The 3 Location Types for Short Term Rentals

The types of locations for short term rentals (Airbnb, Vrbo, etc.) can be broken down into three basic types. They are City Stays, Long distance Travel (Fly to destinations), and drive to regional visits.

Cathedral Rock above green summer foliage near Sedona, Arizona on cloudless summer day.

What is a Short Term Location Type called “City Stay” or “Metro”?

In the Short-Term Rental Market, a City Stay (also called Metro) refers to when a person travels to a large city to rent a short-term rental. Their reason may be for business or to visit the hustle and bustle of a large city. In General, a City Stay would include travel by plane (but doesn’t have to).

With the havoc of covid, vacation destinations are not increasing to large cities. That means a majority of City Stays would be primarily business related or a mix of business and vacation stay. When you are considering a new short term rental purchase the impact of covid on the major cities should be taken into account. Research on that cities Department of Commerce or Tourism should be part of your manditory research before putting any property under contract.

You also want to keep your finger on the pulse of business in this large city as well. Many smaller businesses went under – knowing the primary business draws in your target market is a must for determining your success in this type of location.

The question being, “Does this city have a demand for short-term?”. Or is it going down and making it less attractve for investors?

Some of the drawbacks to City Stays are close proximity of individuals and the covid panic regarding boarding plans with others and not being out in the open or distanced from others. As of this writing the panic has slowed, but if there is another outbreak, we might have another avoidance of packed cities.

What is a Fly-To-Destination?

Fly to destinations are the longer destinations usually requiring a flight and generally, the traveler saves up for this. The destination is something like Hawaii, Aspen, or Disney World. These tend to be a little higher-end than the Regional Visits.

These destinations usually have consistent tourist draws; but can also have high regulation to defend the hotel market. Those hosts who are considering the Fly-to-Destinations might want to aim for a little distance outside the perimeter of the main attraction. This can be a concern to the traveler as they now may be required to use a Uber or rent a car.

Orlando, Florida. Partial view of Cinderella Castle at Magic Kigndom

What is a Regional Visit?

A regional visit is usually a couple hours outside larger cities. It’s attractions may be a national park, beach, Skiing, or mountain. The main point is the guest usually drives to these locations and can do so on weekends if they just need to get-away.

National Parks are high on the list especially those that do not have an abundance of hotels to meet the tourist demand. Reviewing government tourist sites will help you determine the need for short term rentals. You want a market that has increased tourism each year – not less.

Note, as with any type of location, review for seasonality. It does not mean that you should pass on a location because of slow seasons; it just means you need to know before hand what months will be slow or filled and adjust and save accordingly. And of course, evaluate rental rates accordingly. Just because a similar Airbnb in your target area is earning X in June, doesn’t mean they will be earning X in November. there are several tools out such as AIRDNA that can be used to research potential trends of revenue.

Sunset at the Newfound Gap in the Great Smoky Mountains.

Which is better, Metro, Fly-to-Destination, or Regional Visits?

There is no right or wrong answer. You can do well in any of the three if you review the numbers and buy accordingly. Having said that, there is a lot to be said with Regional Visits. With the still on-going fears regarding Covid, there are still people who would rather drive then fly. In addition, those who are scared about the economy, and do not want the larger expensive vacations, are often interested in the nearby regional visits. In other words, the lock down did not stop families need for vacations, just their ability or desire to travel far and incurr the expense of a lavish vacation.

For at least the current time; regional visits do seem to be the go-to travel location type. They faired better than the other two during covid. This does not mean they will always be so.

Regional visit destinations have existed since the beginning of travel in the US. Bed and breakfasts popped up all over high tourist areas from about the 1950s. The only difference now is that we have the internet and booking platforms, making this much easier as hosts.

One advantage to the regional visit locations is that they are the traditional tourist attractions (such as national parks) and thus have already city and county ordinances hammered out and most will not have a sudden change in policy that might prevent you from operating your short-term. Just because they have a strict policy or added tax does not necessarily mean it’s a bad deal. It most likely means they are willing to work with short-term rentals and have already developed a workable way of life for homeowners versus short-term rentals.

In short, regional visit vacation win out over Metro and Fly-to destinations – For now.

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