Marriott International customers have been shacking up with Airbnb and its ilk.
Over the past year, the brand has seen 27% of its guests ditch its digs for home rentals, the hospitality industry’s hot new flame that’s been wooing experience-hungry consumers with travel options birthed by the sharing economy.
Marriott Homes & Villas are its answer to the disruption.
The luxury home properties mark an “If you can’t beat ’em, join 'em,” one-upmanship strategy for the 92-year-old brand, as the hotelier aims to improve on the home rental model to protect its hospitality market share and keep step with changing tastes.
“The consumer is our true north — a key indicator of what’s happening in the future, their needs and wants or where some of their behavioral patterns are shifting,” Jennifer Hsieh, vice president, Homes & Villas by Marriott International, told CO—. “We saw that 27% of our guests were renting homes, [so] by definition, they were going to other platforms.” Homes & Villas, whose 2,000 homes bowed this spring in 100 markets, “is about giving our guests products to stay within Marriott’s portfolio,” she said.
The move comes as a confluence of factors reshapes the hospitality landscape.
While the old-school method of renting a vacation home meant working with a property manager or rental agent, “disrupters like Airbnb connected people instantaneously,” Hsieh said. “On-demand platforms have shifted the economy — they’ve been a major force and influence in how consumers behave and what they value, and it’s been great for the travel industry,” she said. “People are valuing experiences over objects, [there’s] the rise of the sharing economy … the advent of mobility.”
The consumer is our true north — a key indicator of what’s happening in the future, their needs and wants or where some of their behavioral patterns are shifting.
Jennifer Hsieh, vice president, Homes & Villas by Marriott International
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Marriott listened to its target customer and dove into the home rental space, competing against other companies like Airbnb. Read on for more ways you can position your business to rise above competitors.
But at the same time, “growth was becoming more mercurial for us,” Hsieh said.
Since the fourth quarter of 2016, growth of Marriott’s North American revenues per available room has been mostly trending “below the 3% healthy mark,” Jharonne Martis, director of consumer research for Refinitiv, told CO—, citing estimates from the financial data provider. “This is mainly attributed to travelers renting non-traditional hotel accommodations, like Airbnb,” she said.
And it’s why Marriott is aiming for a piece of the multibillion dollar sharing economy and, in turn, the business of millennials.
The coveted consumer group, now the nation’s biggest buying cohort, says the Uber ride-hailing, Airbnb home-renting, Instacart food-ordering, sharing economy trend makes their lives more affordable and convenient, the hotel brand found.
As growth became ‘mercurial,’ incubating change
The idea for Homes & Villas sprung from Marriott’s 2017 travel experience incubator with Accenture Interactive and startup platform 1776, which was conceived to optimize technology to enhance the guest experience.
While Marriott knows how to operate at scale — “we have that down to a science,” Hsieh said, “knowing what’s happening in the future … and keeping a pulse on shifting consumer dynamics is hard.”
The hotelier had watched sites like Airbnb, Booking.com and property management startups like Turnkey build a following, as more homeowners flocked to rent their homes on these “classically growing businesses,” Hsieh said.
Marriott, jockeying to get in on the action, turned to startup entrepreneurs from its incubator to identify innovation opportunities, which led to Homes & Villas.
“We saw an opportunity to get into the market, while addressing what we were hearing from consumers,” Hsieh said.
What the company heard was that travelers loved the idea of a private home, she said, with the space, variety of rooms that could meet the needs of family and friends at different life stages with different bedtimes, and the full kitchens that could accommodate meal preferences.
‘Innovating beyond’ home-sharing competitors
But while scrappy home rental players have been gaining market share, Marriott’s incursion aims squarely at their weakness: The Airbnbs of the world, Hsieh says, stir traveler unease.
“There’s anxiety around home rentals,” she said. Consumers fret over false advertising, asking themselves, “Will it look like it’s supposed to look?’ and, “What happens if something breaks?”
Marriott, Hsieh says, is doing one better with Homes & Villas, a portfolio of premium and luxury properties — from an oceanfront villa in Anguilla to an Irish castle to a two-bedroom condo in a downtown historic district — that come vetted, setting its model apart from the competition.
Indeed, Marriott is working exclusively with established, professional property management companies that have been audited and reviewed by the hotel chain to meet its regulation, design, home curation and amenities standards, Hsieh said.
And they must have a local operation to provide 24/7, on-site support to renters.
By contrast, there’s no reliable filter to vet competitors’ home rentals, she said. As a result, “we are innovating beyond or competition in these areas, as those are completely open platforms that anyone can put their home on.”
The loyalty points perk
For Marriott, home rentals offer a quicker-to-market revenue stream than its lodging model. For example, Homes & Villas swiftly put on the market 70 homes in Telluride, Colorado, in time for ski season, moving at a speed not possible with traditional hotel development, according to the company.
Marriott is also looking to gain home rental market share via its Bonvoy rewards program so that with Homes & Villas, “the biggest differentiators for us are the assurance of quality you get and the ability to earn points,” Hsieh said.
A whopping 90% of its rentals thus far are coming from the rewards program. Marriott’s business travelers, “road warriors” who might average 80 stays a year at the hotel chain, like to earn “a great vacation with their family for their time spent on the road,” Hsieh said. “We’ve seen a huge response [from this group].”
Overall, early indicators suggest that Homes & Villas is addressing a huge gap in the market, Hsieh said.
Since launching in April, Home & Villas has expanded to 2,500 homes in 150 markets. “To get to the scale that our guests need … we want to be in destinations that our customers want to travel to,” be they smaller markets, highly coveted leisure markets like Big Sky in Montana to Capri, Italy, and where Marriott has little or no hotel presence, she said.
We continue to improve upon the model, Hsieh said. “It’s about the ability to give our guests more choice.”
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