3 Things Rental Real Estate Investors Can Learn from Five-Star Luxury Hotels

3 Things Rental Real Estate Investors Can Learn from Five-Star Luxury Hotels

By Strategic Passive Investments 

In the wake of the “first round” of the nation’s cumulative bout with the COVID-19 global pandemic, Americans swarmed airlines, hotels, and attractive vacation destinations. In fact, according to a recent article from Forbes, U.S. travelers are spending thousands more on trips both at home and abroad than they would have in the past. As a result, destinations like Gatlinburg, Tennessee; St. Augustine, Florida; Gulf Shores, Alabama; Hilton Head, South Carolina; and Savannah, Georgia, have booming housing markets and are emerging hot spots for real estate investors and homebuyers alike.

While retail buyers are seeking first or second homes in most cases and real estate investors are seeking investment properties, another “player” in the short-term-stay place is actively changing the way it does business in order to stay afloat in the age of COVID. The luxury hotel industry is working hard to attract its big-spending customers in new and innovative ways and, maybe surprisingly, there are some things real estate investors can and should learn from these high-dollar hospitality behemoths.

One of the most interesting trends emerging in five-star hospitality is a huge interest in fine art. Of course, hoteliers like the now-notorious Steve Wynn have long been collecting art and displaying it in high-end hotels. At one point, Wynn’s Bellagio in Las Vegas (now part of another hotel chain) owned a huge collection of works of fine art from around the world.

The trend is spreading, and these collections are no longer personal collections housed in hotels but, instead, collections accumulated by the business in question. In some cases, the hotels are actually using the allure of sleeping in the same room with fine art, such as a Picasso or a Dali, to bring in customers. Understanding that allure can teach real estate investors three important things about managing short- and long-term rentals of their own.

  1. First, the allure has to do with creating a “story.”

    As social media has expanded to influence an increasing part of daily life since the early 2000s, the concept of a curated “story” has grown in importance for the roughly 3.96 billion people actively using at least one social media platform. In 2020 and 2021, with the emergence of COVID, those billions of people are, on average, spending more than 65 minutes a day on platforms, and that means having a good location for their “story” is more important than ever. That is one reason hotels have started buying up (and ostentatiously displaying in individual rooms) fine art. It makes a great background for the visual narrative on consumer’s social media streams and feeds. “The art becomes part of your vacation, part of the experience,” explained one marketing and social media manager.

    What real estate investors should take away: A rental “experience” that adds to the appeal of a renter’s personal and curated social media “story” can add dramatic appeal to a unit. Use this information in your marketing and when rehabbing units. Creating an alcove or noting a particularly scenic spot (yes, it can be as simple as a balcony or the pool) could help attract tenants and even enable you to charge higher rates in some cases.
  2. Second, residents (long- and short-term) desire a “sense of place.”

    One thing that many renters lack is a feeling of being “at home.” Not surprisingly, this disconcerting sensation is also something many hotels try to combat on behalf of their residents. Matthew Whitaker, an art consultant for high-end hotels, explained in a Boston Globe article that art helps a hotel establish “a sense of place” that creates a stronger connection between customers and the physical location. For tenants who may be accustomed to feeling as if a rental is a temporary stop instead of a true home, having a sense of place (whether created via the display of museum-quality sculpture or not) can be an extremely attractive thing.

    What real estate investors should take away: Rental units that feel like home will be treated more like a home. You have probably heard investors who use the lease-option strategy in their rentals talk about what good care tenants take of properties that they believe they might buy in the future. Creating a sense of place for tenants either through personalized services and management or through unusual unit features that feel unique in some way is a great way to encourage tenants to feel ownership of a property. And, if you happen to own a property in an area with some history, make sure your renters know that history! They will enjoy sharing the information with others it may create a feeling of attachment to the property.
  3. Third, “surprise and delight” stick longer than you might expect.

    In downtown Denver, a hotel hired 300 local artists to create works of art to be featured in public spaces and guestrooms in the hotel. Nearby, a mixed-use hotel/retail/dining space features 700 custom sculptures by local artists. Did those hotels just want to support the local art community? Nope. It might have been a pleasant side effect, but the actual goal, said the CEO of the company that coordinated both projects, was to “surprise and delight” people visiting the venues so that they would remember the experience later and, hopefully, return.


What real estate investors should take away: “Surprise and delight” may not be the very first thing you think of when you start thinking about your rental assets, but they should be up there – especially if your portfolio contains Airbnb rentals or other short-term rentals, but also for longer-term residents. That positive feeling you get when you are literally delighted by a surprising element of a property will stay with your tenants far past the day they sign the lease, and it will stay with short-term renters in a way that will draw them back time and time again to relive the memory.

Five-Star Ratings are More Than Just Hotel Awards

As anyone with a Yelp account knows, five-star ratings are no longer the exclusive purview of luxury hotels. Even landlords have online ratings that both plug and plague them, and you likely are being evaluated on more platforms that you could ever track alone if you own even one rental property. While dedicated, solid, reliable, good service is certainly the linchpin for successful real estate investing, you can add value – and publicly perceived value – to your rentals by watching what works in other sectors and applying that knowledge to your own investments.