Despite hotel owners’ fears, the hotel players involved in homeshare tend to dismiss skeptics’ concerns about cannibalization. The audience for vacation rentals, they argue, seeks a different product than the business traveler staying a night or two in a city or the young single looking for adventure on a budget. Marriott International is eyeing potential vacation destinations that wouldn’t necessarily support a full-blown hotel development; 40% of its initial homeshare portfolio was in new markets.
Thomas Girard, CEO of Accor’s Onefinestay, said length of stay is probably the biggest factor that separates demand for hotel rooms versus vacation rentals — hotels average less than two nights; vacation rentals tend to stretch out for seven or more nights.
Homeshares also face different local legal hurdles than hotels. That will complicate due diligence and slow expansion for a company like Marriott, said Michael Bellisario, vice president and equity research analyst for Robert W. Baird & Co. “Their growth profile will be more baby steps and methodical. They will want to check all 10 boxes before they jump in.”
Hotel companies will be weighing their ability to scale and the potential revenues that homeshare affiliations will yield. Airbnb has already set the bar low, so potential fees from renting out a single home or apartment pale versus the management or franchising fees associated with hotels.
“For many companies, it’s hard to justify the economics of investing in the marketing and infrastructure to support something that represents a very small share or revenue for the foreseeable future,” hospitality consultant Bjorn Hanson said. One way to mitigate the smaller profit, he said, is to focus on the upper reaches of the market and destinations where higher daily rates will yield higher income.
Homeshare owners need some love, too. “To be competitive and continue to grow the platform, marketshare and units, companies need to make their products more attractive from the top to the bottom for all constituents, both travelers and owners,” Bellisario said.
Girard said the past year has been devoted to “ensuring we are customer-centric in everything we do,” from guests to homeowners and travel agents, with an emphasis on consistency and quality.
“The private rental industry is particularly complex and always evolving,” Girard added. “You need to be patient and persistent in order to succeed.”