By Brent Handler
Luxury travel and real estate ownership are changing.
To an extent, this is a byproduct of the post-pandemic era. For example, even as the advent of new built-to-rent communities provides incentives for renters, owners and builders, the Washington Post declared that “the post-covid luxury spending boom has begun, and it is reshaping the economy.”
This includes how owners buy and market their properties for rent in the luxury vacation home segment.
Smart owners anticipate the movement of cash flow and the creation of new markets – as many did in the last decade, getting in early on the creation of the shared accommodations market with the founding of Airbnb and similar platforms.
As the shared accommodations pie continues to grow, new marketplaces are developing to provide options for owners – in the best case, combining the opportunity for investment returns with the personal flexibility luxury homeowners seek.
New platforms opening these marketplaces are an innovation whose time has come.
What a Luxury Homeowner Really Wants
While the potential benefits of investing in luxury real estate are well known, there are also complexities.
First, of course, is the basic challenge of ownership – managing the property.
This involves marketing your vacation home to attract prospective guests, preparing it for occupancy, cleaning and restocking the property between visits, handling ordinary and extraordinary repairs, maintenance, and upkeep.
From a financial perspective, financing a second (or third or fifth) home, staying on top of cash flow and engaging the right management assistance are top priorities.
On the other hand, ownership provides benefits both psychological as well as financial – luxury vacation homes can provide unmatched retreats and meaningful cash flow for the affluent investor (indeed, a recent trend shows many young affluents now purchasing second, third and fourth homes either alongside or even before investing in a primary residence.)
Joining the Benefits of Luxury Travel and Home Ownership
Enjoying both the financial and psychological benefits of a vacation home, together, can be difficult.
If you make renting your home a priority, that limits the time you are able to enjoy it yourself.
On the other hand, keeping a property available for rent and restricting personal use can lead to the erosion of appreciation through opportunity costs – securing guests for a luxury property is a notoriously hit or miss proposition. Owners must always weigh the costs of upkeep, maintenance and marketing against the actual income accrued.
This means that in the end, the benefits of a luxury travel experience and luxury home ownership stand in tension with one another: Balancing the availability of your luxury travel retreat for personal use with the financial benefits of home ownership can be a tricky task.
Opening a New Path
This pain point led us to the recent launch of Inspirato Real Estate (IRE).
The premise is simple: Provide investors with an easy way to find, buy, own and enjoy a luxury vacation home, all via one platform.
IRE offers pre-arranged leases for buyers who purchase vacation homes that provide for predictable income, regardless of booking; flexible owner usage plans with hospitality services such as daily housekeeping and onsite concierge; 24/7 property management, including marketing, booking, bill payment and maintenance; and strategic planning and improvement advice to maximize property value.
Significantly, the package also includes Inspirato Club membership with members-only rates for travel across Inspirato’s growing portfolio of luxury vacation homes.
This positions the platform as a one-stop solution for mitigating the risks of luxury home ownership, enhancing the potential for returns, and delivering the flexibility and diversity of subscription-based luxury travel experiences at the same time.
Bringing the Benefits of Subscription to Luxury Home Ownership
We noted in a previous article the growing power of the subscription model in luxury travel.
What is true for travelers is equally true for luxury vacation homeowners: subscription-based innovation is a way of joining the affluent consumer’s desire for seamless, efficient travel experiences with accelerated upside for the investor.
Luxury real estate appears to be one of the last asset classes available for this kind of innovation. The extension of the subscription model into ownership provides a way for wealthy investors to diversify their investments in real estate, guard against “asset inflation,” and generate high cash on cash return – essentially, owning the “ultimate vacation home.”
And we believe this is just the beginning.
Expect to see additional innovations in an area that has been largely untapped – the convergence of luxury travel and luxury real estate.
It’s a space that should generate attention from investors ranging from hotel owners to institutions to successful developers looking to diversify their real estate holdings into the luxury segment.
If the positive reception to the launch of IRE and our conversations with the financial community are any indication, the interest is growing.