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Will more hotels get into the home-sharing business?

There is no doubt that COVID-19 has had an unprecedented impact on the travel and tourism industry. With massive layoffs and closures, many hospitality professionals have noted that they had never seen such a detrimental event to the industry in their careers. Nobody knows when the recovery will take place.

Yet, there is at least one exception. The home-sharing sector has already rebounded.

Airbnb booking is up and ready for an IPO

When the pandemic hit, Airbnb reported a 90% drop in booking, or a $400 million adjusted loss in the second quarter. Then, Airbnb laid off 7,500 employees, or 25% of its workforce, and cut its marketing budget by 14% from the last year.

Now, when hotels are still struggling and running at a below 50% occupancy, Airbnb booking has already bounced back. For example,

Marriott’s home-sharing arm is doing well

Marriott launched a pilot program that provided home rental management service in April 2018. A year later, Marriott debuted the Homes & Villas division, with the following unique features:

  • The site offers premium and luxury private home rentals only.
  • All properties are managed by trusted partners, who provide professional cleaning service, 24/7 assistance, high-speed Wi-Fi, and premium linens/amenities.
  • Guests can earn and redeem Marriott Bonvoy points.

Like Airbnb, Marriott Homes & Villas are doing very well, especially in the summer months. For instance,

  • The number of listing properties grew from 2,000 when it started to over 10,000 in 250 markets.
  • The booking was up 700% over last summer.
  • The revenue increased by more than 800%.

Nevertheless, the number of 10,000 properties is still too small compared to the 7 million-plus Airbnb listings in over 220 countries and regions. Likewise, Booking.com has more than 28 million listings, or more than 6.2 million homes, apartments, and other unique places, in 226 countries and territories.

Marriott International itself manages 1.38 million hotel rooms of more than 7,300 properties in 134 countries and territories. That means, Marriott’s home-sharing inventory accounted for less than 1% of its portfolio. The gain of Marriott Homes & Villas is unlikely to offset the lost revenues from Marriott hotels during COVID-19.

Will more hotels show interest in the home-sharing business?

 

The hotel industry had a record-high performance in 2019, running a 66.1% occupancy at $131.21 average daily rate. At that time, not every hotel showed interest in the home-sharing business.

Hilton CEO Chris Nassetta, for example, did not worry about the competition from Airbnb. Last year, when Marriott launched Homes & Villas, Nassetta wanted to remain focus on Hilton’s core business. He was not interested in the home-sharing sector.

Wyndham and Hyatt also attempted to get into the business. Last year, Hyatt CEO Mark Hoplamazian admitted that home-sharing experiments “challenging” and not “sustainable.

Now, when hotels are still struggling, and Airbnb is doing just fine, will more hotels become interested in the home-sharing business? What will be hotels’ advantages and challenges as they get into the home-sharing business?

Note: This post is also available on MultiBriefs.com; The picture was downloaded from Homes & Villas by Marriott International

Comments

  1. I think that hotel businesses are going to dive into the home experience but it will cost them greatly. These new businesses of quick renting-homes have caused a negative impact to homebuyers. Prices are going up for homes and no one is living in them, only short time renters who are not contributing to the local area. The lack of long term renters and homeowners will most likely affect the local economy. I see in the near future these airbnb businesses being highly taxed for disrupting local economies and a negative connotation for those companies and hotel businesses who became part of the limited time renting business. HRT3500.02 Albert S. Sandoval

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    Replies
    1. Great thinking Albert! Personally while I was reading the article, I just kept thinking how great of an opportunity this would be for hotels, and the potential for new jobs to open up. After reading your response and also watching a brief video explaining how AirBnb renters could affect the housing economy, I believe that new rules and restrictions will occur in the house sharing business, especially when big brand hotel names get involved. So, I believe hotels should focus on their extended-stay properties and try to find a way to convert or build new extended stay hotels, as I read in another article from Dr. Kwok that those types of properties are doing well during the COVID-19 season.

      Sean Mayor
      HRT 3500 Section 2

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  2. Anita Chang HRT 3500 Section 2

    I think eventually hotels may consider to do be a part of the home-sharing business. Like mentioned in the article Airbnb, despite being hit with the pandemic, is still doing much better compared to other big hotel companies. I also know people that are still traveling during these times. Some of my friends are going on road trips and instead of staying in a hotel, they get an Airbnb. Personally, I think Airbnb’s are easier to control because people are only staying on that property, while hotels, there are multiple people staying on the property. If one person catches COVID in a hotel, everyone is in lockdown. Compared to if one person gets covid in an Airbnb, they will have to take care of themselves as well as inform the owners about it.

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