IMO it is necessary in competitive markets. 

Some towns require a nightly online form to be filled out for any non-residents who are parking their cars (this is easily automated from an operational standpoint).As the MTR market becomes saturated over time, those who have separated themselves from the rest of the "competition" will continue to perform well by having an outstanding listing and all the MTR-specific amenities.

Like others said, there's no specific area that you could invest but rather the area where you have a competitive advantage.

Quote from @Chris Primavera: @Nick Velez thanks for the info and I have heard that the Gatlinburg area isn't necessarily a great market for your first investment because of the competition and amenities. 

To me STR and hotel caters to different groups of travelers and so despite competition as long as the travel demand of Hawaii remains (as you pointed out is a robust assumption) I think both will continue to do well.  

.- The 203(k) will allow you to bid on properties that need repairs that won't qualify for a traditional mortgage => less competition => better purchase price.You will need to find a great local contractor you can trust to supply the required bids to qualify for the 203(k).- After closing, you can do some of the work yourself to save money, but the program doesn't allow you to pay yourself.You will want to buy a Class B property, maybe Class C+, in an area that seems to be improving.

for infill I concentrated on Charleston Sc and built about 35 homes in that market. uber competitive for dirt though they are running out of it and the city wont let you tear down homes in many cases because of historic considerations.

“Lyons, I love seeing someone with your drive and vision diving into multifamily real estate in LA—you’re in one of the most competitive and opportunity-rich markets out there.

If that is true I would probably sell and buy in a place where there is less competition.   

While the property is in a smaller town, it’s relatively close to a larger city, which I think adds a lot of potential for attracting both short-term guests and long-term tenants.The motel has fewer than 16 rooms, and the nightly rates are extremely competitive for the area.