Short-term rentals at Marriott are more than just an experience

Take the change

Marriott still considers homes and villas a small part of its entire business. But the platform has grown by eight times its launch size in less than two years and added 4,000 listings since October — a rare silver lining in the hotel industry for 2020.

Cameron Spirans

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

But in the nearly 20 months since it debuted, Homes & Villas is no longer just a short-term rental platform. It’s growing – very fast.

Homes & Villas debuted with nearly 2,000 homes listing in 100 destinations. Today, the brand has more than 16,000 listings in nearly 250 destinations. More than 4,000 listings have been added since October alone.

“We’re seeing increased demand for our supply these days,” said Jennifer Hsieh, vice president of Marriott Homes & Villas. “With the pandemic, the desire for this entire household product – where [guests] It can take control of the environment and bring the extended family together — it’s really resurfaced with demand, and that recovery has been better than anyone in a pandemic environment would have expected.”

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Homes and 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 to its smaller scale compared to Marriott’s traditional revenue streams. Marriott CEO Arne Sorenson described the brand as “a very small part of our business” in an earnings call earlier this year.

Hsieh admitted in an interview with Skift that the rapid growth of Marriott’s short-term rental division is certainly significant. But that doesn’t get in the way of the company’s judgment on how 16,000 rental homes stack up to the Marriott International’s room count, which is well over 1 million. And no one at Marriott’s headquarters is convinced that homes and villas are on the level Airbnb or Vrbo.

“One of the things I often mention to people is that we are a startup within the largest hotel company in the world,” Hsieh said. “We are a relatively young child talking, but all indications for us point to a really positive opportunity where we can offer our customers a different product than what we offer today in our hotels. But it is clearly a product that we see consumers moving towards, as we have seen the rise in the past few months. It has crystallized. Pandemic really how different this product is.”

Short Term Selective Lease

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

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

Marriott doesn’t want to compete with Airbnb in the true home-sharing space, where guests rent a spare room in a home that the owner occupies at the same time. It wants to focus on a complete home luxury product that can adhere to Marriott’s brand standards.

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

But Marriott also doesn’t want to rely solely on its own branded hotel apartments, such as those seen as part of The Ritz-Carlton Resort or The Westin Resort—although some are still listed on the Homes & Villas platform.

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

Distribution game

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

It’s a similar distribution battle against providers like Expedia and Booking.com, and it’s easy to see Marriott’s Home and Villas strategy as an additional push to reach even more customers.

“We decided to go to these private homes because our real motive was that we wanted to make sure we had the right product but we also wanted to complete the range of destinations our guests could go to,” Hsieh said. “If we only relied on branded residential products like some of our competitors, we simply wouldn’t be in all the destinations we wanted to go to.”

Of the approximately 250 destinations in which homes and villas operate, nearly 40 percent are new markets for the Marriott system such as Malibu, California and St. Barth. Some of them are very seasonal markets where it is difficult to operate a fully developed hotel.

Marriott plans to continue expanding homes and villas significantly in 2021, including its first listings in the Asia Pacific region. But the company still avoided naming this huge division. Homes and villas are meant to remain an upscale show.

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

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