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Founded Year

2017

Stage

Series A | Alive

Total Raised

$13.49M

About Frontdesk

Frontdesk operates professionally-managed, corporate housing rental properties across the United States.

Frontdesk Headquarter Location

1240 E Brady St Floor 2

Milwaukee, Wisconsin, 53202,

United States

414-209-0102

Latest Frontdesk News

The short-term rental industry is booming – but will it last?

Jun 14, 2021

Compared to other sectors of the travel industry, the short-term rental market has prospered amid the COVID-19 pandemic, with the United States officially recovering demand above 2019 levels as of April 2021 . Many major alternative accommodations platforms are preparing for what they view as a record travel rebound on the horizon and are pushing new initiatives to bring more hosts to their respective services. While the summer months are expected to be among the best on record , questions are arising around if the short-term rental industry can continue on this trajectory as people head back to offices and schools. According to a new report from AirDNA , the next major performance milestone for U.S. short-term rentals is whether the industry recovers demand back to the level it would have achieved if the sector had maintained its 2019 growth rate. AirDNA data points to another two-plus years to achieve it, though it could be reached sooner if certain scenarios play out. Jesse DePinto, co-founder and chief product officer of Frontdesk , says recovering demand back to 2019 growth rate levels is the milestone that the serviced apartment rental company is aiming for internally. “Our total revenue has already exceeded pre-pandemic levels, but even our RevPAR has fully recovered, adjusting for our unit growth,” DePinto says. “On top of it, we are seeing continued demand growth, and we expect our RevPAR to continue climbing due to the limited supply in our geographies.” Though overall, the short-term rental market varies widely by market and inventory type, DePinto expects that Frontdesk, which offers suite accommodations in multifamily apartments in urban locations, will cross this next milestone sooner than the two-plus years AirDNA predicts. Mateo Bradford, strategic partnership and business development at At Ease Rentals Corporation , believes demand levels are only going to keep increasing: “I think that demand will surpass those demand levels [predicted by AirDNA] because remote work and lifestyle will continue to drive that demand. I think we will see a slight dip when the service sector goes back to work but that will not stop leisure, vacation and nomads from getting out of the house.” Urban recovery While new demand in small city/rural and destination/resort markets dominated 2020 and 2021, 2022 will be all about a return to cities, AirDNA predicts. Through April 2021, demand in urban areas was still down 40% compared to 2019. But as vaccines are distributed and attractions reopen, urban travel is expected to begin to recover in the back half of 2021 and in earnest in 2022, with urban demand fully recovering to 2019 levels by 2023. According to AirDNA, urban rentals could rebound quicker if business travelers opt for private accommodation, though other factors are also at play. Says Mickey Kropf, founder and CEO of Vector Travel , a short-term rental management company that partners directly with multifamily owners: “Business travel is important to the success of urban short-term rentals, though business travel has continued in many markets Vector serves in the form of extended consulting engagements or projects with increased lengths of stay more than short trips for convention center business or one-off meetings. “Other factors at play for urban demand recovery include the size of the urban market, its dependence on international travel, the diversity of its economic base and overall population growth rate.” The industry needs to become more professional in order to rebuild trust within the real estate community. Jesse DePinto - Frontdesk Share this quote Bradford says that urban recovery depends on a city’s approach to reopening. “People are ready to be out of their houses … they have the ability to make that happen. People want to get back to normal. So cities that can host events – concerts and music festivals, sporting events, any type of live entertainment – that will drive demand into those markets.” That said, supply may be a limiting factor to urban demand recovery, particularly in markets where new and existing regulation limits the potential addition of new listings. To help build supply, Bradford calls for more local city and county regulatory support. “The industry needs to be a part of the discussion. Working with these entities will ensure a lasting and equitable solution for all,” he says. “There should also be discussions with supply holders – owners, business developers – about how they can integrate a short-term rental model for their unused units.” Adds DePinto: “The industry needs to become more professional in order to rebuild trust within the real estate community. Most apartment owners and homeowners’ associations today still see short-term rentals as too risky. Between the house parties and the shuttered businesses over the past year, a small handful of amateur operators and bad actors have managed to lose this trust . “The growth of urban supply will be constrained by construction timelines for new hotels and flex living apartment developments unless the short-term rental industry can work together to form consistent standards and rebuild the trust of the multifamily industry before then.” Kropf says multifamily inventory is key to supply in urban destinations, given the density and economies of scale it affords. “Full recognition of all types of short-term rental income by multifamily lenders would free more owners and managers to diversify their income streams via the short-term rental industry,” he says. “We are proponents of stratified cap rates based on income sources within a given multifamily property, thereby risk adjusting income from all sources while allowing all income to be capitalized for purposes of sale or refinancing.” According to AirDNA, another risk to the rebound in urban markets is the recovery of international travel. In markets such as New York, San Francisco and Miami, as much as 30% of historical demand could be attributed to international guests. Meanwhile, with the U.S. leading the way in vaccines, Americans could resume international travel before overseas guests are allowed to travel to the States, creating an imbalance in travel that could temporarily damage U.S. performance. Outlook While alternative accommodations providers such as Airbnb are betting big on flexible living and long-term stays – in Q1, the home-share giant said 24% of its nights booked were for stays of 28 days or more – AirDNA does not predict remote work will remain the norm once companies feel it’s safe to return workers to the office. That said, with added flexibility, extended trips will become more common than they were pre-pandemic. According to AirDNA, in Q1 2021, the average length of stay was four days, 25% higher than before the pandemic, mainly due to longer stays in large and mid-size cities. As leisure and business travel returns to these cities, AirDNA expects the length of stay to shorten but remain materially higher than 2019 levels. Bradford believes the trend of flexible working and living will grow. “People are not going to return to offices the way they did before. I think the companies that can allow people to work remotely will continue to do so,” he says. “They will shrink their commercial footprints and build out remote work cultures for employees. It will definitely look good on the balance sheet.” Looking ahead, DePinto says consumers are increasingly going to favor professional operators who are at scale. “Consumers can book knowing that they will get all the benefits of great short-term rentals - more space, authentic experience, seamless booking/check-in/checkout, etc. - without all the costs and risks such as unclean units, poor communication and unrepresentative photos.” DePinto says Frontdesk has seen a sharp increase in interest from its property owners for utilizing short-term rentals at their apartment community. “Anecdotally, when the OTAs shared that there is a lack of supply to fulfill the anticipated demand in their marketplace, we saw a renewed excitement for building short-term rental portfolios yet again,” he says. According to AirDNA, despite both Airbnb and Vrbo’s new campaigns to a ttract hosts , there have been roughly 52,000 new units added on either platform as of May 2021, which is about 10% lower than a typical year over the same period. Get a dose of digital travel in your inbox each day Subscribe to our newsletter below Submit The average number of unique available listings on Airbnb and Vrbo is expected to increase by 20.5% in 2022 to more than 1.3 million listings. Kropf says Vector has more than tripled its contracted inventory since the pandemic and is “working diligently to bring it to market as soon as possible.” AirDNA says high levels of a demand and a delayed expansion of the available supply of new short-term rental units will mean at least two years of elevated occupancy levels for U.S. properties. While the shift toward destination/resort markets, where the average rates per unit are higher, led average daily rates to grow in 2020 and 2021, the reverse will cause ADRs to decline in 2022 as demand returns to cities. However, even with the contraction in rates in 2022, the average rate will be 7.5% higher than in 2019 and total revenues will increase by 42% over the four-year period. As competition intensifies and consolidation continues throughout the sector, AirDNA expects the short-term rental industry to continue to professionalize and expand its share of total lodging spend. “For now, we are seeing more options for distribution to booking platforms than ever before, with niche providers focusing on various segments of demand based on their target consumer pool’s demographics or consumption patterns,” Kropf says. “Ease of use, fair and transparent terms for hosts and guests and scale resulting in choice will win the day, and we will likely have fewer and different dominant booking platforms in 10 years.” Adds Bradford: “I think we can agree that our industry's huge competition in our space will be driven by who best connects with the consumer/guest. “The winner is the one who can gain the largest market share, right? At the end of the day, the winner is ultimately the one the guest continues to use the most.”

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