Short term rental has become one of the fastest-growing sectors in the real estate market in recent years. The industry, however, faces various challenges, and ideas for their solutions provoke a wave of comments – most recently around the statement by the Minister Katarzyna Pełczyńska-Nałęcz regarding the need for changes in this area.
The main challenges of the short-term rental industry revolve around legislation, competition, rising customer expectations, changes in tourist preferences, property management issues, societal acceptance, and the seasonality and fluctuation of demand for these services.
The Necessity for Regulations
The industry faces local regulations that limit the number of days owners can rent their properties. Paris, New York or Barcelona, for example, have imposed restrictions on short-term rentals to counteract negative impacts on the local community’s housing market. These regulations aim to limit activities that increase property prices and reduce the availability of long-term rentals. As a result, businesses and property owners must find new ways to adapt to local regulations, possibly resulting in extra costs. “The Polish market is still at a different level of development compared to the Spanish or American one, although of course I would like our country to attract as many tourists as, for example, Barcelona,” says Marcin Dumania, President of the Sun & Snow Management Board. “Short-term rentals are only developing in Poland, so it is necessary to observe trends and consider regulations – such as the introduction of a registry mentioned by the Minister. It is a good idea. Such a registry would help estimate the market and prevent the spread of the grey zone. Based on the analysis of properties rented short-term versus the overall supply of apartments, one could come to sensible conclusions and consider further regulations.”
Competition
The short-term rental market is becoming more competitive with rising customer expectations for quality, cleanliness, service and unique experiences. The challenge is to maintain high standards, personalize offers, and compete with hotels that are also raising their standards and lowering prices. Renters must invest in quality improvement, booking process automation, and technologies such as smart locks, digital check-ins and property management systems. Clients are also increasingly looking for unique experiences, forcing landlords to differentiate their offers. Furthermore, the President of Sun & Snow notes that the specificity of the Polish rental market is strongly linked to the situation in Ukraine. The war and the influx of refugees caused rental rates to rise, and apartments started to be rented everywhere – not only on the outskirts of cities but also in the center. At the moment, the situation is slowly returning to normal, and a drop in prices can be seen. “Rental rates in big cities are still several times lower than in hotels this year, which also drives the demand for apartments,” says Dumania.
Tourists’ Preferences
The COVID-19 pandemic has brought about a change in travel habits and tourist preferences. More and more people are choosing domestic trips, off-season trips or long-term stays related to remote work. Thus, the challenge for the short-term rental market is to adapt its offer to changing needs. Renters must provide more flexible conditions e.g. discounts for long-term stays and ensure additional amenities such as fast internet or a suitable place for remote work.
Property Management
Short-term rentals, in contrast to long-term ones, require constant guest service, cleaning, maintenance and reservation management. The challenge, therefore, is to find a balance between process automation and personalized guest service. Many owners choose to work with rental management companies, but this often involves additional costs.
Social Acceptance and Seasonality
In many cities, short-term rental meets with the negative attitude of local communities. Residents often complain about noise, overcrowding, and the impact on property price increases. The challenge is to find a solution that will satisfy both renters and local communities. Renters must take into account increasing restrictions and local limitations, which may force them to limit their activities or change their business strategy.
Short-term rentals are an industry with great growth potential, but success in this field depends on the ability to adapt to dynamic changes, both in terms of legal regulations and customer preferences. Renters who can adapt their offers to new realities, invest in technology and social responsibility, have the best chances for long-term success. Any potential changes on this market should be thoroughly consulted with industry experts, who can explain the nuances of the specifics of the domestic real estate rental market.
Source: https://managerplus.pl/przyszlosc-najmu-krotkoterminowego-wyzwania-i-nowe-regulacje-na-horyzoncie-87052
