As short-term rental companies continue to expand, there is a growing consensus that bigger isn’t always better. Portoro, a property management company based in Charleston, South Carolina, is taking a slow and steady approach to its growth by acquiring regional property managers in Virginia and Oregon. CEO Dustin Abney believes that the key difference lies in how companies execute their growth strategies, particularly in terms of the cost of acquisitions and the integration of units. Portoro co-brands with the companies it acquires in new markets and takes time to integrate and onboard homeowners at a pace they are comfortable with, typically over a 90-day period.
Some small property management companies choose to stay within their core markets and expand locally rather than nationally. Michael Friedman, CEO of Simple Life Hospitality, which manages 140 homes in Wisconsin, believes that staying regionalized allows for tighter operations and higher margins. By deepening their presence in a single market, companies can reduce inefficiencies and operating costs while maintaining a stable team of employees. This approach contrasts with the rapid and expensive growth strategies often pursued by larger companies seeking national recognition.
Consultants in the industry caution against rapid expansion, emphasizing the importance of focusing on one market at a time to maximize market share and avoid resource depletion. Brooke Pfautz of Vintory, a sales and marketing platform for vacation rentals, recommends expanding only when market share has been maximized and when the right leadership is in place to manage the expansion. This approach ensures that resources are not stretched too thin and that the quality of service is maintained across all markets.
Maintaining a regional focus can also help companies retain homeowner relationships after acquiring new properties. By co-branding with acquired companies and integrating operations slowly, companies like Portoro are able to build trust with homeowners and ensure a smooth transition. Publicly listed companies may face different pressures than private companies, as they are expected to show returns for shareholders. It is important for companies to consider the long-term implications of their growth strategies and prioritize sustainable growth over rapid expansion.
The emphasis on staying local and maintaining a strong presence in regional markets reflects a shift in the short-term rental industry towards more sustainable and manageable growth strategies. By focusing on incremental expansion and tight operations, companies can achieve higher margins and avoid the pitfalls of rapid growth. This approach allows companies to build strong relationships with homeowners, reduce inefficiencies, and maintain a stable team of employees. Ultimately, the key to success in the short-term rental industry lies in finding the right balance between growth and sustainability.
