Marriott’s Short-Term Rental Plan Shows Airbnb Is A Hospitality Force To Be Reckoned With
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Marriott is getting into bed with the short-term rental industry, and experts say the move will further legitimize, not kill off, the growing home-sharing sector.
“[Competition from Marriott] is a significant challenge for a player like Airbnb,” New York University Stern School of Business professor Allen Adamson said. “Being first matters, but being the best wins the day.”
Nearly 11 years after Airbnb entered the short-term rental industry, Marriott is expanding its own home-sharing brand, Homes & Villas by Marriott International, across 100 markets in the U.S., Europe and Latin America. While short-term rental services and hotel companies have sparred in the past, mainly over how regulated the industry disrupter should be, Marriott’s latest move pits a traditional hotel company against short-term rental brands more directly than ever.
“They’re both going after the same prize, but they’re both coming from different parts of the field, so they’re not on equal footing,” Adamson said. “Marriott’s global-ness will make it harder for Airbnb to ladder up in comparison.”
Adamson, who has written about Marriott in his book, “Shift Ahead: How The Best Companies Stay Relevant In A Fast-Changing World,” thinks the hotel brand will have an easier time entering the short-term rental market compared to Airbnb trying to win over business travelers who would normally stay in a hotel.
While he recognizes both brands have a global appeal and ability to scale, Marriott’s existing infrastructure, decades of customer service experience and depth of operations will enable it to appeal to older travelers who wouldn’t normally stay at a short-term rental.
Marriott ran a pilot program last year through its Tribute Portfolio Homes brand extension in London, Rome, Lisbon and Paris, and the units included a 24-hour customer support hotline and in-person check-in. The hotel company also noted guests were staying three times as long as guests were in a traditional hotel.
Marriott customers will earn loyalty points through its recently rebranded Bonvoy loyalty program when staying at one of the properties, just as they would at a regular hotel. The move also positions Marriott to better court younger travelers who crave a more authentic experience when vacationing and would typically rent an Airbnb.
“It’s too important a piece of the market because all these younger consumers staying at the bottom of the market are going to be growing up and willing to spend more and still want to stay in a home and not in a generic hotel,” Adamson said. “If Marriott doesn’t get into the game, they’ll lose the market.”
Marriott’s foray into short-term rentals comes after news broke last month Airbnb is acquiring HotelTonight, a company that offers users discounts on same-day hotel room bookings. Marriott arrives to the short-term rental space as other hotel brands are reportedly also exploring the sector — after AccorHotels and Hyatt have already made their own imprints with Onefinestay and Oasis Collections, respectively.
But Accor admitted in 2018 the Onefinestay brand was losing money, and Hyatt eventually ended its affiliation with Oasis. Experts say Marriott’s expansion is less about competing head-on with industry disrupters than it is about creating the hospitality equivalent of an omnichannel experience, already evident in its retaining 30 brands after its $13B merger with Starwood.
“The industry is trying to move toward an asset-light model,” Boston University School of Hospitality Administration professor Makarand Mody said. “What hotels are trying to do is have as many models as possible for product distribution and garner the most bookings.”
Marriott isn’t expected to compete with the likes of Airbnb for just any apartment rental. Instead, the company said it will focus on an initial 2,000 high-end homes in Europe, the U.S. and Latin America.
Offerings include an oceanfront villa in Anguilla that comes with a private butler and house staff, an 18th century Irish castle that sleeps 17 and a six-bedroom villa in Sorrento, Italy, that overlooks the Mediterranean Sea, according to a Marriott release.
Rather than Marriott owning and operating the new brand, it will rely on a network of property management firms to handle homes in each market. Marriott may arrive to the sector with brand recognition and a high level of customer service experience, but it also has brand and safety standards that could be hard to implement in individual homes compared to a 500-room, build-to-suit hotel.
Mody expects the hotel giant to have some leeway in its short-term rental space when it comes to what amenities and toiletries are offered to guests at someone’s personal home. But Marriott’s safety standards will put it at a competitive advantage.
“Property management companies that work with the likes of Marriott pay more attention to safety standards than what you might find on Airbnb, where it is often just an individual in charge,” Mody said. “Working with partners who do this day in and day out is going to make it easier to incorporate some of these safety standards in a person’s home that ends up on Marriott’s platform.”
The awkward headwind Marriott faces is that it will now be competing in a space numerous lodging associations and hotel groups have fought against in major U.S. cities. It will also be adding numerous listings in markets where it already has a well-established network of operators who may not want to see added competition from the short-term rental sector.
“It’s a tricky dance to do, but they have to because the reality is that market is there, it isn’t going away and it’s going to grow,” Adamson said.
Mody wondered if the company might agree to not place any of its short-term rentals within a certain distance of an existing Marriott-branded property.
Adamson thought it might work in a Marriott operator’s favor to be near one of the short-term rentals. If a guest ended up not liking the home share, the hotel company could just move the customer to a nearby Marriott.
Even a one-time short-term rental adversary welcomed the news of Marriott entering the space. The Massachusetts Lodging Association fought for years for the state to rein in short-term rentals and start applying the same hotel taxes and regulations to guests staying in units offered by services like Airbnb. Now that the state and Boston have passed tougher short-term rental regulations, the MLA isn’t as opposed to the sector.
Marriott entering the field only makes the relationship warmer.
“All we ever wanted was a level playing field with short-term rentals, and we now have that,” Massachusetts Lodging Association President and CEO Paul Sacco said. “Marriott offering a short-term home rental is a lot better than what’s happening in a lot of these other homes. It has higher standards.”
Representatives with Marriott and Airbnb were not made available for comment in time for publication, but an Airbnb spokesperson told the Wall Street Journal, “We welcome [Marriott] to the party and wish them bon voyage.”