Marriott International, the latest major hotel company to enter the market is launching a pilot project over six months in partnership with Hostmaker to offer a selection more than 200 homes in London.
Choice Hotels, which started a Vacation Rental Program in 2016 and has since expanded its offerings to include 20,000 properties throughout the U.S.
Others are following a different route to establish connections with the home-rental market. Hyatt is one example. It shifted to homesharing by offering members loyalty points with Oasis, a serviced accommodation provider that offers homes in more than 20 countries. Accor Hotels also acquired three homesharing platforms in 2017 and consolidated them under the Onefinestay umbrella.
Marriott has a slightly different approach. They started with one trial location in a global gateway town and used Tribute, an existing hotel brand to expand into the space.
Response to disruption
These moves all have one thing in common: They are all part of a concerted effort to adapt to disruption caused by homesharing platforms. Homesharing platforms offer alternative accommodation options in different locations, often at a lower cost.
“New accommodation models have created a lot more travel demand, such as from people who wouldn’t have taken a trip before because of high costs or inaccessibility in the areas they wish to stay,” Lauro Ferroni of JLL’s Head for Hotels & Hospitality Group Research.
Homesharing platforms are a sign of major changes in the hospitality industry, where the emphasis is on personal, immersive and intimate travel. William Duffey is JLL’s Executive Vice president, Hotels & Hospitality. “Millennials want flexible, lifestyle-focused offerings. Hotel companies are continuing to play in that market,” Duffey says.
There is also a financial incentive for hotels that they explore the possibility of offering homesharing platforms to their customers. This could help to reduce hotel revenues and market share. Recent U.S. research shows that hotels experienced a 1.3 percent decrease in bookings and a 1.5% loss in revenue in the 10 most active Airbnb cities.
Leveraging hotels’ advantages
Hotels have an advantage in certain areas when it comes to homesharing. These include brand identity, customer loyalty, and local knowledge. Ferroni says that hotel companies have a wealth of information about their customers. They know who travels, what they spend, and when and where. They also have a wealth of well-known and valuable global brands.
Safety and standardization are two other major benefits. “Big brands bring consistency,” says Duffey. “Homesharing providers are less reliable and have a smaller inventory than hotels.” Hotels offer greater security through surveillance, staff and local status.
This shift could result in a better experience for guests. It combines the authenticity and flexibility of homesharing with the loyalty and consistency of hotels. Ferroni says that it is a positive way for guests to interact in a new way with a hotel brand that they are familiar with.
Using to compete on scale and cost
Hotels face significant challenges at this stage. It is costly to vet properties in order to maintain high standards and consistency. With price being a major motivator for homeshare bookings many consumers wouldn’t be willing to pay more for comparable properties on rental sites. Duffey says that big brands are more expensive to run, which means hotels cannot compete on cost. However, it is possible for them to make a profit.
Ferroni says that there is a risk that hotels may simply transfer existing guests to their homesharing products instead of reaching new customers and expanding their customer base. He says that these programs will be successful if they have a higher inventory and a greater number of overnight guests.
The ability to grow efficiently and quickly is another obstacle for hotels. Duffey says that scaleability and rapid scalability are essential to get something off the ground. “Buying businesses and groups with that scale is often the best choice.”
Despite these challenges, the hotel industry continues to adapt. Operators must experiment to discover differentiators that are both compatible with their brand values as well as appealing to their target audience.
Duffey says, “At this stage it’s about operators trying to figure out not just how they can get that right type of accommodation at a fair price but also how they can add business lines that will increase the value of that stay.”