First Free Story (1 of 3)Join Skift Pro
Despite early hype, Marriott International doesn’t intend to take on Airbnb and other homesharing companies with its recently announced homesharing business.
The company on Monday reemphasized that it has limited goals for Homes & Villas by Marriott International, a small set of professionally managed luxury properties. It mainly intends to use the rental bookings as a way to juice the rewards for the members of its loyalty program, Bonvoy, that have amassed enormous numbers of points.
Marriott’s official entry five months ago into the lodging industry’s buzziest segment attracted wide notice. But a presentation to property managers at the Vacation Rental Management Association International conference in New Orleans, Jennifer Hsieh, global leader for Homes & Villas by Marriott International, underscored the company’s limited, or targeted, aims.
“We knew that we couldn’t outsmart or out-manage professional property managers,” Hsieh said. “We didn’t want to be in that business.”
Today, loyalty members can earn and redeem Bonvoy points when they book and stay in more than 2,500 properties.
Hsieh said the unit’s ideal customer is a repeat business traveler who wants to use the points they’ve earned for an exceptional leisure trip. So Marriott favors rental properties that would be best for hosting family reunions, celebrations such as birthdays, and getaways for large groups of friends. Hsieh cited one Bonvoy member who redeemed 2,563,563 points to bring his family to a home in Sonoma as its largest redemption of rewards yet.
Hsieh’s comments echoed ones made by Marriott Chief Financial Officer Leeny Oberg in September at the 2019 Skift Global Forum in New York City. “Home rentals are an important element of Bonvoy,” Oberg said. “It was clear having a choice to redeem points at a rental home was important to (the loyalty program members).”
Hsieh didn’t say how Marriott chooses properties as partners. Conversations with property managers that work with the company, however, revealed some details.
The sign-up process is currently averaging between two and four months. Properties must connect to Marriott via the company’s exclusively preferred channel manager software tool, Bookingpal. The conglomerate wants first dibs on all inventory and availability, a source said. That can be a sticking point for high-end properties that are accustomed to being booked on a non-instant, by-request basis.
Property management companies need to pass a Marriott vetting for how well they follow best practices for protecting guest data, a source said. Related to that, the companies need to pay for “cyber insurance” to cover the global risk that something goes wrong, along with proof of minimum liability insurance coverage. Obtaining that level of insurance may be out of reach for many property management companies.
Hsieh has different directors by geographic region. For example, Sarah Frohnhoefer, senior director of new business ventures, leads the unit’s business in the Americas. Travis Riner, global head of operations and quality at Homes & Villas by Marriott International, puts together the details of the strategy for curation and the operational standards, a source said. The team typically sends a Marriott representative to visit some of the properties for quality and operational assurance before closing a deal.
Given the cautious approach, Marriott International is unlikely to generate notable, or “material,” revenue from its rentals units anytime soon.
Its attempt to use rentals as a perk to encourage people to become repeat Marriott hotel customers might have the surprise side effect of converting hotel customers into vacation rental customers.
By introducing people to the vacation rental product, Marriott is introducing hotel regulars to alternative accommodations as a preferable alternative, said Jeff Hurst, chief commercial officer at Vrbo, during a separate panel talk at the conference.
“For someone to use a ton of points to experience a vacation rental potentially for the first time in a way that feels safe is likely to get them hooked on the idea that [rentals] are the only way to go [for a luxury vacation],” Hurst said. “That’s good for our sector.”
“You’ll probably run out of points faster than you’ll run out of enthusiasm for the rental experience,” Hurst said.