Renting out a spare room used to be a way to make rent. A futon, a decent camera, a Wi-Fi password.
Somewhere along the way it became an asset class.
Short-term rentals – the listings you book on Airbnb or VRBO, plus their more institutional cousins like Kasa and Placemakr – turned residential housing into something flexible. What began as renting out a spare bedroom is now a real category with real capital behind it.
It caught on because it filled a gap. A short-term rental gave travelers something neither a hotel nor a long lease did – a real place to stay, room to spread out, a kitchen, at a price a normal person could swing.
The missing middle of lodging. Travelers loved it. So did investors. Everyone wanted in.
There were low barriers to entry so everyone got in. Buy a condo, stage it for the photos, post the dreamy listing, watch the bookings roll in. For a few years that worked – supply grew about 20% a year at the 2021–22 peak.
Then it turned.
Everybody piled in at once and the math broke. National occupancy slid from about 57% in 2024 to roughly 50% by early 2025. The average host’s place now sits empty more nights than it’s booked. Your feed went from “how I make $8k a month on Airbnb” to “what happened to Airbnb??”
That shakeout is the whole setup. New supply growth has cooled materially and demand has held. Revenue per available rental hit record highs in 2025, its first real gains since 2021.
As in many industries, the frenzy (read: bubble) and subsequent fallout cleared out the amateurs and left a business. Because running a short term rental well is real work – revenue management, distribution, service standards, the unglamorous operational grind.
We are back to what hospitality is supposed to be! And the weekend landlord can’t keep up.
That’s the opening for institutional operators. Major management firms now run institutional-quality rental platforms for big real estate owners, delivering that same missing-middle stay consistently and keeping units full and profitable at a scale the solo host can’t touch. It’s what the branded hotel companies did for lodging decades ago, now happening to housing.
That’s where it gets interesting.
We’ve written before about the housing shortage and the creative ways people are chipping away at it (Housing Housing Housing). Short-term rentals fit right into that story – just not the way you’d expect. They don’t add a use to a building. They add revenue to the same four walls.
A 200-unit building doesn’t have to be 200 long-term leases. Maybe it’s 170 leases, 20 flexible-stay units, and 10 corporate placements. Same building. Better economics. More resilient income.
The owner stops choosing between being an apartment or a hotel. It’s both. The best operators mix stay lengths and guest types to push revenue per unit while keeping the residential feel that makes the place work in the first place. Residents win too – nicer amenities, better common areas, more on-site services, much of it funded by the premium short-term guests are happy to pay.
Better economics mean more buildings pencil, which means more units get built. That’s the long-term win.
The near-term case is simpler. You’re investing in residential real estate, an asset you already understand. But instead of capping your upside at whatever the local lease market supports, you layer hospitality income onto the units you flex.
Real estate is your downside protection. The operations are your upside.
Sound familiar? OpCo/PropCo baby!
Operators – running flexible-stay residential and looking for capital that actually gets it? Let’s talk.
Investors – want exposure to housing that can earn like hospitality? Same.
