Choosing between a hotel and a short-term rental (STR) can be tricky, but if “extras” and higher-touch services rank on the priority list, right now, hotels appear to have an edge.

According to a new report from Phocuswright, “U.S. Short-Term Rentals 2025: B2B Technology and Distribution Landscape,” 49% of STR guests believe hotels provide more information on tours and activities, while 53% believe they have better support for “non-lodging aspects of the trip.” Approximately 71% said it “describes them somewhat/well” in that they believe hotels offer better information or resources for tourist activities.

Considering the current market—defined by increasing costs of upkeep—this isn’t a battle the vacation rental market can afford to lose.

While Phocuswright found that 84% of STR hosts have explored ancillary revenue sources, they’re primarily charging for extended or increased use of properties via fees for pets (43%), late checkout or early check-in (32% versus 31%, respectively).

But guests want more than the freedom to sleep in on their last day or the chance to take Fido on a getaway.

According to Annie Sloan, co-founder and CEO of digital commerce marketplace The Host Co., a PhocusWire Hot 25 Travel Startup for 2024, private and personalized experiences are “the new frontier.” Guests are seeking “curated, one-on-one experiences” like guided hikes or natural wine tastings, as well as experiences that don’t require them to leave their rental.

“They’re asking for food delivery, spa services and instructors who come to them. That’s a huge signal: Guests want comfort, privacy and a sense of exclusivity,” Sloan said. Airbnb’s announcement last week of its new “Services” line of business reflects the growing demand for these types of in-home ancillaries.

And, according to Phocuswright manager of research and special projects Madeline List, if STRs don’t embrace these revenue streams, they’re leaving money on the table.

“We know from our data that STR guests are engaging in many kinds of tours and activities and non-lodging purchases throughout the course of the trip,” said List, who authored the recent report.

“This is really just an opportunity to take some purchases that would happen anyway and move [them] into the host revenue stream.”

What’s the holdup?

The opportunity is there for the taking, but according to List, STR operators are still trying to get rentals “up to snuff,” i.e., ensuring they appear as pictured and that they’re properly cleaned and well-maintained.

“They’re still struggling with some of those fundamentals, and the theory is that until those are covered, you’re not going to see hosts approach this incredibly aggressively,” List said.

What’s more, adding extra services requires time—a luxury not all STR operators have.

“Most property managers don’t have big teams, and they don’t have the time to think about new add-ons. They’re barely holding their head above water as it is,” Tim Choate, CEO of vacation rental platform RedAwning, said.

Most property managers don’t have big teams, and they don’t have the time to think about new add-ons. They’re barely holding their head above water as it is.

Tim Choate, RedAwning

Logistics add another component, requiring hosts to think about how to communicate options, pricing and payment. And then there’s execution, which comes into play even with tasks that feel “simple,” like stocking groceries.

List said, “You have to think about how you’re going to execute it: Literally, who is going to be the one to go pick these things up and come to the property and put it in the fridge?”

There’s also the element of change. According to Choate, if a host has historically provided an amenity to guests for free—think a crib or a rollaway bed—they may not be inclined to start charging, even amid ongoing economic uncertainty.

“There’s some amount of established practice that people get comfortable with, and change is not something that everyone loves to do,” Choate said.

According to Sloan, hosts have also worried that upselling experiences feels “transactional.”

“Many short-term rental hosts worry that charging for extras might come off as nickel-and-diming,” she said.

However, Sloan also said she sees this mindset shifting.

Benefits abound

Offering extra services improves profitability—and it allows STRs to better compete with hotels.

“Hotels have already, long ago, figured out that you need to introduce alternative revenue streams if you want to think really seriously about making robust revenue,” List said.

“Now, we want to look at the options for the short-term rental sector to do it, not because it’s simple or easy … but because it’s really the next growth step in order to have a healthier revenue, healthier top line.”

For property managers, it can also help balance increasing management costs with decreasing management fees.

Even if a guest doesn’t purchase the amenity, just seeing that it’s there makes your property feel elevated and aspirational.

Annie Sloan, The Host Co.

“In the old days of property management, it was pretty common for people to pay 40 and 50% [management fees], and nowadays, a lot of property managers are offering 20 or 25%. That’s hard because on the other side, the costs have gone up. Labor is higher than it used to be, the supplies they need are more expensive than they used to be,” Choate said.

According to Choate, property management in the U.S. has been “squeezed” because of these diverging trends, making add-on services even more important.

“A lot of property managers are using add-on services as a way to find profitability in a business that’s challenging,” he said.

Marketing strategies

Hotels have historically framed upsells as upgrades and exclusives, as opposed to fees, Sloan said—and STRs will benefit from following suit.

“A minibar isn’t a markup; it’s a perk. Room service isn’t a charge; it’s an indulgence. When hosts present amenities as thoughtful, optional enhancements, they elevate the stay instead of detracting from it,” Sloan said.

According to Madison Rifkin, CEO and founder of Mount, a platform that partners with local businesses to create a TikTok-style feed showcasing bookable experiences, profitability has a wider scope.

You’ve got to get pretty smart about why people are coming, and you can offer it—you’re just not going to be the one fulfilling it, which I think is a huge game changer here.

Madison Rifkin, Mount

Margin increases aren’t likely to result from small sales unless STRs process a higher volume, she said, and attribution is another issue.

“The guest will definitely hear about [an activity] from the host, but they might not use your booking link. They might remember they loosely heard something from you, [forget] where they got that information and google it. None of that’s going to track back to you, and you’re not going to get that money,” she said.

Instead, profitability results from better reviews, allowing STR operators to secure more bookings and charge a higher nightly rate.

“You’re getting better, five-star reviews, you’re standing out, you’re differentiating your property,” Rifkin said.

Sloan echoed this and said that in addition to increasing revenue, amenities “boost purchase consideration, booking conversion, anticipation and guest satisfaction.”

“Upsells like private chefs or farm tours make listings more memorable, more bookable and more shareable. Even if a guest doesn’t purchase the amenity, just seeing that it’s there makes your property feel elevated and aspirational,” Sloan said.

Navigating new regulations

Integrating upsells is now simpler thanks to new tech, including tools offered by companies like Mount and The Host Co. However, those in the space also have to address changing policies and regulations.

Considering Federal Trade Commission rules requiring businesses to disclose mandatory fees in the total price, property managers may want to improve margins by making add-on charges “completely optional” and tied directly to their operation, Choate said.

“There’s an opportunity for them to say, ‘What are the add-ons I can do that are great value to the guests, where I can keep the revenue and benefit from the fact that I actually have a local presence?’”

New Airbnb policies are top-of-mind too. The vacation rental giant just relaunched its Experiences platform and introduced the new Services business that allows guests to book add-ons such as catering or massage therapists. It also rolled out a new off-platform and fee transparency policy prohibiting “requesting, sending or receiving payments outside of Airbnb.”

“It definitely hinders the tech companies—I don’t know if it’s going to hinder the actual hosts or property managers, but it makes sense. Airbnb wants to keep every transaction they possibly can on their platform,” Rifkin said of the off-platform fee policy.

Where the line may “get blurred” is if Airbnb ends up interfering with hosts’ ability to share information about local businesses, Rifkin said.

Choosing services and changing the narrative

There’s an added element of deciding which services to offer—and according to Rifkin, operators need to ask themselves who their guest is.

“Why are they coming? What is the thing that makes your market really special? It’s different for everyone,” she said.

Being unique is certainly a draw—Rifkin used the example of a company outside of San Diego that offers baby goat yoga—but tapping into local draws is another piece of the puzzle. In Iceland, for example, operators likely want to partner with a company that takes visitors to see the Northern Lights.

“You’ve got to get pretty smart about why people are coming, and you can offer it—you’re just not going to be the one fulfilling it, which I think is a huge game changer here.”

Guest expectations play a large role as well, and it will require a group effort to shift beliefs about what they can and cannot get from a vacation rental.

“The more hosts or operators who would step up and start offering other things, the less the reputational factor will be a problem,” List said.