What’s Fueling the Vacation Home Resort Trend?
It’s a fact that lodging can no longer be divided into neat categories such as hotels, resorts, hostels, rental homes and timeshares. Though some properties still align themselves with these traditional silos, the lines have been getting increasingly blurry over the last few years: the industry has witnessed the rise of glamping (a hotel/camping hybrid), pod hotels (a hostel/hotel hybrid) and AirBnb Plus (a rental house/boutique hotel hybrid).
Lately, a new hybrid has emerged: the vacation home resort, a concept that combines the amenities and service of a hotel or resort, with the space, privacy and convenience of a rental home — and improves upon both.
Not to be confused with a timeshare or fractional ownership resort, the vacation home resort comprises individually owned single-family homes and/or townhomes that live inside a centrally managed community with numerous on-site amenities and activities. Bookings are made either directly with the resort’s central reservations service, through travel agents, or through big OTAs like Priceline or Expedia.
Since roughly 2004 at least a dozen of these properties have begun sprouting up in and around Orlando, with a few others dotted across the US and the Caribbean. Since the category is niche, it is not specifically tracked by researchers, making exact nationwide numbers hard to come by. However, the concept is increasingly familiar to industry insiders, and is gaining visibility among the traveling public.
So what is behind the rise in vacation home resorts? In a nutshell, it reflects the lodging industry’s efforts to meet the evolving needs of travelers, and the changing nature of the tourism industry.
- Private rentals are on the rise.
Statistics show that travelers are increasingly turning away from traditional hotels and turning toward private short-term rental homes, both in Florida and across the country. A recent Euromonitor study showed that short-term rentals made up about 17% of total available accommodations in the U.S. in 2015, a number that is projected to increase to about 23% in 2020. The sector grew 11% in 2016 alone, nearly twice as fast as the total US travel market. In terms of dollars, Phocuswright estimated that the vacation home sector reached $36.6 billion in revenue in the U.S. at the end of 2018. In 2016, 58% of visitors to Florida stayed in private non-hotel accommodation, and in the greater Orlando area, vacation rentals outpaced traditional hotels for tourist tax revenue. - More space at a lower price.
Vacation home resorts appeal primarily to groups traveling together: nuclear families, multi-generational families, or friends. For this type of customer, hotel rooms are not necessarily a practical option. They lack space and privacy – or charge a premium for it. Vacation home resorts, on the other hand, allow each guest to have their own room and bathroom, plus a kitchen to cook in, a living room, a laundry room, and sometimes even a private pool, typically for half the price of the equivalent number of hotel rooms. The on-site amenities are also included in the nightly rate and can range from swimming pools and splash parks to golf courses and live music. - Standardization of service.
Despite the popularity of the “sharing economy,” travelers who use sites like AirBnb or VRBO to book a home accept a level of uncertainty and risk. Do the photos accurately reflect the home? Is the property actually located next to a landfill? Will the house have dirty floors or leaky pipes? Will the owner be slow to address issues or just plain unresponsive? All of these can spoil a vacation. That won’t happen with a vacation home resort, which guarantees a standard user experience with central booking, professional on-site management and uniformly furnished homes. Each group gets its own clean, spacious house with linens and kitchen supplies, plus peace of mind from knowing that if there’s an issue it will get fixed, or if they have a special request, the concierge will take care of it. The standardized product and service offered by a vacation home resort also make it attractive to travel agents and tour operators, who normally avoid rental properties due to service issues, inconvenience and their lack of connectivity to booking platforms. - Location, location, location.
Orlando is the #1 family vacation destination in the U.S., and the number of visitors is growing every year. So it should come as no surprise that the area also has the highest number of vacation rental units in the state and that the vacation home resort model has a significant presence there. Though Central Florida is ground zero for the trend, the model has the potential to gain traction anywhere traveling families or groups converge in large numbers. Las Vegas, Hawaii, and the Caribbean are just three of many destinations that come to mind. - An enticing business model.
The vacation home resort is not only a fantastic option for travelers, but also for investors. Buyers get a beautiful, modern home that provides a great return on investment and does not require them to lift a finger to maintain. Unlike timeshares or fractionally owned homes, there are no restrictions on how long the owner can stay in their own property – though they typically don’t want to. They want to maximize revenue through short-term rentals, which can yield an average 6% return per year. The business model is a win-win for both traveler and investors, so it follows that it will continue to grow in popularity, edging out other models.
The vacation home resort concept is a potential game-changer in the hospitality industry. These “horizontal hotels” tap into the evolving needs of modern travelers, who increasingly value space and privacy, and appreciate the value for money such properties offer.
In an era where new hotels are being built with ever-smaller rooms that cost more per night, the vacation home resort offers a refreshing counter-trend; for the price of one room in a 4- or 5-star hotel guests can stay in a fully equipped home-away-from-home with the whole extended family – even the dog.
In short, vacation home resorts give customers what they want, which we as hoteliers should all aspire to.
About the author: Garrett Kenny, who originally hails from Dublin, Ireland, is one of the most well-known names in Central Florida real estate. He is the founder and CEO of the Feltrim Group, a property and resorts development company that has sold over $900 million worth of property in Central Florida to date, much of it a vacation rental real estate. Feltrim also developed and manages the innovative Balmoral Resort in Haines City, a vacation home resort. The author of the book “Buying and Owning Property in Central Florida,” Kenny regularly appears on TV and radio in the US and abroad, and actively supports charitable causes in his local community.
