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In the past three years, the hospitality industry has — slowly but surely — seen more traditional hotel companies begin to embrace homesharing, with companies like Accor, Marriott, and Hyatt testing it out and investing in it in various ways.
But what about other hotel brands and companies? Are they beginning to warm up to the idea of offering private accommodations alongside their hotel inventory?
Skift asked a number of hotel CEOs, executives, and industry experts for their thoughts on homesharing at the recent Americas Lodging Investment Summit (ALIS) in January. Here’s what they had to say.
‘I Have Nothing Against Homesharing’
“I have nothing against homesharing,” he said. “My kids do it and I have lots of friends that do it. I’ve done it. I fundamentally just think homesharing’s something different. I know Marriott’s doing it and they’re exploring it. Hyatt’s tested the waters.”
And although he sees it as something different, that doesn’t mean his opinion won’t change over time.
“The one thing I am not is stubborn,” he said. “The thing you learn as you mature as a leader is [that] a view that you have isn’t a view forever. You might change your view. My view at the moment is it’s a different business. It really is, and that I’m a big believer in focus. [We should] do what we do and do it well and [homesharing] is not what we do.”
One of the biggest reasons why, he said, is because of quality control issues.
“That is not what our promise to our customer is,” Nassetta said. “Our promise is consistent high-quality branded experiences. That means, product, amenities, service, loyalty and all those things. I am not convinced that in that environment you can do that. I don’t want the cognitive dissonance with my customers.”
He continued, “I am of the mind at the moment that it is really a different business and we’re not in the dormitory business. We’re not doing college housing, and we’re not in the apartment business.”
Later, he said, “To the extent that [homesharing] business morphs and changes, I may change my mind.”
‘I Can’t See How You Do It at Scale and Make It Profitable’
InterContinental Hotels Group (IHG) announced recently it was launching a new all-suites brand — one that could no doubt compete with private accommodations product. But when we spoke to IHG CEO Keith Barr a few weeks prior, he, like Hilton’s Nassetta, did not hold the viewpoint that IHG would get into homesharing anytime soon.
“I’ve looked at it and I may be wrong, but I can’t see how you do it at scale and make it profitable,” Barr said of homesharing. “There are enough companies out there we’ve looked at that other companies have acquired who just lose money. The bigger they get, the more money they lose. Because the challenge with homesharing is, if you want to have a consistently branded experience, which you kind of have to, you have to do it right.”
For Barr, the investment necessary to ensure quality of “experience, safety, security,” and more is more complicated than it is in a hotel.
“I think about how much money I have to invest to do that today with my existing brand,” he said. “Firelight safety inspections, brand standards, all that for fairly standard product, but every home is different and they’re not in the same location. It’s just really hard, unless you can get to this uber-high price point to make it really profitable.”
He also said he’s concerned with cannibalizing his own hotels’ business and “societal pushback” against homesharing in many markets.
“Because it’s doing a couple of things,” he said. “One, it’s pushing up housing prices. So, I don’t think anybody has an issue if you want to rent our your flat for a weekend when you’re gone traveling on holiday. I think people are really struggling with the fact when you go buy three flats in your building and are turning it into a mini hotel and changing that whole dynamic of the community.”
In short, he said, “I think that industry has more challenges in front of it than it does necessarily tailwinds.”
‘A Connection’ Is There
Hyatt has dabbled in homesharing twice. First by investing in Onefinestay, the luxury homesharing platform now owned by Accor, and most recently by investing in Oasis, which, coincidentally, was formerly backed by Accor.
In both instances, the results were mixed. Onefinestay was bought by Accor, and Oasis was ultimately bought by Vacasa, a vacation rental property management provider.
At ALIS, Skift spoke with Hyatt global head of development and owner relations, Jim Chu, about what Hyatt learned from its homesharing experiences with Onefinestay and Oasis.
Chu said, “So, I think there is a connection between the customer and business use for homesharing. I think there is obviously a long-term plan for that side. I think we’ve learned that there is a complementary and adjacent space that could be meaningful and important to us. But we want to do it in a way that is financially responsible also.”
Moreover, Hyatt’s homesharing challenges were more logistical in nature, especially with regard to scaling inventory and loyalty connections.
“If you’re dealing with something that has six rooms in a building, or 16 rooms in a building, there’s not enough inventory, as we may have 25,000 people looking at a marketplace in a period of time,” Chu explained. “Having 16 rooms in an office building doesn’t really help the situation. There’s not enough inventory when you’re dealing with that side. So, I think that’s where some of the models are different. If you have an entire building and you’re trying to put people into a building, that’s one side, so I think scalability inside the marketplaces is different.”
‘My Feelings Haven’t Changed’
For Best Western CEO David Kong, his concerns about homesharing haven’t wavered.
“My feelings about homesharing haven’t changed,” he said. “It’s about the safety and security, it’s about adherence to regulations. It’s about not creating nuisances in neighborhoods and communities. I mean, it’s the same. It hasn’t changed.”
As for what his peers are doing in the space, Kong said, “I think Marriott’s foray into homesharing demonstrates that they get it, and they are addressing all those issues. They pay taxes, they make sure those listings are legal, and they have a quality assurance process associated with that. So, I think that’s the right way of doing homesharing. There’s a place for it.”
And although there’s a place homesharing, Kong doesn’t necessarily see Best Western entering the business anytime soon. He is, however, paying close attention to Airbnb as a possible distribution channel if the company does indeed decide to open up its platform to all hotels, and not just boutique or lifestyle ones.
“Yeah, I’ve been very reluctant. This might open it up,” Kong said. “Contrary to what they say publicly, they have featured a lot of hotels, that are not necessarily boutique hotels, and you’ve got to recognize the power of that platform, the traffic that it has. So, regardless of how much the industry is fighting Airbnb in terms of homesharing, you’ve got to recognize that platform drives a lot of traffic and at some point, we might have to work with them like an OTA [online travel agency].”
Microhotels Are the Industry’s Answer to Homesharing
Instead of getting involved in actual homesharing, PwC principal and industry leader for hospitality, Scott D. Berman, sees hotels turning to automated, tech-driven microhotels as a solution.
“I believe there is an emergence of microhotels,” Berman said. “It is competitive with the shared economy, but also competitive with some of the select-service brands that have all the creature comforts.”
He continued, “When you look at the over 5 million hotel rooms in this country, half of those are independent and half of those are under 100 units. Those under 100 units that are unbranded would be natural shared economy targets. You can put some rooms on those websites, or they can become part of a larger portfolio and get some of the benefits.”
“I think it’s a response to homesharing,” Berman said of the emergence of microhotels. “The execution of that strategy is difficult because it’s organic, but I think there’s some interest and some capital out there that’s focused on that.”
And he also sees this sector borrowing from the select-service hotel model and injecting automation into it. “Their business model has an artificial intelligence component which requires less staffing, and it’s almost like property where you don’t see a person, except probably to clean your room.” He added, “We haven’t gotten to robotic cleaning yet,” but noted a Vegas-based company promoting robotic housekeeping.
A Short-Term Rental By Any Other Name Is Just an Extended Stay Hotel
When asked if Red Roof would enter into the homesharing sector, Red Roof president Andrew Alexander likened short-term rentals to the extended stay space.
“I guess I would say the extended stay business is almost a short-term rental type of business,” Alexander said. “To me it has a lot of the characteristics of that yet, it is doing it lawfully and we’re paying our taxes and meeting the safety requirements.”
Sticking to Vacation Rentals
Choice Hotels, which has offered Choice Vacation Rentals for a number of years, is staying the course with its current homesharing strategy and limiting its involvement to traditional vacation rentals that are professionally managed.
“Vacation rentals are really sort of what we’re looking at,” said Robert McDowell, Choice Hotels chief commercial officer. “We’ve had some success there,” he added, noting that the business was formed out of Choice Hotels’ partnership with Bluegreen Resorts in an effort to expand the company’s portfolio.
The synergies between vacation rentals and hotels, he said, is one of the main drivers of the business. “If you think about Choice Hotels, right, you look at us as a platform, so we have a very strong technology background, as well as a strong loyalty program,” McDowell said. “So, the question is how do we actually build out inventory, whether it’s on the hotel side, the vacation rental side or the resort side, that meets the consumers where they want to be, whether it’s business or leisure?”
Outrigger CEO Jeff Wagoner said that Outrigger, like Choice, is interested in the vacation rental business, but not necessarily private accommodations like the listings you might find on Airbnb.
“We have a division that is comprised of Hawaii vacation condos right now, so we are already in that space in a pretty big way,” Wagoner explained. “We have 16 properties that are vacation rental properties, so we just acquired a new one just a few months ago in Maui, so absolutely, we’re in that space.”
At the moment, they are proprietary to Outrigger, but Wagoner hasn’t ruled out using Airbnb or other platforms as distribution channels for them.
“It’s definitely something we’re exploring to see if it makes sense to be there,” he said. “The platform is one element and the distribution element is one, and then there’s the entire short -term rental program out there, and making sure that it’s competitive but fair and that people are helped to the regulatory issues within the communities and so forth, so there’s a lot of focus there as well.”