Niche Short-Term Rental Startups Are Saturating the Market: It Can’t Last

Just about everyone has heard of Airbnb. 

What about Vacasa? Bob W.? Ukio? Raus? 

The likely answer for most people, particularly those who do not work in the travel industry, would be no. All five of them are startups with their own niche portfolio of properties that customers can choose from, and several have raised venture capital for proprietary software systems used to book those properties. 

Basically, they could all be seen as competitors with the likes of Airbnb. 

There are many others, and many tend to be made for customers in a specific niche: luxury, dog owner, RVs, yurts, remote moderns cabins, tiny houses with open ceilings to view the stars. 

In competition with the big names like Airbnb, along with big online travel agencies like Expedia, it’s hard to imagine that they could all survive, let alone flourish, long-term — especially with the resources it takes to power an independent software platform on top of property management. 

The travel industry is still benefitting in many ways from a boom post-pandemic, but that won’t last forever. 

In a survey by Hostfully of 375 vacation rental operators, 80 percent of them indicated feeling more competition within their markets than in the previous year. Revenue continues to increase for most operators at the same time — though that trend is already slowing. 

“More vacation rental reservations are being booked than ever, but the competition for those reservations is steep,” Melanie Brown, executive director of data insights for short-term rental data firm Key Data, stated in the survey. “It’s time to reassess your pricing and marketing strategies to make sure you stay competitive.”

Mike Ortegon, who was a global operations director for vacation rental marketplace HomeAway during the time it was acquired by Expedia, has some thoughts. He is now a short-term rental consultant and curator of content and speakers for Short Stay Summit Europe.

He believes that such a large number of independent short-term rental platforms can only exist for so long. 

“I still think there are going to be only three or four major players,” Ortegon said. 

Even now, those big names dominate the market. 

“The rest is a big jumble,” he said. 

Regarding the few he believes will survive long term besides the big players, he thinks something like AltoVita, a platform that raised $9.5 million, could do well because of its focus on business travelers.

Or a luxury brand like Le Collectionist, which just raised $63 million. On top of bookings, the platform offers a bunch of curated services and local staffers to ensure the experience runs smoothly. It comes with a cost — tens of thousands of dollars, even over $100,000, per week — but that’s what some customers are looking for. 

All the tech startups that have raised money are also focused on portfolio expansion. That’s what will be needed to survive, according to the Hostfully survey. 

Some of that is happening via acquisition, which many short-term rental platforms have already started. 

VTrips is one that has been publicly acquiring the assets of other companies. 

Le Collectionist is another, with plans for more. The startup this week acquired The Greek Villas, a Greek luxury villa operator.

“The market is so fragmented with a local champion on every Greek island, every nation, and these are the people we’re also looking at in terms of mergers and acquisitions, said Max Aniort, Le Collectionist co-founder. 

Ortegon expects that all these companies acquiring one another long-term will reduce the fragmentation. 

And Ortegon’s extra hot take: “I also think that one day, we’re all going to wake up and either Amazon and or Google are going to own one of those big four or five.”