Short-Term Rentals at Marriott Grow Beyond Just Being an Experiment

Marriott leaders have downplayed the size of the company’s luxury short-term rental brand Homes & Villas since its launch last year.

But nearly 20 months since its debut, Homes & Villas is no longer just a tiny short-term rental platform. It’s growing — very quickly.

Homes & Villas debuted with roughly 2,000 home listings in 100 destinations. Today, the brand has more than 16,000 listings in nearly 250 destinations. More than 4,000 listings were added since just October.

“We are seeing demand outpace our supply these days,” said Jennifer Hsieh, Marriott’s vice president of Homes & Villas. “With the pandemic, the desire for this entire home product — where [guests] can go and control the environment and bring extended family back together — has really reemerged with demand, and that recovery has been better than anyone could have expected in a pandemic environment.”

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Homes & Villas may have grown by eight times its launch size in less than two years, but company leaders in the past have been quick to point out its smaller scale relative to traditional Marriott revenue streams. Marriott CEO Arne Sorenson called the brand a “very small part of our business” on an earnings call earlier this year.

Marriott’s short-term rental division’s rapid growth is certainly significant, Hsieh acknowledged in an interview with Skift. But that isn’t clouding the company’s judgment in how 16,000 home rentals stack up to Marriott’s global hotel room count, which exceeds 1 million. Nor is it convincing anyone at Marriott headquarters that Homes & Villas is at the level of Airbnb or Vrbo.

“One of the things I often remind people is we are a startup within the world’s largest hotel company,” Hsieh said. “We’re a toddler relatively speaking, but all the indicators for us point to a really positive opportunity where we can give our customers a different product than we do today in our hotels. But it’s clearly a product we see consumers shifting toward, as we’ve seen the rise in the last few months. The pandemic has really crystallized how different this product is.”

Selective Short-Term Rentals

The Homes & Villas platform is different from most traditional hotel company initiatives into the short-term rental space in that most of its listings are independent of an actual Marriott hotel. The Four Seasons Hotels & Resorts Private Retreats brand offers private residences within a Four Seasons-branded property.

While Accor’s similarly named Apartments & Villas website — launched Thursday — includes private homes from its Onefinestay brand, a bulk of the listings are tied to hotel-branded residences or extended stay hotels.

Marriott doesn’t want to go head-to-head with Airbnb in the true homesharing space, where guests merely rent a spare room in a home the owner is occupying at the same time. It wants to focus on an entire home product within the luxury segment that can adhere to Marriott brand standards.

“We’ve never been in the business of providing the cheapest place for people to stay,” Marriott CEO Arne Sorenson said earlier this week on a Morgan Stanley webinar. “We’ve been in the business of providing quality, predictability, luxury, and other attributes associated with our business.”

But Marriott also doesn’t want to just rely on its own hotel branded condos, like those seen as part of a Ritz-Carlton or Westin resort — even though some of those are still included on the Homes & Villas platform.

“If you go to the other extreme of some of our traditional competitors, who are effectively just trying to better market their current hotel products, I absolutely see they’re responding to consumer demand for this type of product,” Hsieh said. “But distribution and having choice and depths of inventory, we know already from our 18 months of experience [with Homes & Villas], is important for our guests.”

A Distribution Game

Airbnb’s IPO documents show the short-term rental giant doesn’t view Marriott or other traditional hotel companies as a leading competitor. Instead, they share a common threat: online travel agencies.

It is a similar distribution fight against providers like Expedia and Booking.com, and it is easy to see Marriott’s Homes & Villas strategy as a further push for more reach with customers.

“We decided to go into these private homes because our real impetus is we want to make sure we have the right product but also wanted to complement the portfolio of destinations our guests could go to,” Hsieh said. “If we just relied on our branded residential-type products like some of our competitors, we simply wouldn’t be in all the destinations where we want to go.”

Of the nearly 250 destinations where Homes & Villas operates, nearly 40 percent are new markets to the Marriott system like Malibu, California, and St. Barth’s. Some are highly seasonal markets where it is hard to operate a fully developed hotel.

Marriott plans to continue to significantly expand Homes & Villas in 2021, including its first listings in the Asia Pacific region. But the company continues to shy away from calling this a massive division. Homes & Villas is meant to remain a high-end offering.

“We’ve entered this space unlike any other competitor,” Hsieh said. “We have a curated approach to the product and partners we bring on. I think that, at the end of the day, the consumer will tell us what resonates.”

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