For consumers, the historical distinction between hotels and short-term rental accommodation may be apparent, but for the hotel and vacation rental sectors, these lines are becoming a lot more blurred. The first trigger was the rapid growth of STR inventory (40% increase since 2018 as demand surfed the Airbnb wave). Short-term rental supply growth has brought them into competitive consideration for hotels. So, should your hotel be looking at short-term rentals and how they utilize data?
Convergence of sectors
As vacation rental supply and demand continue to boom, traditional hospitality business models and their competitive understanding have had to evolve. Now, as the sectors adapt inventory to serve common interest (aparthotels, concierge services), and new trends in hospitality demand begin to emerge, the convergence of short-term rentals and hotel accommodation looks set to continue. With provision blurring, should strategic practice be following suit?
Convergence brings hotel and STR mutual strategic relevance, and as accommodation providers are adapting, so are the businesses that support them. The need for holistic accommodation data with stakeholders understanding complete competitive sets is clear: Hotels and short-term rentals, as well as their strategic visibility and hospitality data provision, are converging.
The relevance of short-term rentals to hotels
North American vacation rental supply is up 34% since June 2019. Moreover, drilling down into some of the 25 key hotel markets shows skyrocketing rental supply – take Houston and Miami for example, whose vacation rental inventories have increased 35% and 74% respectively over the past 3 years. There are now 24,361 vacation rental rooms in Houston, and 20,850 in the city of Miami.
Strategic relevance doesn’t simply come from supply however, but also demand. Where demand for the flexibility of rentals was growing, the pandemic has greatly accelerated this.
An inclination towards space, amenities, group travel and rural locations has driven travellers towards rentals. On top of that, with fewer touch points, there’s considerably less opportunity to contract Covid within the confines of a short-term rental property. Furthermore, with more freedom and more flexibility in the workplace expected to be one of the lasting by-products of the pandemic, bleisure travel is likely to continue for the foreseeable future, shifting traveller requirements and expectations.
With this evolution, both sectors are attempting to bridge the gap where possible. For example, aparthotel provision from the top 10 hotel brands is up 8% since the pandemic, and many of the world’s largest have launched a ‘homes’ provision. Meanwhile, professional inventory is ever growing on the foremost rental booking platforms (up 21% in Europe since 2018), and there has been a 13% increase in additional/concierge services since 2019 from North American property managers for example. Crucially however, in addition to expanding services, this growing competition has also fuelled the uptake of operational catalysts, with technology such as data provision seeing a 162% increase in adoption in Europe, and 58% of all property managers globally planning to increase their data spending.
STRs are relevant – how should hotels factor them in?
STR revenue management found its basis in hotel practices, and management companies now routinely engage with market benchmarking and business intelligence. Drivers such as pricing, occupancy, operations, owner and prospect reporting, performance forecasting and tracking and of course investment are steadily becoming more data driven.
With the competitive landscape merging, the next question is how hotels can use this now readily available STR intelligence to inform their own strategies.
In further evidence that the hospitality landscape has shifted, global leaders in cloud-based hospitality business intelligence, OTA Insight, acquired short-term rental data company Transparent this year. Transparent have used their tracked 42 million global listings to pull together a comprehensive view for hotels looking to track the space. They propose 25 KPIs covering supply, pricing, demand and distribution.
Tracking these metrics will ensure full visibility over the performance and trends in significant accommodation within your market, and position you to take advantage of different opportunities. Whatever your position; data is always a good place to start.
If you wish to explore how short-term rental and hotel data can benefit your business, reach out to us!