Tapping into demand for flexible accommodation, JLL has launched a short-term rental service to compete with Airbnb and Booking.com.
Created in partnership with Lavanda – a flexible rental software company with customers including Greystar and Blackstone – JLL Short Stays offers fully serviced accommodation for stays ranging from three nights to 12 or more months.
The service seeks to be a “more trusted and professional alternative” to its rivals by only listing accommodation operated by institutional property managers and operating under the JLL brand.
With an initial launch in the UK, JLL Short Stays looks to expand from 1,000 homes domestically to more than 35,000 globally when its international roll-out starts next year.
Staycation boom opportunity
The team behind JLL Short Stays said it is capitalising on a booming staycation market and “soaring demand” for flexible urban accommodation – both fuelled by continuing travel restrictions and pandemic-linked uncertainties.
Like many trends in property over the last 18 months, the rise of landlords looking to short-term rents to generate income pre-dates the pandemic. Lavanda itself was founded in 2015 and has worked with JLL for several years.
Now landlords are seeing an opportunity in the domestic holiday boom in the hopes that the trend will continue.
Market research firm Mintel earlier this year predicted that a surge in staycations will “leave a positive legacy” for the market in the UK, raising demands higher than before the pandemic.
In the US, vacation occupancy rates were 67% higher in April 2021 than in April 2019 in small cities and rural locations.
What value is there in providing short-term rents?
When Lavanda and JLL first teamed up, Lavanda said that it can increase the yield on private rented sector developments by up to 20%. Others, such as Direct Line, have estimated that landlords could make 30% more by offering short-term rent.
JLL Short Stays’ aim is to create “optimised returns” for landlords while offering users a product that is cheaper than a hotel.
Companies providing flexible accommodation have started to recover after 2020. Airbnb, for example, posted £1.3bn of revenue in Q2 2021 – more than four times its revenue in Q2 2020 and 10% more than in Q2 2019 (net losses, however, topped £68m in Q2 2021).
But the windfall from more staycations will likely not be universal. A report from the Resolution Foundation this summer showed that the UK benefits from a switch to staycations because, in normal circumstances, residents spend more on tourism in other countries than visitors do in the UK. However, benefits vary across the UK: coastal and rural areas (such as Devon and Cornwall) can expect more tourist activity, but cities – which rely much more on overseas tourists – could see numbers fall.
The same has been true in the US. While small cities and rural areas have seen vacation occupancy rates rise between 2019 and 2021, they have fallen by 41% in the 50 largest US cities.
What JLL and Lavanda have said
Sam Winnard, director at JLL, said: “JLL Short Stays offers guests a better value alternative to a hotel or serviced apartment, whilst at the same time providing exclusive access to premium urban accommodation professionally managed by the world’s most trusted blue chip operators – including Greystar, Blackstone, and CA Ventures.
“This is all wrapped up in a best-in-class online booking experience to deliver a seamless digital guest experience end-to-end. We have big ambitions for our Short Stays platform, and I’m hugely excited to develop it alongside our network of corporate travel bookers into a primary channel of corporate rental demand.”
Frederik Lerche-Lerchenborg, CEO of Lavanda, said: “We’re thrilled to build upon our existing partnership with JLL and work with the team to deliver new value for JLL’s residential partners.
“As demand for greater flexibility and digital-first customer experiences continues to sweep the industry and shape its future, so does Lavanda’s technology become increasingly critical to the effective management of institutional real estate. We’re very excited to build upon this launch and explore what the future has in store.”