Short-Term Rentals Can’t Rely on Tech to Solve Its Labor Shortages — Yet

Technology, powered by artificial intelligence, is coming after many jobs. But in the short-term rental industry where human capital is vital, labor shortages are still a problem. 

Cleanliness and good housekeeping are cornerstones of hospitality. And as users of short-term rentals increasingly expect hotel-equivalent service, delivering that experience comes with a cost — and without the necessary workforce. 

“I don’t see human workers getting out of the picture for at least another ten years,” said Guy Westlake, founder of Lavanda, which sells property management software to student, multi-family, co-living, and serviced apartment rentals. “Robots cannot clean and maintain apartments yet.”

That said, Westlake maintained that it’s harder to find the workforce willing to do the manual labor at a particular price point feasible to the short-term rental market. 

The Old Normal

Labor shortages in hospitality aren’t new. The pandemic may have made it more acute, but it’s a problem the industry has been coping with well before the ‘work-from-anywhere’ times. 

As short-term rentals grow in every market and expand to newer ones, the manual workload in maintaining the properties have proportionately increased. 

“The average number of tasks per day, per property have steadily increased,” said Jeremiah Gall, founder and CEO of Breezeway, a property operations platform for the short-term rental market. “And there is the need for quality assurance, if the work is outsourced — a second crew that comes in to inspect and make sure everything looks great.”

Gall noted that guest expectations put pressure too. 

“Guests are expecting a hotel-like experience at a vacation rental,” Gall said. “10 years ago, you took your own sheets, toiletries to a rental, but now that’s changed — we know everything is going to be sanitized and very clean when we check-in.”

The national average cost of cleaning for a 1-bedroom property in the United States was $60.68 in Q4 2021, which was an 18.31 percent increase compared to the previous year during the same timeframe.

But cleaning costs vary depending on the location and type of property. In 2022, the average cleaning fee in the U.S. for a private/shared room on Airbnb was just $47 per stay, while the average fee for a house with five or more rooms reached $333, according to data from AirDNA.  But overall, cleaning fees have risen by 28 percent since 2019. 

Not surprisingly, a lot of this can be attributed to stringent sanitation policy required during Covid — that alone pushed cleaning costs by 11 percent in 2021. 

But also, a lot of local workforce in holiday destinations do not depend on the hospitality industry for work anymore. A lot of the workforce are abandoning labor-intensive manual jobs for higher-paying remote roles that have opened up opportunities everywhere.

“With remote work being prevalent now, people living in leisure destinations get an online job, which is making the already-existing problem more acute and difficult now,” said Steve Trover, CEO of Better Talent, which manages staffing needs for the vacation rental industry. 

Trover added that historically, in vacation destinations, it used to be that resorts and hotels hired seasonal workers, but after Covid, that’s becoming harder to do too.

“There is really no fix for this, “ Trover said. “Companies are being aggressive in attracting housekeepers. Costs have gone way up, and the pay disparity is widening the gap between demand and supply — demand is higher than ever for every single role.”

So what does this mean for users? Well, higher average daily rates. Companies including Sonder and Airbnb (in some markets) have done away with cleaning fees. But it’s a cost that gets billed into the price some other way.

“Cleaning fees may be going away, but costs are not. And rising costs mean guests pay more,” Trover added.

This is not the case everywhere — 52 percent of properties in the U.K. do not charge cleaning fees, compared to only 13 percent in the U.S.

Is There an App for That?

There may not be a way around replacing manual labor for essential tasks like housekeeping and maintenance, but there is a way to make it airtight and efficient. 

That should explain the rise of software solutions for the short-term rental market automating just about everything else. 

“Anything that a guest is not going to feel or experience should be automated,” said Gall. “The time and resources saved can be then spent on amenities and services guests do experience.”

Gall added that the short-term rental industry is very technology-forward. “It’s an industry that understands that it is multi-disciplinary and thanks to the nexus between property management and hospitality, it has a better ecosystem of point solutions now.”

TurnKey, acquired by Vacasa, rolled out technology for cleaning inspections, staff verification to ensure 24-hour buffer between stays in response to Covid.

And this has resulted in an influx of guest experience startups, according to Simon Lehmann, co-founder and CEO of AJL Atelier, a consulting firm specializing in the private accommodation and vacation rental industry. 

“We have seen a lot of companies who have started to outsource their customer service teams to the Philippines, for instance,” Lehmann said.  “Virtual assistance and other tasks like reservations and marketing are being either automated or outsourced.”

An interesting outcome of this is that secondary roles, that are location-agnostic are being automated. 

“It is counterintuitive, but you had a marketing team, guest services roles,  reservation agents where the headcount is being reduced,” said Trover. “Companies used to have fairly large guest services and dispatch teams that have been reduced and optimized by technology.” 

Paying the Price For It

The shortage of labor faced by the short-term rental market is both the cause and effect of an expanding industry. 

The vacation rental industry has been long criticized for reducing the supply of affordable housing and pricing locals out of their hometowns. 

In tourist markets that have seen a rapid growth in vacation rentals, locals that would otherwise be employed by the industry have been priced out of those places. Even second-tier towns, from where people commute to bigger cities, have become core markets for rentals. 

On a national basis “a 10 percent increase in Airbnb listings leads to a 0.42 percent increase in rents and a 0.76 percent increase in house prices,” researchers at the National Bureau of Economic Research and the University of California, Los Angeles (UCLA) and the University of Southern California found. 

“Cost of living and workforce housing are massive issues,” Trover said. “This problem isn’t going away, especially with rising inflation, so companies better be looking at affordable housing for workers, because those robots are not coming anytime soon.”