The inevitable shift towards technology consolidation in short-term rentals

In the short-term rental (STR)
management arena, a persistent debate revolves around technology choices:
should property managers assemble customized tech stacks with specialized
tools or adopt an all-in-one property management system (PMS) for simplicity and
efficiency?

While this question dominates discussions, it overlooks a more
pressing issue — the inevitable consolidation of technology within the STR
sector. Ironically, this is the critical missing puzzle piece in this ongoing
debate.

This
oversight is happening because the STR industry tends to view itself in
isolation, focusing exclusively on its own unique challenges. While there are
indeed unique aspects to the STR industry, the industry follows common patterns
observed across other cloud software verticals. When the industry considers
broader business trends, a common thread emerges: industries naturally
gravitate toward consolidation, culminating in comprehensive, all-in-one
solutions.

Consider
HubSpot. What started as a marketing software platform evolved into an
all-encompassing ecosystem that now supports sales, customer service and customer relationship management (CRM) capabilities. Microsoft expanded beyond its foundational Windows and Office
products to create Microsoft 365, integrating cloud services, collaboration
tools and enterprise-level security — all under one umbrella. Even online
travel agencies like Expedia and Booking.com
have consolidated services, allowing users to book accommodations, flights,
experiences and rental cars on a single platform. 

Despite
potential challenges or failures in some consolidation efforts, the overarching
strategy remains toward unification. This pattern isn’t just a trend; it’s the
natural evolution of industries as they mature and professionalize. Industries
often experience a “mushroom phase,” characterized by the rapid proliferation
of players and specialized tools — a phase the STR industry is currently
emerging from. This phase often begins when industries digitize or consumer
behavior shifts. 

While
this phase fosters innovation, it also leads to fragmentation and complexity.
Over time, as industries seek to streamline operations and enhance the consumer
experience, consolidation becomes the logical next step. The STR industry is
primed for this transformation, approaching a new level of professionalization
— not only in technology but also in services.

Investor interest

Investors
are acutely aware of this trajectory and are actively accelerating
consolidation within the STR industry. Recognizing patterns observed in other
sectors, they are strategically injecting capital into companies positioned to
drive this unification. This influx of
investment stems from an understanding that professionalization and
consolidation enhance scalability, efficiency and profitability.

The
only logical and natural place for this consolidation to occur is within the property management system (PMS). Investors recognize that the PMS is the strategic point for consolidation, because it sits at the heart of property management operations and serves as
the system of record, housing the core functions and tools needed to run an STR
business.

By
focusing on expanding the capabilities of PMS platforms, several industry pain
points can be addressed. Consolidating functionalities like revenue management,
dynamic pricing, financial reporting and maintenance scheduling into the PMS
eliminates the fragmented approach of managing a patchwork of systems, which is
increasingly unsustainable in a market demanding agility, efficiency and
cost-effectiveness.

Property
management companies are increasingly opting for streamlined tech stacks
— typically a PMS plus one or two additional tools — to focus on providing
excellent hospitality experiences to guests. This approach spares them the
complexity of evaluating numerous software solutions and dealing with the
connectivity issues between them. Training staff to use multiple systems can be
burdensome, and a simplified tech stack alleviates this challenge.

However,
consolidation doesn’t mean that every single tool will be absorbed into the
PMS. Specialized tools will continue to have a place, particularly for niche
services requiring deep expertise. These tools will become complementary layers
added to the robust foundation provided by the all-in-one PMS. For example,
while HubSpot provides an all-in-one solution, it also offers a marketplace of
apps, enabling businesses to integrate specialized functionalities as needed.

This
model offers the best of both worlds — a strong, efficient platform for core
operations with the flexibility to incorporate specialized tools. Property
managers benefit from having a single source of truth for their day-to-day
activities, with centralized support and accountability. 

Ultimately,
the debate between assembling a customized tech stack and adopting an
all-in-one PMS is becoming redundant in light of the unstoppable wave of
consolidation. Whether the industry is ready or not, this natural progression
will unfold — if not in one year, then in five or ten.

It’s not a question of
choosing between plug-and-play solutions or integrated systems; it’s about
recognizing an evolution that is reshaping the very foundation of the STR
industry. Adaptation isn’t optional. Property managers and industry
stakeholders must embrace this shift toward unified platforms or risk being
left behind.