Should You Buy a Hotel or List Properties on a Rental Website?

Each new year and each generation brings with it something new. With the rise of Millennials and the internet age comes the rise of the shared economy. The world is smaller and more interconnected than it’s ever been, and modern websites like Airbnb, VRBO, Homeaway, and others are capitalizing on this interconnected world by offering anyone the opportunity to run a hotel-like business from their home. This begs the question, should you buy a hotel or just sign up for one of these new services?

First, we would like to quickly touch on the shared economy. This term refers to private individuals sharing what’s theirs with other individuals. The internet has given like-minded people across the world the opportunity to connect and form communities in a way they never could have a decade ago. This community makes it easier for individuals to bypass companies by selling products and services directly to other individuals within their online community.

What Are Rental Websites?

Rental websites have rushed into a void created by the internet. When it comes to personalizing yourself, businesses will always be at a disadvantage to individuals, and the internet has given everyone the ability to bypass traditional advertising and choose what brands they want to buy and what hotels they want to stay at.

Rental websites give individuals the opportunity to rent out their own rooms and homes. Millennials and Generation Z often base purchasing decisions on how personable your business is and on how well they can relate to your business. An individual will always be more personable than a business. More and more people are turning to these rental websites to list their apartments or to stay in rooms when they would have otherwise stayed in hotels. But does this mean you shouldn’t buy a hotel?

But How Much Have Rental Websites Hurt the Hotel Industry?

This is not easy to quantify, but many estimate losses to the entire industry to amount to roughly $400 million dollars. The hotel industry as a whole struggles to match flexible and personable experience that rental websites provide customers, but individual hotels are not hurting as much as you might think.

Pros and Cons to Running a Hotel vs. Using a Rental Website

Hotel Pros and Cons

When you buy a hotel, you generally know what you are getting into. The business model provides structure for you, especially if you buy a chain hotel. Experienced staff can tell you the ins and outs of this particular location and the customers it appeals to. You do not have to do everything yourself and can delegate responsibility to staff members. On the downside, a hotel cannot adapt as easily. You cannot easily change pricing structures, open new rooms, or close for some well-deserved rest and relaxation.

Rental Website Pros and Cons

When you use a rental website, you have a minimal amount of overhead. You also get flexible hours and can take time away from renting any time you wish. But when it’s time to work, the labor is more intensive. Checkout times and check-in times are often only an hour or so apart, and you have to get everything perfect for the next customer. Because hours are so sporadic, it is difficult to find reliable help. Rental websites are all about providing flexibility for the customer, but this flexibility comes directly from you. It takes a lot of pressure to do so much without a staff. Most importantly, the liability falls squarely on your shoulders, because most deposits will not cover potential damages.

Recent Legislation Against Airbnb

A recent Chicago city ordinance has been drawn up to regulate Airbnb. Many people, who chose not to buy a hotel, were running Airbnb hotels. With multiple properties, they ran de facto hotels without licenses. This ordinance will put a cap on how many properties individuals can rent over these online sites. Unlike a hotel, these rental sites cannot bring in the quantity needed for large profits. It works best as extra income, but if Chicago is any indicator, legislation will soon make it difficult to run a business or make a substantial income on rental websites.

Buy a Hotel Through Southeast International

If you choose to buy a hotel, Southeast International is here for you. We have more than a half century of experience in hotel brokerage, and we have the connections and wherewithal to help you buy a hotel at a price and location you want. Contact Southeast International today.