In Scottsdale, Ariz., where the sunny weather lures bachelorette party revelers year-round, short-term rental owners are ready and waiting.
Their houses are designed with bright interiors — vibrant wallpaper, neon signs, colorful murals, pops of pink — and resort-like outdoor spaces. There are makeup studios with mirrors, ring lights and swivel chairs where everyone can get ready for a night on the town. Pools, fire pits and yoga areas are highlighted in the listings, designed to catch bridesmaids’ eyes with photos worthy of a glossy magazine.
“We didn’t just design a house,” said Carissa Vivirito, an Airbnb host in Scottsdale. “We designed an entire brand.” With a partner, Nicole Zopolos, she owns three houses under the “Pink Cactus” name that cater specifically to bachelorette parties.
The short-term rental industry, in which people rent out furnished rooms, apartments or houses on platforms like Airbnb and Vrbo, has grown so fast in recent years that supply now outpaces demand across the United States, with homeowners scrambling to convert their second homes or investment properties into cash. But three straight years of declining occupancy rates have left more hosts to fight over fewer guests, driving down prices and forcing the hosts — and the platforms they use — to find new and creative ways to entice renters.
Last month, perhaps in an effort to combat creepy headlines and sketch-show roasting, Airbnb announced a ban on all indoor security cameras (“to prioritize the privacy of our community”). The company, which leads the industry with more than 7.7 million listings, also rolled out a new guest cancellation policy that allows refunds in the event of foreseeable weather events, like hurricanes.
On Vrbo, which specializes in vacation house rentals, hosts now face stiffer penalties, including fees and temporary suspensions, when they cancel on guests. And, seeking to accommodate a growing market segment, Vrbo is counseling hosts to consider allowing pets.
To stand out, hosts are catering more to guests’ concerns about safety and sustainability and their desire to stay with extended family, along with pets, under one roof. Successful hosts have identified their likely potential guests and designed their properties to take a starring role in guests’ vacations.
“They are really seeking experiences,” said Annette Grant, a co-founder of Thanks for Visiting, an online community and podcast for short-term rental owners. “It’s not just about getting an Airbnb.”
A straightforward farmhouse-style rental might have done well in 2021, said Wendy Doris, who owns a short-term rental property and manages 13 others in Scottsdale and other Arizona cities. In 2024, that farmhouse will still be rented, but it’s no longer at the top of the market. “Now you have to be extra,” Ms. Doris said.
Her company, Mostess, offers concierge services in addition to the nightly rental fee, such as a charcuterie board upon arrival, a fully stocked fridge, a s’mores kit for the fire pit and a margarita bar. Her next project is a four-bedroom house aimed at spa enthusiasts, complete with an infrared sauna and a cold-plunge pool.
“People want the house to be part of the adventure,” she said.
Even with the extra perks, hosts are seeing prices sag as more inventory lands on platforms, said Jamie Lane, senior vice president of research and chief economist at AirDNA, which tracks industry data. Supply grew 24 percent in 2022, and another 12 percent in 2023. So far this year, it’s up 10 percent. Demand is also growing, but not nearly at the same pace.
As a result, Mr. Lane said, short-term rental prices were down an average of 1.3 percent in 2023 and are down 1.6 percent so far in 2024.
“Competition is heating up,” Mr. Lane said on a recent edition of the AirDNA podcast. “The investors that are designing and sort of ‘amenitizing’ and crafting their property to meet what guests want are absolutely doing OK. And the ones that aren’t are seeing performance deteriorate and continue to deteriorate. People want the new stuff. They want the properties that are attractive.”
Leverage is swinging in the direction of guests, whose ratings can make or break a property. Airbnb — which last year introduced an “OMG!” section for extraordinary listings — is pushing hosts to seek five-star ratings from renters by highlighting two million properties as “guest favorites,” a feature the company added in November. To be a guest favorite, a house must have high ratings, positive reviews and a reliable host. On the other end of the spectrum, the company removed 100,000 listings in the past year that did not leave guests satisfied. And Vrbo has a premier host program with requirements that have become more rigorous over time.
Five stars is the new four stars, and hosts need to provide a “six-star” experience, said David Krauss, co-founder and chief executive of Rent Responsibly, a company that brings together short-term rental hosts and others in the industry. “You need to go above and beyond,” he said.
Appealing to guests who are interested in sustainability has also become more important, whether that means adding an electric car outlet or limiting single-use plastics, Mr. Krauss said.
He advises hosts to disclose as much as possible in their listings and to practice being guests in their own properties to get a renter’s-eye view of things.
“The era of surprises is long gone,” he said.