The next big property alternative could be short-term holiday rentals.

So said a report on the potentially $60B global 'alternative accommodation' sector now dominated by aggregator websites like Booking.com and Airbnb.

“With more than $60 billion of revenue opportunity, relatively high investment yields, and a growing consumer base, it’s clear the alternative accommodations sector is ripe for consolidation,” a new JLL analysis concluded.

“The injection of institutional capital has the potential to accelerate the sector’s growth just as it did to the hotel industry in the 1980s. Further, traditional lodging brands and distribution companies are missing opportunities to meaningfully grow their market share and fees. It’s therefore only a matter of time before all three constituencies aggressively enter the alternative,” JLL added.

JLL has every reason to hope its prediction is right: In September 2021 it launched a short-term rental service in partnership with Lavanda with the aim of competing with the big booking platforms. With an initial launch in the UK, JLL Short Stays looks to expand from 1,000 homes domestically to more than 35,000 globally during this year's rollout, PlaceTech reported.

Three issues will determine how fast the new alt grows.

First, will the major hotel parent companies (Accor, Hilton, Hyatt, IHG, Marriott) increase their exposure to the alternative accommodation sector? Second, will new brands be required or can existing brands be merged or adapted to suit? And will private equity bite?

The opportunity arises thanks to the few and small branded operators in alternative accommodation: For instance, JLL showed that Airbnb’s operators list an average of 1.38 properties each. This highly fragmented sector is consolidating at the level of online platforms, where Expedia, Booking.com, Hotels.com and Airbnb dominate ahead of a chasing back of Kayak, Vrbo, Priceline, Travelocity and Tripadvisor.

However, consolidation among operators is the prize, just as it was in the once-fragmented mom-and-pop hotel sector. Soon brands will create their own booking engines, displacing the four giant intermediary platforms that dominate today, JLL said.

“Ownership structure within the traditional lodging industry has transformed," the report said. Brands (acting primarily as operators), REITs, and private equity groups encompass most of the industry. "Given the similarities between the alternative accommodations space today and the lodging industry 30+ years ago, it begs the question as to how the latter will evolve as the industry matures and suggests that the alternative accommodations space is ripe for consolidation via private equity investment.”