Although Airbnb has become virtually synonymous with short-term home rentals, there are now a wide range of players in this market, including niche services such as Bud and Breakfast and female-focused Wanderful Homesharing. That said, consolidation and acquisitions have also been reshaping the market. For example, in the last few years, Expedia has bought HomeAway and VBRO, while Airbnb has made a number of acquisitions, including Luxury Retreats, meetings and events-focused Gaest, and recently agreed to acquire HotelTonight.
This segment has also evolved to compete from more than a heads-in-beds standpoint, with meeting/event spaces and experience offerings becoming increasingly prevalent.
Airbnb, in particular, has been focusing on expanding its reach as it strives to become an end-to-end travel platform. In 2018, the company marked its 10th anniversary by introducing collections, tiers and additional property types. At this time, it also hinted at plans for a loyalty program, Superguest, but the company has since gone back to the drawing board on this project. Further, Airbnb increased listings of boutique/independent hotels, more than doubling the number of rooms available at traditional lodging operators (including boutique hotels, B&Bs, hostels and resorts) in 2018.
Certainly, offering short-term rentals is an appealing business model from a property-owner’s perspective. In fact, earlier this year, Airbnb announced it surpassed six-million global listings. There have also been Canadian instances of new condo developments — such as Condos LB9 in Quebec City — being designed specifically to accommodate short-term rentals.
And, as Nuno Guerreiro, regional manager of Booking.com Canada, notes, “The number of alternative-accommodation listings on Booking.com grew 27 per cent between 2017 and 2018 — faster than traditional options, such as hotels, motels and resorts.”
“Travellers are increasingly seeking out new and unique experiences and their accommodation type is often the first place they look for this. According to recent research, 26 per cent of Canadian travellers prefer ‘unique and quirky’ accommodations over more traditional places — further indication that this segment will continue to grow,” Guerreiro adds. “People value a human connection when they travel and the special attention to detail we see homeowners, B&B hosts and villa managers adding to their guests’ experiences is a key factor in this trend of seeking out alternative accommodations.”
Addressing the New Reality
While the alternative-accommodations market continues to evolve and blur the lines between the traditional-lodgings industry, Canada — and the world — is scrambling to catch up. Governing bodies are still working to implement regulations to address new realities created by this cohort of online businesses.
In Canada, the provinces of British Columbia and Quebec, as well as the cities of Montreal, Vancouver and Victoria, have implemented rules around short-term-rental platforms. Toronto has also adopted regulations regarding the licensing, registration and regulation of short-term rentals, however, an appeal of these regulations has prevented them from coming into force. Additionally, Ottawa has also announced it will conduct a regulatory review, as have Edmonton, Calgary and Nova Scotia.
According to the Hotel Association of Canada (HAC), the tabled 2019 Federal Budget includes a commitment to address tax noncompliance associated with the digital economy, including a focus on those who rent through short-term rental platforms.
Getting in on the Action
Rather than fight the sharing economy, major hotel companies have begun acquiring or partnering to launch platforms of their own. These offerings capitalize on the gaps that exist in more traditional home-sharing services, offering quality assurance and hotel-like amenities, such as toiletries and concierge services.
Last fall, Marriott International announced the expansion of its home-sharing pilot — originally launched in London, U.K., in spring 2018 — to additional European markets. The offering, dubbed Tribute Portfolio Homes, was launched in collaboration with Hostmaker, a London-based home-rental-sharing management company.
“Our home-sharing pilot in Europe attracted great interest from our loyalty-program members and yielded significant learnings,” Arne Sorenson, president and CEO, Marriott noted in the company’s 2018 results conference call.
However, Accor has been struggling to turn a profit from its acquired platform, Onefinestay, noting in its 2018 results that the company was continuing to work at turning the business (along with its John Paul concierge service) around, “primarily through rationalization programs.”
“We’re working on Onefinestay and John Paul and turning them around,” Jean-Jacques Morin, deputy CEO, Accor, explained during the company’s 2018 results presentation. “As part of that, we’re rationalizing the portfolio and we’ve notably reduced the Onefinestay inventory to the tune of 30-per-cent-plus by taking off the rooms that were not profitable, hence the fact that turnover is down.”
Despite a lack of profit, during the presentations, Accor chairman and CEO, Sébastien Bazin expressed faith in the value of these struggling “Beyond Hotels” assets, stating, “All of these bricks are different in nature…They’re extraordinary additives to the new lifestyle loyalty program (Accor Live Limitless, a.k.a. ALL).”
Hyatt had also made a foray into this market, with a significant investment in Oasis in 2017, but the company quickly abandoned the project, divesting its stake in the platform in October 2018 after extending the World of Hyatt loyalty program to include the brand only months earlier. Hyatt broke ties with Oasis as a result of Portland, Ore.-based Vacasa acquiring the company’s inventory. When reporting the company’s Q2 2018 performance, Hyatt CFO Pat Grismer indicated the company’s performance had not met expectations. (Prior to Hyatt’s involvement, Accor also owned a stake in Oasis, which it sold upon Hyatt’s entry to focus on Onefinestay.)
Broader Impact
Hotel companies of all sizes have also responded by launching hotels that more closely emulate apartments. For example, Toronto’s The Annex Hotel characterizes itself as a hybrid of a design hotel and an Airbnb, while Montreal-based Maisons & Co markets itself as offering “accommodation rentals” and even lists its small, loft-inspired properties on Airbnb and as ‘serviced apartments’ on Booking.com.
As Maisons & Co’s co-owner and operator Adrienne Couture explains, the company’s two Montreal hotels — Maison Saint-Vincent and Maison Sainte-Thérèse (featuring a combined 17 rooms) — fall somewhere in between a boutique hotel and an Airbnb, but are operated as boutique hotels with very limited services. “Airbnb pretty much disrupted the whole hospitality business over the last five years,” says Couture. “[We try] to differentiate ourselves from your typical Airbnb and from your typical boutique hotel,” she adds, noting the brand strives to do this through digital innovation and design focused on ensuring guests have the best experience possible.
The brand has evolved since its origin as a five-room experiment. “At first, we were only listed on Airbnb,” Couture explains, but once demand was established “we got our hotel license, then sold on Booking.com, then we [received] so many bookings [through our] website from SEO.” However, Couture notes, “we’re sticking with our brand being an autonomous, self-serve hotel.”
Short-term-rental platforms have given birth to an entire industry, with the advent of ghost hotels, management and software solutions targeted specifically at “hosts” and even the creation of turnkey design solutions for short-term-rental operators.
Montreal-based Fülhaus has established itself as a furnishing-and-design solution for the short-term rental market, offering its Haus-in-a-box product — an all-in-one service that includes delivery, installation and photography.
As Couture largely runs Maisons & Co’s operations herself, such solutions have been key to the brand’s growth and success. She utilizes services such as Tokeet — a rental-management platform — and Austin, Texas-based Volo’s in-room tablet concierge to keep things running smoothly. She also called on Fülhaus to design the properties’ rooms as the brand expanded.
Vacation-rental management companies also help bridge the service gap — and arguably further facilitate “super hosts.” Companies such as Vacasa and Lucky Homes (an Airbnb-owned subsidiary) boast hotel-quality services for whole-home short-term-rental properties. There is also the Accor-backed Properly, which offers hosts and property managers web- and mobile-based management tools for housekeeping and maintenance operations.
