Blurring lines, hotels get into the home-sharing business
Hotels largely stood by as home sharing companies like Airbnb began offering travelers a chance to bypass a standardized hotel room and, instead, live like a local.
But hotels are no longer standing by. In fact, they are beginning to get into the private home-rental market themselves, mostly at the high end — but with a difference. They say they can consistently provide service that is up to hotel standards.
Most home sharing guests leave positive reviews of their experiences, but when they do complain, it is often about cleanliness, last-minute cancellations by the host, problems with checkin or an unmet need at the property they have rented.
The hotel companies say their private lodgings are vetted, outfitted and maintained to hotel standards. In addition, the hotels say, services at their lodgings are provided by company employees rather than homeowners.
Hotel companies were “in bit of denial” about competition from Airbnb, said Makarand Mody, assistant professor of hospitality marketing at Boston University. “Now, they see it’s the same travelers, just choosing different accommodations based on the occasion or situation.” Guests who stay in a hotel for a business trip may prefer a multi-bedroom apartment in an interesting neighbourhood for family vacations, rather than connecting hotel rooms.
Adding private home rental is a way to capture more of the customers’ total travel spending, Mody said. “If I’m a Marriott customer, Marriott wants me to be able to find all my lodging needs on their website,” he said, “whether it’s a business trip or family reunion.”
It is only natural, he said, for hotel portfolios to include a new type of accommodation that the market wants.
AccorHotels, which operates hotels and other properties in 100 countries, has entered the home sharing market over the past two years by acquiring companies already operating there. In 2016 it bought Onefinestay, which was founded in London in 2010 and rents upscale private homes and apartments.
Accor has also purchased Squarebreak, which offers home rentals across a wider price spectrum, and Travel Keys, which manages vacation properties, like condominiums at beach resorts. The properties all offer check-in with a company employee, 24-hour support services, professional cleaning and hotelstyle toiletries. Private home rental is complementary to hotel offerings, said Javier CedilloEspin, chief executive of Onefinestay.
The company is actively adding properties in Europe, Asia, Australia, the Caribbean and Hawaii, Cedillo-Espin said. “As a customer told me, ‘Give me more destinations and I will stay with you more times,’” he said. “That’s the model we’re going for.”
Adding private homes to the Accor portfolio also allows the company to test and learn about new markets. Contracting homes to rent in a new area, like a small island in the Caribbean, is faster and less expensive than building a hotel, Cedillo-Espin said. “It’s a way to understand the market, see who the target customer is and get a feel for the future of the area.”
Hyatt Hotels Corp. has taken a minority investment stake in Oasis, which rents out 2,000 homes in 20 cities. The goal is to “serve high-end travelers across more dimensions of their lives,” said James Francque, head of transactions at Hyatt.
Local staff at Oasis properties, called sidekicks, act as registration desk, bellhop and concierge, meeting guests at the property to check them in, showing them the amenities on site and offering advice on local attractions and restaurants. Oasis’ home page displays the Hyatt brand, and World of Hyatt loyalty program members can earn or redeem points on Oasis stays. The partnership with Oasis also offers Hyatt guests some options in cities or neighbourhoods that currently lack Hyatt hotels, Francque said.
Marriott International Inc. recently started a six-month experiment in London with about 200 homes managed by Hostmaker. The homes are grouped with the Tribute Portfolio Hotels collection, which Marriott acquired from Starwood in 2016.
The Tribute Portfolio Homes, as they are called, offer personal check-in, professional cleaning services and on-call service help, and meet a list of safety and security standards. Homeowners are offered advice on how to design their properties to improve the guest experience.
Entering the home-sharing market is not without its risks for the hotel industry. “Our guests may not end up seeing enough value in it for us to focus on home sharing,” Francque, of Hyatt, said.
It is also not clear how to best expand the business or how to make it profitable. Managing the safety, quality and cleanliness of thousands of homes in disparate areas is far more complex than managing sets of similar hotel rooms under one roof.
Francque agreed. “It’s a tough model,” he said, especially as travelers continue to change what they are looking for. “We want it to be efficient and high touch.”