Your Home Away From Home
Everyone loves a good vacation. Whether it be for days or weeks, the feeling of dropping all responsibility and leaving town is second to none. The increase in modern technology has simplified the booking process like never before. Instead of settling for the traditionally over-priced hotels, travelers can choose from an array of homes using applications such as Airbnb. But how does the lodging industry plan to compete with profitable startups who can offer tourists more options across the globe?
Marriott International may have an answer, planning to compete with Airbnb at its own game with the announcement of a home-rental subdivision. This will be no easy feat, seeing as Airbnb offers more than 3.5 million more homes than Marriott does at this time.
The solution to this problem could come in the form of a new pilot program offering 2,000 upscale homes in 100 markets throughout the U.S., Europe and Latin America. Guests will be able to use the same loyalty points they earned with the other Marriott-affiliated brands towards these homes. From one bedroom apartments to Scottish castles, the Marriott can be seen as a more flexible booking option — a great option for wealthy corporate executives and students looking to travel the world on a tight budget.
Additionally, Marriott guarantees hotel-esque amenities such as Wi-Fi, clean sheets and smoke alarms. The properties being owned by one organization is a significant advantage: “One of the challenges you see with home sharing is there's too much inventory without quality filters or brand assurances,” said Marriott Global Chief Commercial Officer Stephanie Linnartz.
This approach, however, does not come without risk. Many hotels have struggled to transition into the home-sharing market. In 2016, Accor Hotels acquired home-rental service Onefinestay for $169 million and a majority share in concierge platform John Paul for $120 million. A mere two years later, Accor hotels reported a $288 million write-down on these investments. In 2017, Hyatt invested in luxury home-sharing sight Oasis, but ultimately divested in 2018 because of government restrictions preventing growth. The great uncertainty that comes from entering into the home-sharing market cannot be overlooked. With a trial test targeting in New York, Marriott hopes that this model can translate into international long-term success.
To counter the lodging industry’s efforts at disrupting Airbnb’s momentum, they have been investing in more traditional lodging operations. In addition to its purchase of Hotel Tonight and Indian hotel booking company Oyo Hotels & Homes, Airbnb has partnered with RXR Realty to launch its first hotel in New York City. Located in the Rockefeller Plaza, these 200 apartment style-suites provide guests with magnificent views of the St. Patrick’s Cathedral.
The introduction of home-sharing has greatly complicated the once simple lodging industry. Instead of wanting a cookie-cutter hotel room, guests oftentimes look for unique experiences. While Marriott and Airbnb are leading the pack right now, numerous challenges and challengers await.