Rent High Life in Plush Homes: Unreal Estate

SEATTLE ( TheStreet) -- For nine years, I've organized fall foliage trips to Vermont for friends who -- in harder times -- found $100 weekend lodging a bit rich for their blood. However, since 2001, I've been able to locate lakeside houses with hot tubs, indoor fire pits, boats and, usually, enough sleeping space to keep everyone happy.

This year's model, a seven-bedroom cabin with private pond, Jacuzzi, fireplace and canoe came out to $109 per person after taxes for a three-night stay. That's just $20 more than an average night at one of the town's four hotels and $50 less than a night at a local inn or bed and breakfast, according to TripAdvisor.

You can get this cushy pad in Palm Springs for less than the price of a hotel room.

"If you have friends and family coming along, good grief you'd better stay in a vacation rental," says Bill Furlong, chief executive of Seattle-based Escapia, which oversees vacation property management site Escapia.com and rental site ClearStay.com. "Imagine what a hotel room looks like after two days in Hawaii with a family of four. You dream of going home."

The vacation rental industry has matured well beyond the shore-and-slopes niches of its infancy. Bookings at Escapia, which comprises more than 200 rental companies throughout the U.S., climbed 8% in June from a year earlier after the company focused on North Carolina's Outer Banks, coastal Oregon and Hawaii. Its distribution partner HomeAway has become the seventh-largest travel site in the world, with rentals in New York, Paris and London as well as Dubai, Cape Verde and Thailand.

Amid the economic crisis, 54% of HomeAway's property owners had to rent out space just to cover costs. Value-hungry renters seeking amenities as simple as a kitchen have stabilized or increased business for 62% of those owners. Craigslist, meanwhile, says personal interaction has caused rentals to triple on its site in the past two years.

"When you're doing a vacation rental (or quite separate but also popular, a housing swap) you typically meet the owner of the house or apartment and have many conversations with the other party," says Susan McTavish Best, spokeswoman for Craigslist.

Forming relationships with snowbirds in Florida is great for business, but doing the same in costly locales like Boston (where Business Travel News says hotel rooms average $248 a night) or Moscow (where hotels average a world-record $379 a night) is pure genius. In an effort to fill ski-cabin space during the offseason, homeowners in Vermont often send me and my friends restaurant and activity suggestions weeks in advance.

While most vacation rental sites are still sheltered by investors, with HomeAway pulling in $250 million in venture capital in November alone, they afford clients something their competitors at Orbitz Worldwide ( OWW), Priceline.com ( PCLN), Starwood Hotels & Resorts Worldwide ( HOT) and Marriott International ( MAR) can't: personality. A big outfit might put freeze-dried coffee on your table in the morning and change the sheets, but it takes the little guys to offer you their houseboat on Boston's Charles River, a windmill on one of Greece's Aegean Islands (a two-bedroom on Cyclades for $403 to $547 a night) or a room on the Champs Elysees with a view of the Eiffel Tower (one bedroom, $323 to $425 a night).

"We're their eBay ( EBAY)," says HomeAway CEO Brian Sharples. "They created a marketplace that didn't exist because it couldn't exist, because the ability to cost-effectively find a buyer for a $12 item if you live in Kansas and a buyer lives in Boston was impossible. That's exactly the problem we're solving here."

-- Reported by Jason Notte in Boston.

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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

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