estate. Perfect Experiences sells properties two ways. It may help an owner find an apartment, help redesign, and then rent it for the owner. Alternatively, it may purchase and renovate before selling to an owner who, ideally, will rent it part-time through the platform. This sales service, which is part real estate and part design, expands the company’s portfolio with the exact kind of properties that it seeks to rent out.
The target owner is someone who has a $1 million-plus budget to purchase and remodel an apartment in Paris, London, Rome, or Florence. Many owners use the apartment mainly as an investment and only spend a short portion of the year on-site.
Perfect Experiences more recently has developed a fractional ownership program. Paris Perfect Shared was created after the company saw that many of its customers “had the dream of owning a property in Paris but didn’t want the responsibility or the commitment of owning a property fully on their own,” said Lisa Byrne, co-founder of the Perfect Experiences brand. “We saw an opportunity with a built-in target market who were receptive to this message of shared ownership. The first fractional sold out in one month, with a waiting list of buyers. Most are former guests who know and trust us to provide excellent service and care.”
Perfect Experiences is a clear example of a small alternative accommodations company with a hard-to-replicate model. As the short-term rental market has grown, it has expanded its initial model while maintaining its founding philosophy of serving the luxury lifestyle guest. But other companies, like Plum Guide, start losing distinguishing features as they grow. While shifting strategy is necessary in the fast-moving marketplace, small companies that don’t stay true to their unique selling propositions risk being swallowed up by the big guys.