Yahoo Finance Marriott’s Foray Into Short-Term Rentals No Longer an Experiment — It’s a Business: Exec
When Marriott announced it was officially going into the short-term rental space in April of this year, the move certainly turned heads.
Would the largest hotel company in the world find success in a sector where other corporate hotel brands have struggled? Is it making an explicit move on Airbnb? And does this mean Marriott will stop lobbying against short-term rentals now?
For Marriott, however, the move was less a gamble and more an imperative to keep its guests within its network of brands and properties. Speaking at Skift Short-Term Rental Summit on Dec. 5 in New York City, Jennifer Hsieh, vice president of Homes & Villas, said that in 2017 to 2018, the company found that 27 percent of guests were leaving its portfolio of hotels to rent a home.
“Whenever Marriott makes a choice, we really look to our customer as our north star,” Hsieh said. “We knew that the opportunity really existed for us to serve our guests in the home rental space beyond just hotels, which is really what prompted that entry.”
Homes & Villas is run by partnering with property management companies in various markets, which are extensively vetted by Marriott and, in some cases, given training, such as in housekeeping standards. That, said Hsieh, is what differentiates it from other major hotel brands like Accor or Hyatt who invested in or acquired such companies.
The offering is also designed to address the two biggest customer pain points that Marriott identified when it comes to vacation rentals. One is the glut of inventory in the space, which makes choosing a top-notch property laborious and risky, as anyone who’s ever tried to swiftly book an Airbnb can attest to. And second, the anxiety or fear that something will go wrong and customer service won’t be there to help.
Most of the use cases for Homes & Villas so far have been for leisure travelers looking for premium, luxury, or ultra-luxury properties for family vacations, milestone birthdays, etc. The average property has three bedrooms, with guests staying for five or more nights. In addition, 90 percent of users are members of the Bonvoy loyalty program, with Hsieh reporting that there have been several examples so far of multimillion point bookings.
Even though the ending of Marriott’s relationship with HostMaker — part of a one-year pilot in London called Tribute Portfolio Homes — left some wondering if the experiment hadn’t gone well, Hsieh emphasized that the company no longer sees itself as getting its feet wet in short-term rentals.
“When we launched Homes & Villas, we launched (it) as a business, and I don’t think in the history of Marriott we’ve even pulled a part of our business — a brand, effectively — down. So I would say for our consumers Homes & Villas is a business … that will continue to grow.
Despite that, Marriott has been notably tight-lipped this year when it comes to communicating its ambitions for the offering. Since May, it’s grown from 2,000 listings to 5,000, many in hyperseasonal markets where it’s difficult for traditional Marriott properties to thrive. Thus, Hsieh said that much of the growth of Homes & Villas will be in ski and beach locations, a way to complement the existing offerings of the Marriott portfolio. She added that growth of offerings in urban settings would be more prudent, due to the challenge of different regulations.
Speaking of regulations, what about that lobbying? One audience member at the summit wanted to know if Marriott will stop fighting the likes of short-term rentals provided by Airbnb when they act as a direct competitor now.
“Our position has always been that (short-term rentals) have to be compliant, safe, and regulated, and paying taxes — it’s a level playing field,” Hsieh said. “And we believe strongly enough in that that we’ve moved into this business to actually do that very thing.”
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