Over the past few years with the number of new nightly-rental building taking place offering nightly rentals we are asked this question often:

Have we reached a saturation point in the nightly rental market?

This is a great question and one that should be asked before you put down $300-900k on a second home (or more).   What’s the marketing going to be like if you’re just one of 1,000 like?  Will you be able to compete on more than just price?  Is price all you have?  (if it is, will it be a race to the bottom of the pile?)

The short answer is NO.

Of course I will elaborate why I believe this and why the numbers support the conclusion.  I will even go further and give some insights on pricing, creating a unique selling proposition and making your home stand out.

Point 1:  Because city’s codified nightly rentals and worked with developers to build proper communities and inventory, we are seeing that transition or shift to replace legally what was once illegal.

A short 5-7 years ago, most cities didn’t have municipal code in place to handle the boom of the vacation rental.  People were buying second homes and doing the nightly rental thing everywhere they could.  Very wild-wild-west like.  Airbnb was in its infancy and the vast majority of nightly rentals were operated ‘underground’ if you will.  As such no one really knew how many there were in operation.  We knew that on holiday weekends there were 15-20k more people in town and we knew we didn’t have the hotel space to house them and they were staying somewhere but it was a SWAG method to get a number.  Estimates at the time were between 4,000 and 5,200 properties operated short-term stays.  Fast forward to today, the cities have now codified short-term rentals, inventory is being built that meets the code and demand and the underground model is discouraged by the market (some still exist, but it is becoming less of a market share rapidly as no one wants to deal with the headache when you can buy legit nightly rentals)

Meaning the inventory was already there, we just couldn’t quantify it.  Now that we’ve also had crazy demand as well I personally think we have capacity to ad much more before saturation.

Point 2: For every nightly rental built, only about 40% are used and marketed as a nightly rental – available for public occupancy.   It is estimated that 30% are occupied full time or near full time as a primary residence. An estimated 20% were bought as a ‘family only’ use and is used for that owners family, friends etc. only and will never be in a pool – a true second home.  These properties will be in trusts and passed to the next generation(s).

Point 3:  The Greater St George area has always been a ‘regional’ destination.  A sleepy little retirement town between Salt Lake and Vegas – only people along the Wasatch Front knew about for its awesomeness.  Only in the past 10 years has it started to gain national and international recognition as a ‘must see’ place.  We will always retain the 300-400 mile radius draw but now, mega events and the YouTube boost, we are now a destination community.  The Sr. Games, the Ironman, Red Bull Rampage, The ATV/Offroad events, the St George Marathon and its 15+ other little races, the countless baseball and soccer tournaments, dance competitions and with Utah Tech entering Division 1 sports, the drive

for short-term units is growing. All this before you even get into the heavy demand of Zion, The Grand Canyon (north rim), Cedar Breaks, Bryce Canyon and even little Snow Canyon have their impact.  Toss in the development of Sand Hollow, Quail Lake, Gunlock, Firerock, Anderson Junction and Long Valley reservoirs . . . we’ve barely scratched the surface.

Even as this shift is taking place I personally believe that we could build another 1,500-2,000 units before we even reach a point to start discussing saturation.


What may be of more importance than saturation is the risk of ‘sameness’.  This is where there are many units in a small geographical area that are all near the same size, same sleep capacity, look the same from the curb and all have the same “EAT, LOVE, PRAY” art work in the kitchen.  Failure to stand out is a greater risk.


To help with this risk here are a few quick points:  First,  think of your systems that adjust your price daily to not always be the cheapest nor the most expensive unit in your market.  Second, stand out.  IF 95% of units in your area are not pet friendly – you should become pet friendly.  Look at adding a THEME to your unit.  A theme is not just putting in a bunk bed and a princess poster and calling it a princess themed room – that’s just sad.  Build a bunk bed that looks like a castle fit for a princess – now you’re cooking with gas.  Look at this unit as an example:  Castle Ridge.

here is another one to get you thinking of how to stand out and improve occupancy as well as short up your rates.  Think a cave or mine shaft with a ball pit- this may inspire you – Silver Reef. 

We’d love to discuss your needs when it comes to buying, selling, managing or theming your property.  Reach out to us today.  435-414-1525.