I recently attended Skift’s inaugural The Future of Lodging Forum in New York City. The focus of the event was to dissect and debate the ‘great merging’ of hotels and short-term rentals.
The two-day conference didn’t just cover what we already know about Marriott and its collection of homes, Airbnb’s expanded hotel listings, or Sonder offering branded ‘hotel-like’ experiences for guests who also need kitchen convenience. The discussion went deeper than that. It looked at a near future of travel, immune to a recession, where guests’ preferences and changing behaviors are fuelling new opportunities for lodging businesses, presenting fresh challenges and changing hospitality at lightning speed.
The traveler persona, once distinct and easy to identify, now reflects the blurring nature of our home lives and our work lives. We don’t have business trips and leisure trips anymore – we now have ‘me trips’ with travel and experiences that combine work and play. This merging of our identities has major implications for hotels and great advantages for short-term rentals. No one wants an extended stay in a box without a kitchen/desk/table to eat at. Travelers are now workers and tenants are also guests. And vice versa.
According to Skift and the speakers at the event, the great merging also covers trip planning and loyalty programs. Owning the customer relationship and focusing on lifetime value that makes for a better investment on high customer acquisition costs, is the future.
Here’s some of what we learned at the Skift Forum:
‘Nichification’ of vacation rentals is the future
With the provision of unique stays, the sector’s clear USP, as being the defining factor setting vacation rentals apart from any other lodging class. Airbnb recently unveiled what it touted as its biggest announcement in ten years, with its new curated categories search functionality. Travelers can now search in 56 categories, with more to follow, for stays based on property type (farmhouse, treehouse, shepherd hut…) or experience (national park, great view, Arctic….). This change has huge implications for redistributing travel outside of core travel areas as more travelers are guided towards lesser known destinations that actually have supply.
Membership programs are the way forward.
Hotels have long been proponents of loyalty programs with Marriott Bonvoy, Hilton Honors etc. Lifestyle lodging companies such as CitizenM, Blueground and Life House are adopting various paid and unpaid programs as a way to keep customers engaged with their brand, increase the customer lifetime value and reduce churn. Membership platforms also transform trip planning into a feedback loop. Ensuring the customer journey is engagement led rather than transactional. Forward thinking vacation rental brands can look at these models to build customer communities in a cost efficient way.
Hotels and STR are poles apart – sometimes
Hotels and short-term rentals may have beds in common – but really the two sectors are still miles and miles apart. From the way they operate to the way they build relationships with customers to the tech that is used. It’s clear that hotels have greater hospitality experience and deeper pockets than short-term rentals. We are still waiting to see what will happen when hotels finally wake up to what’s been happening down the road in vacation rentals.
Today’s ‘Rentalprenuers’ are tomorrow’s professional property managers
According to reports, second home purchases were up by 50% during Covid with 60% of these bought as vacation rentals. That’s a lot of single homes owned by single individuals. 85% of rentals (Futurstay) operate without any tech at all and reviews of hosted/owned properties tend to perform far better than those managed by professional operators. The longtail isn’t getting any smaller and represents a challenge as well as an opportunity for the managed sector. Can these ‘rentalprenuers’ be converted? In order to do so, they’d need a really strong proposition presented to them.
There is huge change in the air in short-term rentals and the rest of lodging. The above are just some of the areas that we will all be looking at, whatever our sector of interest, over the next 12 months as the merging continues.
About Jessica Gillingham
Jessica is the founder and managing director of Abode Worldwide, an award-winning B2B public relations agency focused on raising the profile of transformative technology solutions operating within the global short-term rental, hotel and ‘living’ property sectors. With over 20 years of experience in public relations, hospitality and technology, Jessica is also an advisor, leadership mentor and industry commentator.