Within the mid-to-late 2010s, a brand new development emerged that caught the eye of many within the hospitality house: trip rental houses changing into standard. The highest gamers on this new market have been Airbnb and Vrbo, and collectively they created an enormous community of particular person property homeowners who rented their house to vacationers from around the globe. Many believed that the world’s largest resort chains could be compelled to both adapt or be left behind by this revolutionary enterprise mannequin. However over 15 years after Airbnb’s founding, resort chains proceed to thrive and make revenue within the hospitality market.
Customers preferring trip leases like Airbnb and Vrbo admire their authenticity, costs, and bigger capability for accommodating complete households. Followers of accommodations like Marriott, Hilton, and the UK-based IHG take pleasure in their stage of standardization, the entry to facilities corresponding to gyms or swimming pools, and the a lot decrease cleansing and upkeep charges. And for enterprise journey, particularly throughout borders, accommodations present a consistency and dependability that can’t be matched. A rental property in a faraway metropolis might shock friends with an intrusive host or sudden communal areas, however a JW Marriot on the identical road may have the identical facilities and requirements it does all around the globe.
Outdoors of enterprise journey, there’s clearly overlap within the goal market between trip rental firms and resort giants. Up to now, the prevailing thought was that trip rental web sites would supply a disruption to the hospitality business that giant resort conglomerates wouldn’t be capable of adapt to. However now, Airbnb is providing complete models and houses increasingly usually. Its enterprise mannequin has develop into extra much like accommodations, and because of this, resort CEOs like Marriott’s Arne Sorenson really feel they’re already properly ready to deal with this sort of competitors. Are they right?
When it comes to capability, trip rental firms have accommodations beat. Airbnb has greater than 7 million units accessible worldwide, whereas Marriot, which is the biggest resort chain on the earth, has simply 1.4 million rooms underneath its administration. Additionally, it’s simpler for rental firms to broaden internationally, as there’s a prepared provide of property homeowners in virtually each nation on the earth. As a result of a hotel takes at least 2 years to develop from breaking floor to opening day, and since firms like Airbnb and Vrbo can faucet into an virtually infinite provide of models which can be able to be rented, the battle for capability simply goes to trip rental firms.
When it comes to income, the story is completely different. Marriott recorded $23.5 billion in income in 2023, whereas Hilton and IHG recorded revenues of $10 billion and $2.2 billion, respectively, in the identical 12 months. In the meantime, Airbnb reported revenues of $9.6 billion in 2023 and Vrbo reported $2.7 billion in income in 2022. For the smaller two resort chains, income is actually comparable with Airbnb and Vrbo. For Marriott, nonetheless, the dominance is evident with greater than double the income of anyone competitor.
For worldwide journey, the battle turns into much more attention-grabbing. As talked about earlier than, worldwide enterprise vacationers normally gravitate towards accommodations for his or her model repute and predictability. Vacationers, nonetheless, have many various approaches they’ll take. A vacationer in quest of a extra immersive, genuine expertise, may look to remain with an area host in a rental property to expertise the distinctive tradition they’re visiting. Others could discover this to be too unfamiliar, and decide as an alternative to remain in accommodations the place they know it is going to really feel extra like house. Nonetheless others could not need full immersion however are nonetheless drawn to distinctive rental property choices like castles in Ireland or treehouses in Costa Rica.
Altogether, whereas Vrbo and Airbnb are globally aggressive within the trip hospitality panorama, they haven’t upended the established order for accommodations fully. Their market share and capability within the business can’t be understated, nonetheless, and the wrestle for aggressive benefit could proceed for many years to come back.