With hotel companies feeling the competition from the surging home-share industry led by Airbnb, Marriott International has decided if you can’t beat them, join them.
The company, whose brands span from the bargain Courtyard by Marriott to the cosseting Ritz Carlton, is expanding a home-sharing experiment into a full-fledged division that will rent you a St. Barts villa, a Lake Tahoe mountain home or an Irish castle.
The company is betting big on a market where other hotel companies have yet to succeed. The new Homes & Villas by Marriott International will offer 2,000 luxury properties worldwide, ranging from a one-bedroom home for $200 a night to that castle in Ireland for $10,000 a night.
The new division expands on an experiment last year that offered 500 homes in Europe.
“The demand numbers are making hotel companies rethink who they fundamentally are,” said Makarand Mody, an assistant professor of hospitality marketing in the School of Hospitality Administration at Boston University.
In a study he and colleagues published this year, Mr. Mody found that revenue per available room, a common hotel performance metric, fell by 2 percent in 10 major American cities since Airbnb emerged in 2008. Airbnb’s disruption of the business, he added, “has been a wake-up call for the hotel industry that there is a need to innovate.”
Marriott’s homes are not home sharing in the sense that the owner gives you the keys or the door code, but the term has effectively been stretched to include rentals managed by third-party companies. Its partners, including LaCure and Loyd & Townsend Rose, vet homes for unique design and appealing locations.
Marriott said its trial last year convinced the company to jump in. Nearly 90 percent of renters were members of its loyalty program, Marriott Bonvoy. Most were traveling for leisure and, with an average five-day stay, spent three times as long at the property as the typical hotel guest.
“People stay at different hotels for different trip purposes,” said Stephanie Linnartz, the global chief commercial officer at Marriott. “Sometimes it’s a cool weekend with friends at a beach house and then a kid’s soccer tournament and you need a Courtyard,” referring to Marriott’s lower-cost brand. “Home sharing is another offering.”
The company’s plan, said Chekitan S. Dev, a professor in the Hotel School of the S.C. Johnson College of Business at Cornell University, “keeps any migration of lodging nights from traditional hotels to home-sharing in the family.”
Marriott isn’t the first hotel company to dabble in home sharing. In 2017, Hyatt invested in Oasis Collections, offering homes with high-end linens and concierge assistance, but sold it a year later. AccorHotels has the similarly serviced collection of homes called OneFineStay, though its year-end 2018 financial report indicated the investment had yet to pay off.
Early efforts by hotels to compete with Airbnb — which offers more than 6 million homes on its platform — illustrate the differences between traditional hotels, which may offer 300 similar rooms in one locale, versus a home share service, which rents unique units in possibly thousands of locales. Experts say hotels are challenged in the rental world in delivering the consistency they normally control and learning to manage far-flung properties.
“Hotel brands come with a seal of approval, but it’s harder to enforce,” said Eric Breon, the chief executive of Vacasa, a vacation property management company, which recently acquired Oasis. “There’s a lot more personality to people’s homes. They bought the beach house and furnished it. They’re not a hotelier to whom Marriott can say, ‘This year we’re doing all oval mirrors so you have to get rid of the square ones.’”
Marriott’s solutions to these challenges has been to stick to luxury properties and to contract with property management companies that take on the on-site logistics, including providing premium linens, high-speed Wi-Fi, in-person support and extras like cribs and high chairs. The expanded Homes & Villas have a minimum 3-night stay.
“Most travelers prefer hotels, so that’s still a robust market,” said Lorraine Wileo, a senior vice president at the travel research firm Phocuswright, which found that consumers prefer hotels over alternative accommodations by a two-to-one ratio. Hotel-branded homes, she added, may appeal to travelers who want the assurance of “cleanliness, security and amenities and don’t want a cookie-cutter hotel but aren’t ready to share an apartment with a stranger.”
A key selling point for members of Marriott Bonvoy could be the ability to earn points and spend them on villa stays. The company plans to integrate its experiential reward offerings — like taking a local cooking class or attending a concert — with its rentals.
“When you’re getting your vacation rental home in the south of France, at the same time you will be able to book a bespoke wine and cheese tour in the village,” Ms. Linnartz said. “It will all be connected and interrelated.”