Although Airbnb has been around for a little over a decade, it is only in the last 4 to 5 years that the accommodation rental platform has got onto the radar screen of the big hotel chains.
After choosing to largely ignore the ‘sharing economy’ phenomenon initially, several of the major hotel groups have taken steps to compete more directly with the accommodation rental platforms, as exemplified by Airbnb, but with a more curated approach. In fact, the hotel chains are increasingly deciding that the best way to address the ‘sharing economy’ is by acquiring existing brands themselves.
AccorHotels has led the charge in embracing the ‘sharing economy’ with numerous acquisitions in the sector. Meanwhile, Marriott and Choice have followed AccorHotel’s lead.
AccorHotels leads the way
More than any other of the major international chains over the past few years, AccorHotels has moved to embrace the alternative accommodation sector. In April 2016, Accor took a significant jump into the so-called ‘sharing economy’ when it purchased the luxury home-rental platform onefinestay for €148 million.
In fact, this acquisition was preceded by two smaller investments in February 2016, when the chain announced it had purchased minority stakes in two holiday-rental businesses, explaining that it “wanted to understand what consumers expect from a holiday rental”.
The hotel operator acquired a 49% interest in Squarebreak, an online rental platform with upscale properties across France, Spain and Morocco, as well as a 30% stake in Oasis Collections, which offers leisure and corporate rentals in the US, Europe and Latin America.
onefinestay operates as an independent business unit within AccorHotels Group.
According to the company, onefinestay is very selective about its supply chain, accepting only one out of ten properties that apply to be listed and all locations are visited and vetted by staff (as opposed to Airbnb, for example). The typical property in the firm’s inventory is worth US$2-3 million and the average nightly rate for an accommodation is about US$600-700.
The group began with listings in prime urban locations, including central London and Manhattan, Los Angeles, Paris, Rome, Miami, Boston, Milan, San Francisco, Edinburgh, but now has expanded exponentially following its 2017 merger in 2017 with TravelKeys and Squarebreak, which increased its portfolio of homes from 2,500 to 10,000 +, and from 9 destinations to over 200 around the world.
Choice moves into rentals
Since February 2016, Maryland-based Choice Hotels International has been offering holiday rentals on its website and has been considering branching out into sharing economy/alternative accommodations, as well, according to Steve Joyce, former CEO of the company. While the company states that it launched its vacation-rentals division in in order to "compete with companies such as Airbnb and HomeAway", in reality Wyndham's extensive US vacation rental network looks more like a direct competitor.
Only professionally managed inventory
Vacation Rentals by Choice Hotels is partnered with holiday rental management companies, such as Magical Memories, Sterling Resorts and Bluegreen Resorts, and has inventory in 15 US states, including Hawaii. Leisure destinations include: Orlando, Destin and Panama City Beach, Florida; Aspen, Colorado; Williamsburg and Shenandoah, Virginia; Phoenix; Myrtle beach, South Carolina; and Big Bear Lake, California. Vacation rentals are linked to the company's loyalty scheme, Choice Privileges, and members are able to earn points for stays at vacation rentals. This is, nevertheless, a somewhat different business model from Airbnb's peer-to-peer network.
Marriott joins the sharing economy
In yet another sign of Airbnb’s impact on the hotel sector, Marriott has joined major competitors like AccorHotels and Choice in introducing a home sharing platform. At the end of April 2018, Marriott International signed an agreement with UK-based home rental firm Hostmaker, to launch Tribute Portfolio Homes which offers Airbnb-style home rentals.
Tribute Portfolio is a brand that Marriott inherited from its 2016 acquisition of Starwood Hotels and Resorts and is one of the group’s two ‘soft’ brands (the other being Autograph Collection). The home sharing programme allows Marriott Rewards members to earn loyalty points and ‘Elite’ nights when booking rooms or entire houses in London, as well as the ability to redeem points against stays.
According to the Tribute Portfolio Homes website, “Every property within Tribute Portfolio Homes is vetted and reviewed by our hospitality experts. Properties meet rigorous safety, security and design standards before they are accepted. Marriott’s partnerships with local property management experts, like Hostmaker, provide 24/7 support to guests during their stay. Marriott also offers 24-hour in-person check-in, high speed Wi-Fi, premium bed linens… and full-sized bath amenities, cooking essentials and childcare items, such as high chairs and travel cribs. Travellers searching for a Marriott or Starwood hotels website for a London stay are now being offered the option of booking a home stay with Tribute Portfolio Homes."
Hostmaker is a hospitality management service that helps Airbnb hosts, as well as other homeowners who offer short-term rentals to provide more services for their guests, including housekeepers and concierges. The service claims to be able to integrate new properties into its network in the space of 72 hours and to boost hosts’ rental income by 30%.
Marriott expands home sharing in Europe
At the beginning of October 2018, Marriott announced plans to expand its Tribute Portfolio Homes home sharing programme beyond London. The hotel group’s network now includes more than 1,500 properties in nine cities across six countries, globally, including: Bangkok, Barcelona, Cannes, Florence, London, Madrid, Lisbon, Paris and Rome. The company's experience in London has shown that, on average, guests stayed more than twice the typical hotel length of stay. More than 75% of guests staying at Tribute Portfolio Homes were travelling for leisure with friends and family or extending business trips to include their friends and family.
Photo Credit: onefinestay