Hotels are now entering the short-term residential rental business
Tuesday, November 21, 2017
It is clear that room-sharing services have created a big threat to hotels — even though a recent study also reported that Airbnb listings could actually have positive impacts on hotels' RevPAR (revenue per available room) performance. Hotels are firing up for a new war against Airbnb, as well as other platforms that provide short-term residential rental services.
Many hotels, for example, have initiated book-direct campaigns and have reinvented their reward programs as a means to encourage travelers to repeatedly make purchases on their hotel websites directly. They are also making a lobbying push and recently have successfully convinced legislators to impose stricter regulations on room-sharing operators in several popular tourist destinations, including San Francisco, Vancouver, Amsterdam and London.
Additionally, more hotels are responding to the shifting needs of customers by introducing new products and services to the market. They are getting ready to compete head-to-head with Airbnb.
The Unbound Collection by Hyatt
The Unbound Collection is a new flagship of Hyatt for boutique hotels, intending to give travelers "the freedom to be extraordinary at unique properties around the world," according to the hotel's website. In fact, creating a unique collection of boutique hotels is not a new strategy among major hotel chains. Marriott's Autograph Collection and Hilton's Curio Collection are two examples.
What really sets the Unbound Collection apart is its new partnership with Oasis Collection, a network for "handpicked" homes that meet hotel standards and, at the same time, provide the services usually found in hotels but not in Airbnb.
One reason why travelers choose Airbnb over hotels is the authentic experience they could get from a trip as a "local resident." Yet there are many concerns associated with residential rentals, such as safety and lack of established service standards.
For short-term residential rentals, the listings on Oasis, or the Unbound Collection by Hyatt, also feature some standardized hotel amenities, such as in-person check-in and check-out service, on-demand concierge services and toiletries packed in small containers. More importantly, travelers will soon be able to earn and redeem their travel reward points from Hyatt for their stays on Oasis.
With its new partnership with Oasis, Hyatt reported promising growth in the second quarter. Aligning with Hyatt's new "asset-light" strategy, the hotel is predicted to have more cash flows for product development.
The Moxy Hotels by Marriott
Marriott debuted the Moxy Hotels brand in 2013 as a new product to enter the economy-tier, three-star segment in Europe. The latest addition of the brand's portfolio includes the Moxy NYC Times Square.
Marriott CEO Arne Sorenson described Moxy Hotels in an interview with Fortune Magazine as a "distinct" brand that could compete with other lodging options in the market, including short-term residential rentals.
The Moxy NYC Times Square also aims to provide travelers affordable stays, in which rooms could be small but with urban and functional designs (some with bunk beds). However, the highlight of this property is really its great public space that can be utilized for different social activities — possibly an inspiration of how hostels make good use of their public space to encourage more social interactions among guests.
Sorenson believed the public space in Moxy Hotels, as well as its affordable price, could make it a better option for young travelers, who would possibly have chosen residential rentals over hotels. For a rate starting of $107 plus tax on Nov. 21 at the Moxy NYC Times Square, would you choose to stay in an Airbnb instead?
No wonder Fortune called this the hotel "for the Airbnb generation."
Airbnb volleys back
The latest move made by Airbnb came Monday when the company's head of public policy, Josh Meltzer, sent an open letter to Sorenson, suggesting Marriott uses taxpayers' money to subsidize the construction and operation of the Marriott hotels. In addition, the letter claimed that taxpayers also helped fund Sorenson's compensation of almost $12.3 million in 2016.
In what direction is the war between hotels and residential rentals heading? Will more hotels enter the short-term residential rental market to compete with Airbnb and others?
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