Can subscription services work for STRs?

Subscriptions have been slow to take off in the airline industry, but could they work for short-term rentals?

Possibly, if they provide something that consumers can’t get elsewhere, says Robert Cole, senior research analyst for lodging and leisure travel at Phocuswright. STRs can take a cue from streaming services, which seem to have mastered exclusivity: Viewers can watch The Handmaid’s Tale only on Hulu, after all.

“That’s the hook, and that’s the challenge,” Cole says.

Among subscription sectors, travel was expected to see the most growth, a study found last year. But examples of travel subscriptions are harder to find than many other subscription models.

Apartment rental company Zumper in early March announced a subscription called FlexPass, which it says “gives you access to thousands of premium short-term rentals across the country for $300 a year.”

Luxury vacation rental company Inspirato recently announced a subscription for businesses to reward employees with free trips.

In 2022, home-swap company HomeExchange created a subscription for people with upscale, in-demand properties.

Airbnb, Vrbo, Vacasa and Sonder say they do not offer a subscription service for guests.

“Subscription models are an untested but intriguing concept in short-term rentals,” says Will Parry, CEO and co-founder at Altido, which manages serviced apartments, homes and other properties across Europe.

Parry says he sees the potential for STR subscriptions to build a community and drive long-term guest loyalty.

“But I suspect we may only see this being launched by companies with a more ‘standardized’ portfolio of properties that appeal to frequent travelers, like digital nomads,” Parry says. “A loyalty program needs serious critical mass behind it with lots of useful perks to have a compelling value proposition for the consumer.”

An avenue to explore?

The benefits of subscription services can include recurring revenue streams, which businesses and Wall Street find appealing, plus customer engagement, loyalty and retention, according to Cole. But STRs face challenges: How do you scale up, create value and achieve exclusivity? 

“It’s hard. It’s not just, ‘Hey, let’s start charging fees,’ because you’ve got to come up with something that makes sense to the consumer,” Cole says.

An STR subscription should cater to a specific demographic, as with Inspirato, which serves the more affluent traveler.

“They know their niche target market,” Cole says. “People are willing to pay for that service to get access to that inventory.”

Some travel brands center their entire business models on subscriptions, while others offer a subscription as an add-on, according to Hollis Thomases, Phocuswright senior research analyst and author of the Phocuswright report “How is Travel Adapting to the Subscription Economy?”

However, Thomases cautions, “subscription products and services are not for every business, and even those which have succeeded thus far may have a limited life expectancy.” Consumers could feel that they’re overpaying, and those who take only a few trips per year may not see the value.

Still, Thomases says, “the subscription model - if it generates revenue or improves customer retention - is one strong avenue to explore.”

‘Unique in the industry’

At Zumper, which just launched a subscription service, rentals come fully furnished and fully equipped – without leases, security deposits or hidden fees, according to the company, which has existed for about 10 years.

Zumper created the subscription primarily for remote workers because “we know our renter audience is looking for more flexible short-term options,” says Zumper co-founder Taylor Glass-Moore.

“You can have a consistent experience of staying in a nice place [where] you can work from home and stay a few months at a time and then jump to another another place,” he says.

Although Zumper offers stays of anywhere from one night to one year, the minimum booking for FlexPass is 30 nights.

Glass-Moore says the company’s competitors in the apartment rental space don’t offer subscription services. “We’re creating something that is really, truly unique in the industry.”

“The real way we make our money is on the supply side, where we charge a transaction fee to the landlord,” he says. “We can rely on [delivering] enough bookings to our partners that we don’t need to rely on a monthly subscription fee or an annual subscription fee to stay in business.”

Zumper’s main target demographic are the 17 million people who identify as digital nomads, according to Glass-Moore, but the country’s 100 million renters could also find “a better quality of life” through the service.

“You can be the average renter and can have access to this,” he says. “That for us is the real win.”

Business subscription

On the luxury end of the spectrum is Inspirato, a “full-service travel company” that was launched in 2011. The company manages and controls about 500 large vacation rental homes, including villas and mansions, says David Kallery, president of Inspirato. The company also has partnerships with hotels, cruise lines and events and experiences.

Inspirato launched subscription services in 2019. The main subscriptions are Club, in which travelers make à la carte purchases, and its premium subscription, Pass, that gives travelers access to 2.5 million pre-packaged trips through a $2,550 monthly fee. The cost covers the accommodation, with no additional nightly rate, taxes or resort fees. Since launching in 2019, Kallery says, Pass has reached 4,000 subscribers, who include retirees, families and remote workers. 

“They just pick the trip off the list. They pack. They go on the trip. They come home. They pick another trip,” he says.

Pass “helped take us from being a private company to becoming a public company. It really gave us good explosive growth. It captured the attention … of consumers because nobody had ever seen anything like that.”

Inspirato and luxury fashion brand Saks on March 14 announced a partnership in which 3,000 Saks stylists will become “Inspirato brand ambassadors.” They will introduce Saks customers to Inspirato’s subscription offerings - with support from Inspirato’s sales team - both online and in Saks Fifth Avenue stores. The partnership is set to launch in the second quarter of 2023. 

Inspirato in late February officially launched a new subscription service – Inspirato for Business – that uses the same algorithm and technology to create custom lists of rentals for businesses. Inspirato is tapping a “multi-billion dollar industry” in incentive travel for employees, according to Kallery. It counts Salesforce among its customers.

“You can imagine – with 15,000 members, which is about what we have today – a lot of them are titans of industry,” including heads of banks, manufacturing companies and law firms, Kallery says. “Now they can reward employees with access to Inspirato.” 

The company has had to “make a lot of changes” since launching subscription services, for example, by enhancing flexibility and making it more user-friendly.

“I don’t care if you run an ice cream truck or you run a multimillion-dollar hospitality company – recurring revenue is a beautiful thing in a business, and we, like all other businesses, love that,” Kallery says. “There’s predictability with it. There’s loyalty that comes with it. … [Customers] want to engage with you.”

The Pass member gets the predictability of knowing their accommodation budget is $30,600 a year, Kallery says. Plus, “you’re staying there at a fraction of what it would have cost had you gone direct.”

Luxury home-swap option

For more budget-conscious travelers, HomeExchange offers an annual subscription fee of about $175. Members, who include many teachers and families, can stay in other members’ homes for no additional cost.

While the website features some vacation properties, “a lot of people are opening up their actual home to you,” Jessica Poillucci, PR manager for HomeExchange.

The challenge is winning people in the United States over to the idea of swapping homes with a stranger, and HomeExchange does that by “showing real stories of real people who have done home exchanges,” Poillucci says.

“We are starting to see a younger demographic come in, and I think that has to do with probably the TikTok trends we’ve seen around home exchanging,” she says. “That’s a slower-build one. But I do see that some people in their 20s are now starting to come in and try it out, whereas before we were seeing an older demographic.”

High fees and other complaints around Airbnb-style rentals can give a boost to HomeExchange, she says.

HomeExchange in early March bought Love Home Swap, which will provide a larger inventory of homes in the U.S., the United Kingdom and Australia, according to Poillucci.

In 2022, the company launched HomeExchange Collection, a premium subscription catering to people with in-demand properties, such as upscale beachfront homes. The number of Collection members has doubled since last year, and they now have 2,000 luxury homes to choose from. Membership costs $1,000 per year.

Collection members “have the option of hiding [their] home from the regular home exchange community and just having a bit more exclusivity, because otherwise their inboxes are getting flooded,” Poillucci says.

“The swap isn’t always equal if you’re swapping your small apartment with a mansion.”