Future Trend: Could Housekeeping Companies Be the Next Challengers in Short-Term Rentals?

Emmanuel Lavoie
11/7/2022

We’re seeing an emerging trend of housekeeping companies diversifying into short-term rental (STR) management. Technology, its accessibility, and the high standards of cleaning expected by guests these days are empowering housekeeping businesses to step up and actually manage the properties they service themselves. Could this service sector break into property management and use their connections and existing operations to their advantage in short-term rentals?

To get under the skin of this shift, we need to delve deeper into several market trends taking shape right now.

There’s a rising demand for short-term rental stays and “workations” post-pandemic. This is resulting in an increased need for efficient, high quality housekeeping services. However, we are facing labor shortages, which are particularly exacerbated within hospitality. Finally, add in an explosion of accessible tech solutions in the sector, which have enabled savvy housekeepers to transition into property managers themselves.

Increase in Demand for Short-Term Rentals and Workations

During the pandemic, bookings for short-term rentals skyrocketed. Travelers were grounded, so domestic travel boomed. Being cautious to avoid catching the virus, many consumers chose STRs where they could cook at home and avoid the risks of contracting COVID-19.

Having enjoyed these home-from-home comforts, including working remotely, reducing commute times, etc., many travelers are realizing they can have the best of both worlds: going on vacation and working at the same time.

Despite high inflation and a potential risk of recession, demand for travel continues to grow in 2022, particularly in short-term rental stays, up 17.9 percent from last year.

Rising Need for Housekeeping Services in STRs

Since COVID-19, health concerns remain. Guests state cleanliness as one of their top priorities when arriving at a short-term rental, with housekeeping being integral to a property’s success. Breezeway Property Operations Report 2022 also reports that 56 percent of travelers agree cleanliness and safety is the No. 1 factor contributing to a five-star experience.

AirDNA found that cleanliness matters now more than ever, revealing that, in 2021, hosts with high cleanliness rates saw their occupancy rates increase by 6.8 percent over hosts in the seven-to-eight category of cleanliness. Their research also shows that higher reviews result in higher average daily rates and occupancy.

Labor Shortages in Hospitality

Labor shortages are plaguing the US economy, particularly in the hospitality and travel industries. With the boom in the STR sector, a lack of skilled housekeeping staff is taking its toll. Professionals working in the STR industry know how hard it is to find well-trained, reliable cleaners who can meet the standards required, and there are simply not enough workers to fill jobs.

Who’s best to navigate the labor shortages for trained cleaners? It’s the housekeeping companies, because they’re the ones who know how to hire, train, incentivize, and retain good cleaners. Housekeeping companies have started to find a new way to make extra income by stepping up and taking on the property management themselves.

How Technology Helps Housekeeping Companies Diversify Into STRs

There’s an easy way for housekeeping companies to access the potentially lucrative short-term rental market—by teching up. Introducing a designated tech stack means all marketing, technology, and service solutions can be outsourced.

Adopting technology solutions can remove barriers to entry, helping housekeeping companies to fill listings and manage the whole STR process smoothly and efficiently. In addition, rather than only being paid for their time, they are now also making a commission on bookings, moving up a rung on the economic ladder.

Jessica Larsen, owner of Cape Cod Cleaning Collaborative, has been cleaning multiple short-term rentals since 2012. In 2021, she expanded her business into managing short-term rentals by leaning on an all-in-one tech platform. Instead of updating all her listings individually on Airbnb, Vrbo and Booking.com, her entire reservation process, from guest screening, property protection, and home automation, works like a well-oiled machine.

She is also able to outsource all guest communications, which removes the need for an in-house reservation team and saves her time to focus on on-site operations, scaling and growing her business. “We have increased our occupancy, and we are making way more money by embracing the pricing dynamics and working closely with our revenue manager. When we make more money, our owners make more money,” she says.

What the Future Holds

There has been an increase in demand for STR stays, a need for greater cleanliness/housekeeping services, plus a rise in hospitality labor shortages. The big change is that technology solutions coming onto the market mean that anyone can become a STR property manager by streamlining operations. Those with cleaning expertise stand to benefit the most.

Housekeeping companies are stepping up and embracing tech solutions to diversify their business model. It makes sense for them to become property managers themselves, as they often own the key trust relationship with the property owners. It is a direct owner relationship that is a potential challenge to established property managers operating in a market. They are also best placed to manage skills shortages.

Business leaders are thinking smart and appealing to multiple sectors. It’s not a new tactic, diversifying. Rather than purely focusing on commercial and domestic cleans, developing revenue streams by moving into the short-term rental sector is a wise move.

As the value placed on cleaning providers increases, so do the charges for these services, and this leads to rising profitability of the sector. This will ultimately lead to a consolidation of the industry with more sophisticated buyers procuring other companies.

There’s opportunity here for housekeeping companies to run with this trend and grab a slice of the action in short-term rentals.

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