Why Bigger Isn't Always Better in STRs

The vacation rental industry stands at a critical juncture in 2025, where the lessons of past failures are shaping the strategies of tomorrow's successful property managers. In a recent episode of the STR Data Lab podcast, two industry veterans came together to dissect what makes or breaks vacation rental management companies at scale.

Jamie Lane, Chief Economist at AirDNA and host of the STR Data Lab, invites Ashley Ching, CEO and Founder of Inhaven, onto the show. Ashley leads the charge in developing innovative solutions for hospitality management challenges. Her company is pioneering the vacation rental industry's first comprehensive quality framework, set to launch at VRMA 2025.

Ashley brings a unique perspective shaped by extensive research across hospitality sectors. "We interviewed hundreds of hospitality executives, not just in vacation rentals and hotels, but also in the restaurant space. We found that the reasons for failure were structural," she explains. Her background includes 13 years at Tiffany & Company, where she ran Asia merchandising from Hong Kong, giving her firsthand experience in balancing global consistency with local market needs.

Factors Adding Complexity to Scaling Vacation Rental Management

In 2025, guest expectations continue to rise, creating operational challenges for property managers attempting to scale. The diversity of guest profiles—from luxury seekers to budget-conscious families—requires sophisticated service delivery systems that become increasingly complex as portfolios grow.

"The more boxes you check, the more complex your business is, and the harder it is to scale," Ashley Ching emphasizes. This complexity multiplies when managers try to serve different guest segments simultaneously, each with unique expectations for amenities, communication styles, and service levels.

Product Variability and Market Distance

Unlike hotels with standardized rooms, vacation rentals present unique challenges through their inherent diversity. "Ambridge managed everything from luxury resorts to economy hotels, each requiring a different operating model," Ching notes, drawing parallels to vacation rental portfolios that span from beachfront mansions to suburban condos.

Geographic dispersion adds another layer of complexity. "Moving from one to two cities doesn't just double complexity. It makes it exponentially more complex," Jamie Lane observes. This insight resonates particularly in 2025, as property managers grapple with maintaining quality standards across dispersed portfolios.

Evolution Hospitality's experience expanding from Los Angeles to Palm Springs illustrates this challenge. Despite being only a two-and-a-half-hour drive away, the company faced completely different demand drivers, guest expectations, and operational requirements—a cautionary tale for vacation rental managers eyeing multi-market expansion in 2025.

Owner Quantity and Relationship Management

The fragmented ownership structure of vacation rentals creates unique scaling challenges. With most property managers working with numerous individual owners, each with one or two properties, alignment becomes increasingly difficult as portfolios grow.

"It's important to be very selective with the owners you bring on. Demanding or misaligned owners can be a huge problem," Ching warns. This challenge intensifies in 2025 as owners' expectations for revenue, communication, and property standards continue to evolve alongside guest demands.

The Five Pillars of Successful Vacation Rental Management in 2025

Curated Portfolio: Quality Over Quantity

The first pillar of success centers on maintaining a carefully selected portfolio of properties. "A curated portfolio means selecting properties that are profitable on their own and align with your brand standards," Ashley Ching explains.

In 2025, this principle has become even more critical as market competition intensifies. Property managers must resist the temptation to grow through indiscriminate acquisition. "When your bottom 10% of properties becomes 20% or 30%, it distracts management and becomes destructive," Ching warns.

Successful managers regularly evaluate their portfolios against specific criteria:

• Owner alignment with company standards
• Property maintenance requirements
• Booking performance and revenue potential
• Operational complexity
• Brand consistency

Similar Demand Drivers Across Markets

The second pillar focuses on targeting markets with comparable guest demographics and travel patterns. "By aligning operations to a single tier, they can scale more effectively," Ching notes, highlighting companies like Moving Mountains, which operates exclusively in luxury ski markets across Colorado.

This focused approach enables property managers to:

• Streamline marketing efforts
• Standardize operational procedures
• Build expertise in specific guest segments
• Achieve economies of scale in targeted niches

"If you try to appeal to everyone, you may appeal to no one," Jamie Lane observes, emphasizing the importance of specialization in 2025's competitive landscape.

Selective Owner Partnerships

The third pillar addresses one of the industry's most overlooked challenges: owner selection. "Be picky with owners to ensure you can move quickly as your business needs," Ching advises.

In 2025, successful property managers implement rigorous owner screening processes, asking critical questions about:

• Willingness to standardize amenities (like linens)
• Flexibility on pricing strategies
• Investment in property improvements
• Communication expectations
• Long-term partnership goals

"Most conversations about owners are after the fact—how to get rid of bad owners," Lane notes, highlighting the industry's shift toward proactive owner selection strategies.

Locally Oriented Operations

The fourth pillar challenges the centralization trend that has plagued many failed hospitality companies. "The best hospitality is delivered on the ground, with leadership and decision-making close to the properties," Ching emphasizes.

Steve Schwab's turnaround strategy at Vacasa exemplifies this principle in action for 2025. By returning decision-making authority to local teams, companies can:

• Respond quickly to market-specific challenges
• Build stronger community relationships
• Customize services for local guest preferences
• Maintain higher staff morale and retention

"National companies need to empower their local teams and allow them to differentiate their business based on local needs," Ching explains, whether that's implementing specific check-in procedures or providing specialized local recommendations.

Empowered Local Hospitality Professionals

The fifth pillar focuses on human capital—specifically, hiring and retaining local staff with what executives call the "hospitality gene." "Executives consistently told us they hire local people with a 'hospitality gene,'" Ching shares.

The danger of over-centralization becomes clear in its impact on talented staff. "When operations are centralized, these people stop thinking about delivering success for owners and guests," Ching warns. Instead, they focus on corporate approvals, leading to a brain drain as the best employees leave for companies where they can make a real difference.

The Triangle of Success: Service, Profitability, and Scale

Balancing the Three Pillars in 2025

The vacation rental industry in 2025 faces a fundamental truth: companies must choose their priorities carefully. "We haven't seen a company achieve all three at once—service, scale, and profitability," Ashley Ching states definitively.

This framework forces property managers to make strategic choices:

• Service + Profitability: Most successful local operators
• Scale + Profitability: Possible with minimal service (like American Homes for Rent)
• Service + Scale: Often leads to financial distress

"Vacasa tried to deliver service at scale but wasn't profitable," Ching notes, providing a cautionary example for managers pursuing growth in 2025.

Lessons from Other Hospitality Sectors

The broader hospitality industry offers valuable lessons for vacation rental managers. "In hotels, Hilton now only manages 187 of its 5,800 US hotels, delegating the rest to local operators," Ching reveals. Similarly, McDonald's has reduced its directly managed units from 2,100 in 2002 to under 700 today.

These industry giants recognize what many vacation rental companies are learning in 2025: local management delivers superior results. "In vacation rentals, the most admired property managers are local operators, not large-scale players," Ching emphasizes.

Innovation and the Future of Vacation Rental Management

The Need for a Quality Framework in 2025

The vacation rental industry's most glaring gap becomes apparent when compared to other hospitality sectors. "Every other hospitality industry—hotels, airlines, restaurants—has a quality framework. Nothing like this exists in vacation rentals," Ching points out.

This absence creates significant problems in 2025:

• Guests face uncertainty with every booking
• Property managers struggle to differentiate their offerings
• Pricing often fails to reflect actual quality and service levels

Inhaven's solution addresses these challenges through a comprehensive framework evaluating both property standards (bed, bath, kitchen, cleaning) and service levels. "Our top-tier property managers operate at a ratio of one local staff per five properties; lower-tier managers operate at one per twelve," Ching explains, providing concrete metrics for service differentiation.

Predictions and Opportunities for 2025 and Beyond

Looking ahead, the vacation rental industry stands poised for fundamental changes. "The quality framework we're launching will fundamentally change how guests think about booking," Ching predicts.

For property managers navigating 2025 and beyond, the message is clear: "Bigger is not better. We see diseconomies of scale come into play, adding complexity to your business," Ching warns. Instead, success lies in:

• Focusing on local market expertise
• Building sustainable, profitable operations
• Maintaining high service standards
• Carefully curating property portfolios
• Empowering local teams

As the industry evolves, those who embrace these principles while leveraging new frameworks for quality and service differentiation will find themselves best positioned for sustainable growth. The lessons from past failures have illuminated the path forward—one that prioritizes quality, local expertise, and strategic focus over blind expansion.

The vacation rental industry in 2025 stands at a crossroads. Property managers who learn from history, embrace the five pillars of success, and make strategic choices about their business priorities will thrive. Those who chase scale without considering the structural challenges of hospitality management risk following in the footsteps of their failed predecessors. The choice, as always, lies in the hands of today's industry leaders.