While short-term rentals have enjoyed a distinct advantage over traditional hotels for most of the pandemic, rental demand has stabilized and hotels have regained some of the ground they lost by competing for space on their own terms.
A recent report by STR and short-term rental analytics firm AirDNA shows that the impact of the pandemic has pushed the market share of short-term rentals to an all-time high in mid-2020, when the sector swelled to nearly 17% of all US housing demand.
However, by January 2022, that share had fallen to 12.7% — a level about 3% below the trend line that STR and AirDNA projected based on their tracking of the sector’s growth trajectory between 2018 and early 2020.
“The current linear growth trend from 2021 to the present has a slope that is significantly steeper than the pre-pandemic trend,” the report stated.
STR and AirDNA said the sudden contraction in short-term rents in urban markets hit hard by Covid-related challenges may have caused the flat decline. Also, a narrowing of the price gap between short-term rentals and hotels may be a factor. In US suburban markets, for example, the report found that the average daily rate for short-term rentals has exceeded average hotel rates this year.
But another possible factor is that hotels have emerged from the pandemic more flexible and are giving short-term rentals a run for their money.
Hotel startups make a game
Traditional hospitality leaders such as Marriott International make a bigger play for the short-term rental guest. Building on the success of Marriott International’s home and villa rental platform, the company recently launched Apartments by Marriott Bonvoy, a brand of serviced apartments in the upscale and deluxe categories.
Accommodations will include a separate living room, bedroom, full kitchen, washer and dryer in the unit.
Meanwhile, Catbird, an independent long-term hotel concept that debuted last year in Denver from Sage Hospitality Group, represents a new breed of up-and-coming hospitality players seeking to incorporate aspects of short-term rentals into the hotel experience.
A kitchen area in a guest room at the Catbird Hotel in Denver. Image source: Sage Hospitality
The 165-room property has plenty of traditional hotel elements: a vibrant lobby with a food and beverage venue, a rooftop bar, a 24-hour fitness room and housekeeping services. Meanwhile, each Catbird room has a kitchen stocked with cooking utensils and “seasoning grains,” which are half a teaspoon of spice. Guests also have access to what’s called the Catbird Playroom, a hardware locker with household items—with items like an air fryer or panini press, board games, hiking gear and fishing rods—that guests can borrow for free.
“What a lot of guests have told us is that they wanted an extended stay at the hotel, but nothing was upscale enough and matched what they were looking for until we arrived,” said Courtney Griffith, Catbird. Director general.
The Catbird concept is ready for iteration, said Will Balinbin, director of development for Sage Hospitality.
“We plan to grow this brand,” he said. “We’ll start small, with two or three, but I could easily see 50 or more in the States.”
Similarly, Rentyl Resorts, a hospitality management company and distribution platform focused on offering resorts with residential-style units such as villas, townhouses and cottages, is promoting accommodations that offer what CEO Nick Falcone describes as “the best of both worlds.”
Among Rentyl’s nearly 400 resort partners with condominiums are properties such as Florida’s Encore Resort at Reunion, Margaritaville Resort Orlando, Grand Isle Resort & Residences in the Bahamas, and Portugal’s Martinhal Family Hotels & Resorts chain.
“The market is definitely moving towards household products,” Falcon said. “But I think more people are now looking for those scenarios where you have a more spacious home or accommodation within a resort setting.”
Rentyl, which works with travel advisors, has a pipeline of 100 new partner resorts, all with residential-style accommodations, soon to join its portfolio.
Not that more traditional hotels and resorts are stepping up their game doesn’t mean that the biggest players in the short-term rental category are moving away from gas.
Airbnb does not rest on its laurels
Airbnb, which said its latest third quarter was its most profitable quarter on record, is making a determined effort to increase the supply of short-term rentals, unveiling new efforts designed to encourage more owners to list their properties on Airbnb.
At a media event in Brooklyn on Nov. 14, Airbnb CEO Brian Chesky detailed several of these strategies, including the launch of Airbnb Onboarding and its new tool that enables new hosts (owners) to match with seasoned Airbnb hosts and get one-on-one access. – Single support via voice, video or messages.
Also expected to ease concerns for first-time hosts is a significant expansion of Airbnb’s AirCover damage protection program, with coverage ranging from $1 million to $3 million and extending to protect a host’s vehicles, boats, fine art, jewelry, and collectibles.
Rent listed as part of Airbnb’s new Top of the World collection, which showcases homes nearly 10,000 feet above sea level. Image source: Airbnb
“The current hosts are making record profits,” said Chesky. “And the more supply we have, the more guests we have. It’s a network effect business. The more exposure you get, the more demand you get, the more demand you get, the more exposure you get.”
However, Sage Hospitality’s Balinbin believes that short-term rentals face stiffer competition than in the past.
“We may see the pendulum start to swing a little bit,” he said. “There are friction points [with short-term rentals]Like the cleaning fee, the fact that you still have to do some of the cleaning yourself, and if something goes wrong, you have to wait for the owner or property manager to come your way. As hoteliers, we are committed to higher standards. Therefore, we resist.