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The chief executive of the world’s largest hotel company sees plenty of reasons to get into the short-term rental market. But going directly head-to-head with Airbnb isn’t part of the plan.
Marriott entered the short-term rental sector last year with Homes & Villas, a homesharing brand offering only entire high-end homes for rent. The platform went from 2,000 listings in 2019 to around 12,000, as of October. Despite the rapid growth, Marriott leaders frequently mention on quarterly earnings calls that Homes & Villas remains a very small part of the company’s total revenue.
That size cap appears to be intentional.
“It was clear to us the homesharing space included a business that was attractive to us and a business that was not attractive to us,” Marriott CEO Arne Sorenson said Tuesday during a Morgan Stanley webinar.
Short-term rental platforms like Airbnb offer true homesharing options where guests simply rent out a spare bedroom in a home that is still occupied by the owner. That was not a business Marriott wanted to get into.
But the high-end, entire home rentals were an attractive business line. Marriott’s competitors already in that space have tended to succeed, Sorenson said. Four Seasons Hotels & Resorts’ Private Retreats offering performed well throughout the pandemic and has been a division of the company for roughly 20 years.
Sorenson saw upside in launching a Marriott-branded product, as it would be a way to cater to larger groups needing multiple bedrooms and who would be difficult to accommodate in a traditional hotel. But if Marriott was going to get into the space, it would be with a product that could live up to company standards.
“We’ve never been in the business of providing the cheapest place for people to stay,” Sorenson said. “We’ve been in the business of providing quality, predictability, luxury, and other attributes associated with our business.”
Marriott’s leaders have repeatedly told Skift they plan to continue to grow Homes & Villas selectively in the luxury sector. Sorenson offered more rationale behind that plan Tuesday.
“I think if you look at the cheapest place to stay in a city, that business is still under significant pressure and not very attractive to us,” he said.
The Road to Recovery
Sorenson’s remarks came amid two key, ongoing measures that will play a major role in the hotel industry’s path to a full recovery.
A bipartisan group of U.S. senators Tuesday introduced a $908 billion bill aimed at providing financial relief to a variety of businesses, including hotels, impacted by the pandemic. That measure includes temporary liability protections for businesses against coronavirus exposure claims, something the hotel industry has repeated called on Congress to pass.
The bill also includes more money for the Paycheck Protection Program small business loan initiative that many hotel owners were able to tap into under the $2 trillion relief bill passed in March.
The hotel industry’s other tailwind stems from optimistic news on the vaccine front, with Moderna and Pfizer vaccines possibly distributed — in small numbers — later this month.
While Sorenson did not speak to the latest news on the stimulus front, he did have a positive outlook on the vaccine development — once the current surge in cases is controlled.
“In a sense, you could say the near-term has gotten a little bit worse because the virus statistics have gotten worse, but the medium and long-term has gotten a little bit better because the optimism around a vaccine is that much stronger,” he added.