Skift

Marriott Is Officially Getting Into the Homesharing Business

  • Skift Take
    This news will trigger responses from elated to downright furious, whether you’re a Bonvoy member, Marriott hotel owner, a property manager, or just someone concerned about the growth of homesharing around the world.

    Marriott, the world’s largest hotel company with more than 7,000 hotels around the world, is officially getting into the homesharing business with the launch of Homes & Villas by Marriott International in 100 destinations.

    A year after it began conducting a homesharing pilot, the 91-year-old hotel group appears convinced it can compete with travel disruptors Airbnb, HomeAway, and others in the space.

    As Marriott did with its pilot, it’s enabling its loyalty members to earn and redeem Marriott Bonvoy points when they book and stay in these 2,000-plus homes.

    What started in 2018 as a small pilot with just a little over 200 homes in London in partnership with UK-based property management company Hostmaker has now evolved into a global business operating in more than 100 different markets, from the U.S. and Europe to the Caribbean and Latin America. Of these markets, 40 are markets in which Marriott has never had a presence, including the Amalfi Coast in Italy, North Lake Tahoe in California, Saint-Tropez, France, and St. Barts among them.

    While Marriott’s nearly year-long pilot yielded “great results” for Marriott, according to Marriott Global Chief Commercial Officer Stephanie Linnartz, the company ultimately decided not to continue its partnership with Hostmaker for the official launch of this “separate offering” that Marriott isn’t quite ready to label its 31st brand.

    “They were good partners to us in the pilot in London,” Linnartz said. “But they are not part of the launch of this.”

    Instead, Marriott is continuing with the same business model it more or less used with Hostmaker for the pilot, but is now working with a variety of different property management company partners whose respective inventories run the gamut from castles and beach houses to urban apartments and country homes. Initial partners include TurnKey Vacation Rentals, LaCure, Loyd & Townsend Rose, Veeve, London Residents Club, Mainsail Lodging, CPG, and Reserva Conchal.

    What Marriott Learned From Its Pilot With Hostmaker

    Although Hostmaker isn’t continuing on as partner with Marriott for Homes & Villas, Linnartz said that the information Marriott gathered from its pilot with Hostmaker was invaluable. It gave Marriott the data it needed to pursue homesharing officially: It showed there is consumer demand for this type of product.

    The pilot, she said, “was a real opportunity to learn from Marriott’s customers” and especially its loyalty members. Nearly 90 percent of guests who booked a Tribute Portfolio Home as part of the Hostmaker pilot were loyalty members, and more than 75 percent were traveling for leisure with family and friends. The average length of stay for Tribute Portfolio Homes guests was more than triple the normal hotel stay, at 5.1 nights, and the average size of home booked was more than two bedrooms.

    Hostmaker’s pilot with Marriott eventually expanded from 200 to more than 340 listings in four European markets.

    And while Marriott is retiring the Tribute Portfolio Homes brand, the partnership model that Marriott piloted with Hostmaker will continue to live on with Homes & Villas.

    How Marriott Intends to Run Homes & Villas

    In running this new business unit, Marriott will act more like an online travel agency or distribution platform, like Airbnb or Booking or HomeAway, for the selected property management companies it has chosen to work with. The company would not disclose the commission structure it has put into place.

    “The property management companies will pay us a platform fee,” Linnartz explained. And it’s those companies that are tasked with managing the properties themselves, handling everything from pre-arrival, check-in, cleaning, support, and so on.

    “The best way I can think about it is to compare it to how Marriott manages hotels,” Linnartz added. “That’s what these property management companies will do for these homes.”

    The homes, as well, will all be in what Marriott defines as the premium or luxury category.

    Marriott said in its statement they will include:

    – A four-bedroom cottage on six private acres of California wine country.
    – A six bedroom villa in Sorrento, Italy with an infinity pool overlooking the Mediterranean Sea and a wood-fire pizza oven.
    – An oceanfront villa in Anguilla with private beach and a personal butler and house staff.
    – A 18th century Irish Castle that sleeps 17 and features a private lake for boating and fishing.
    – A six-bedroom townhouse in London with a children’s playroom and climbing wall.

    For Marriott, the standards are very similar to what the company expects of its hotels: 24/7 support, high-speed Wi-Fi, premium linens and amenities, and family-friendly amenities when requested. Linnartz said she does not see the company pursuing economy or lower-tier private accommodations in the future.

    And unlike some of its other hotel peers, who have opted to buy homesharing businesses (such as Accor and Onefinestay) or build their own (such as Room Mate Hotels and Be Mate), Marriott wants to continue using the partnership model.

    “This model makes a lot of sense,” Linnartz said.

    The inventory consumers will find via Homes & Villas is not exclusive, however, meaning that partners can continue to advertise and distribute these homes on other platforms including Airbnb, HomeAway, and Booking. But if consumers want to earn and redeem their Marriott Bonvoy points with these Homes and Villas, they can do that when they book with Marriott via the website, HomesandVillasbyMarriott.com, as well as on Marriott.com.

    When a guest searches for a place to stay for three or more nights in markets where there are Homes and Villas, they will also see existing home inventory advertised alongside hotels. Marriott said it’s also exploring the ability to book Homes & Villas via the Marriott Bonvoy app and other channels, including travel advisors.

    “From day one, you can earn and redeem Marriott Bonvoy points on our homes,” Linnartz said. “We’re meeting our customers’ needs and expectations. The inventory is not exclusive, but what is exclusive to us is earning and redeeming Marriott Bonvoy points.”

    The earn rate for Homes & Villas is the same as what Marriott offers for its long-stay hotel brands — five points for each $1 spent, and eligible members can earn bonus points based on their elite status, as well as elite welcome gifts or special amenities.

    There’s also an opportunity for guests staying in a Homes & Villas by Marriott product to use their Bonvoy points toward special tours and activities or experiences, including exclusive Bonvoy Moments that Marriott has developed with partners.

    What Happened with Hostmaker and the Challenges Ahead

    While it’s not clear exactly why Marriott and Hostmaker parted ways after their pilot, Skift spoke to former Hostmaker Chief Operating Officer James Lemon, who served as COO from April to December 2018, for some insights. Lemon has also previously worked for InterContinental Hotels Group and Travelport.

    Linnartz would not comment on the split with Hostmaker. In a statement on Monday, a Hostmaker spokesperson said: “Our partnership has been incredibly successful in demonstrating the opportunities within the homesharing category, and we’ve learned a great deal from collaborating with the Marriott International team. Now that the one-year pilot has ended, we are exploring new partnership opportunities and hope to be able to say more soon.”

    Now an independent startup consultant and partner with AJL Consulting, specializing in short-stay and vacation rental management, Lemon said that while the pilot with Marriott “whetted their appetite for this” business, he also wasn’t “surprised that they are taking a multi-player approach” as they launch Homes & Villas.

    The challenges that Marriott faced with Hostmaker during the pilot, as well, will continue to be difficult as they navigate the world of private accommodations, he noted.

    “Both Marriott and Hostmaker plus the broader industry are wrestling with foundational challenges in this space,” Lemon said. “Quality: How do you manage a home over time? Expectations: It’s not a hotel stay. For some customers and segments this creates a slight challenge. Regulations: There is obviously a very big need for Marriott. Compliance in this space is critical, with guest ID regulation, home safety, and of course time-restrictions like London’s 90 day rule. This is all part of the much-needed professionalization of the sector””

    Those three roadblocks have plagued any and every organization that has attempted to enter into this space, from Airbnb and HomeAway to Oasis and Onefinestay.

    He continued, “My view is that when Marriott launched the pilot with Hostmaker, those three core challenges remained. I think that Hostmaker probably didn’t deliver to what Marriott needed in those three areas, so my warning sign to the new partners with Marriott and to Marriott itself, is that they need to have a laser focus on those three areas.”

    TurnKey Vacation Rentals CEO T.J. Clark, whose company is an inaugural partner of Homes & Villas, said that what struck him most during the process of working with Marriott on this new business was the fact that there was a “very extensive diligence process” and that “they have visited many, many, many of our properties in person.”

    About 1,000 of TurnKey’s total inventory, which includes more than 4,000 homes in 55 U.S. markets, will be distributed via Marriott Homes & Villas at launch, and Clark hopes to see that percentage rise over time to at least half.

    Linnartz also said that making sure all homes are compliant with local regulations was a critical “part of the due diligence that we did with these property management companies.” She also said Marriott will continue to “monitor and audit” its partners and their inventory to “make sure all laws are complied with” and that the homes meet Marriott’s standards for quality.

    As for critics who might feel that Marriott’s entry into homesharing seems hypocritical for a hotel company and industry that often lobbies against the rise of this particular business, Linnartz said: “I think the key point is making sure that we comply with local laws and regulations. Renting homes has been around for a very, very long time, and this is why we did a pilot. We’re interested in experimenting and learning.”

    How Do Marriott Owners Feel?

    While professional property management companies like TurnKey may be “excited” about this latest experiment from Marriott, that’s not necessarily what Marriott’s hotel owners may be feeling.

    Skift spoke to a Marriott hotel owner who expressed his concerns about this latest endeavor.

    He said, “A lot of owners are upset about Marriott’s growth” because, in pursuit of that scale, “they’ve been cannibalizing a number of markets or many markets by opening more and more hotels. They’re eating their young.”

    This year, the company opened its 7,000th property and in March, CEO Arne Sorenson said the company intends to add 1,700 more hotel properties within the next three years. The hotel owner said that the more often Marriott adds new properties in markets where there are already a number of Marriott hotels, it makes it that much harder for existing owners to profit, and many are now wondering “if we should continue to invest in Marriott products of markets.”

    What keeps many of those hotel owners in the Marriott system, however, is the strength of its own distribution platform and its loyalty program — considered the largest in the industry with more than 125 million members. But if Marriott adds homes to its distribution channels, that could be at a detriment to its hotel owners.

    “If it’s something like a vacation home in a market where there aren’t many homes, that’s one thing,” the owner said. “If it’s more Airbnb-ish, more like apartments in an urban or metropolitan area, that’s another nail in the coffin. They will be attracting Bonvoy members and they will book a Marriott Home & Villa where they might otherwise book a Marriott hotel.”

    The tenuous relationship between Marriott and its hotel owners is not unlike the one that other platforms like Airbnb, HomeAway, and Booking also have with their respective homeowners/hosts/property managers: How do you continue to grow and please guests, all the while making sure that your owners are profiting alongside you?

    What This Means for the Overall Accommodations Space

    Marriott’s homesharing launch, while much larger than its initial pilot by far, is still relatively smaller than the homesharing platforms run by the likes of Airbnb and Booking, at least in terms of inventory. Both Airbnb and Booking.com claim to have home listings that range near or above six million in total.

    However, it doesn’t seem like Marriott is looking to necessarily go toe-to-toe with those behemoths in this particular space anytime soon, said Lemon.

    “I don’t think they’re trying to [give Airbnb a run for its money],” Lemon said. “They can’t be the leaders in size and scale in homes, but I don’t think that’s what they need to achieve. They are trying to offer an alternative for a certain customer segment and certain types of lengths of stays and to offer a credible supply choice.”

    As Skift has noted before, travel brands like Marriott are striving to be more like end-to-end experience platforms and, well, everything in hospitality seems to be converging: It’s increasingly difficult to distinguish what’s a traditional form of lodging or an alternative one anymore, and accommodations providers now realize that travelers want variety and flexibility.

    Homes & Villas by Marriott International is particularly representative of these two overarching trends in travel.

    “Our goal is to be the world’s favorite travel company, offering a comprehensive travel platform through Marriott Bonvoy,” said Marriott’s Linnartz. “The more we have to offer customers and to make things seamless and easy, the more they will love us, and that’s our goal.”

    Whether Marriott manages to reach this goal with Homes & Villas remains to be seen, but it’ll certainly be interesting nonetheless.

    Skift Editor’s Note: This article was updated to include Marriott’s announcement of the launch, and some of James Lemon’s quotes were modified for clarity. It was also updated to include a statement from Hostmaker. 

    Photo Credit: Featured here is the kitchen of one of the more than 200 homes available on TributePortfolioHomes.com that was available through Marriott's homesharing pilot with Hostmaker. Marriott International

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