Tech-Savvy Hosts: A Growing Threat to Conventional STR Property Management

Emily Tunggala
12/9/2024

For years, the short-term rental industry has been a land of giants. Independent hosts have long been locked in a relentless uphill battle, constantly vying with established property management companies to successfully scale while continuing to deliver a high-quality service.

Hefty software price tags, minimum property thresholds, and overly complex systems are just a few of the hurdles that have traditionally stifled independent hosts’ ability to scale.

The tools and systems required to manage multiple properties efficiently, beyond channel management and calendar syncing, were reserved for those with substantial resources, while affordable property management software only had basic functions. This made it nearly impossible for self-managers to transition from managing a single property to a portfolio, especially if they wanted to do it well.

This is how—unlike their larger counterparts who benefit from deeper pockets, expansive portfolios, and extensive resources—independent hosts have always entered the market as underdogs, already at a disadvantage. But a shift in the balance of power now seems to be taking place.

A new wave of accessible technology is finally arming the underdogs with the tools they need to compete on an equal footing. It’s like tech vendors are finally waking up and realizing that these independent hosts actually make up a substantial part of the market and that excluding them is a missed opportunity. In fact, it’s more than that; it’s recognition that empowering these independent hosts is essential to the future of the industry.

The shift is evident across the entire market, even among industry giants like Airbnb, who have long recognized the vital role of independent hosts. According to the latest figures, independent hosts with single listings represent 38% of Airbnb’s platform, underscoring their substantial industry influence and spending power. This is only poised to grow, as the days of being pressured to compete with large property management companies are fading. Now, there is little advantage to being a property management company when it comes to accessing tools in a cost-effective way.

Hosts are no longer boxed into basic channel management and calendar syncing. Instead, they’re gaining access to professional-level tools that are critical to running a full-fledged rental business.

Take advanced guest vetting systems as an example. In the past, hosts with limited resources had to rely on the basic vetting tools provided by online travel agencies (OTAs), which often only verify the existence of an ID. Now, affordable vetting tools allow hosts to perform checks with the same thoroughness as established property managers. These tools can match and verify IDs with selfies, conduct criminal background checks, and even run credit checks for long-term stays, significantly enhancing the safety and security of their rentals.

Until recently, drafting legally sound agreements was a daunting task for hosts with limited resources. But technology has stepped in to simplify this process too, automating the creation of detailed rental agreements to ensure hosts have the right legal protection should any issues arise.

Another tedious and often daunting task in property management is financial reporting to property owners. Previously, generating clear and detailed financial reports required significant time and expertise. But with automation, these documents can now be created automatically, requiring nothing more than a quick review before sending them to property owners. This is making it easier for property owners to grow into property management and co-hosting.

Aspects of property management like accounting and navigating complex tax regulations, which were once a deterrent for hosts with no experience, can now be taken care of by intuitive, easy-to-use tech. The intricacies of local, state, and federal tax laws, coupled with the fear of making costly errors, were historically enough to prevent most from scaling beyond one property. But automated tax calculation tools, now available at the fingertips of hosts, demystify the complex process of preparing and submitting tax documents, ensuring hosts are compliant.

These are just a few of the solutions now readily available for independent hosts. Suddenly, they have access to a whole Swiss army knife of tools that transform them into full-fledged rental moguls. They now wear several hats: accountant, lawyer, marketer, maintenance manager, and customer service representative—all at once, and all on their own.

Should property management companies be wary? Absolutely. The gap between self-managers and traditional property management companies is narrowing as the playing field levels. No longer shielded by their vast resources and scale, property management companies now face a formidable challenge. As independent hosts gain access to the same advanced tools and strategies, the traditional advantages of size and reach are diminishing.

As self-managers rise, armed with cutting-edge tech and a do-it-yourself mentality, the traditional giants of the industry may soon find it’s them on the back foot.

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