Marriott International is to retire its Tribute Homes rental offering, launching Homes & Villas, with 2,000 homes in over 100 destinations throughout the US, Europe, the Caribbean and Latin America.
The decision came as Selina announced further funding and OYO Rooms acquired @Leisure Group, as the sharing economy continued to swell.
Marriott told us that Hostmaker would not be working with it “this time”, adding: “Hostmaker was very aligned with our Tribute Portfolio Homes pilot in Europe. Through Homes & Villas by Marriott International, we’ve expanded our offerings and sought out property management companies that had scale both in terms of markets where they have inventory and depth within each of those markets.
“Marriott is launching Homes & Villas by Marriott International with select property management companies that are already managing these homes. These trusted property management companies provide guests a professionally cleaned home with 24/7 support, high speed Wi-Fi, premium linens and amenities, and family-friendly conveniences upon request.”
“The launch of Homes & Villas by Marriott International reflects our ongoing commitment to innovation as consumer travel needs evolve,” said Stephanie Linnartz, global chief commercial officer, Marriott International. “What started out as a pilot a year ago is now a global offering, providing our guests with the space and amenities of a home backed by a trusted travel company, and the very best in loyalty benefits.”
At launch, the property management companies selected by Marriott included: TurnKey Vacation Rentals, LaCure, Loyd & Townsend Rose, Veeve, London Residents Club as well as current hotel owners and operators including Mainsail Lodging, CPG and Reserva Conchal. The companies listing homes on Marriott’s platform will pay a ‘platform fee,’ which is a percentage of revenues (net of taxes and cleaning fee).
Over time, Marriott expected to introduce Homes & Villas by Marriott International in additional markets as well as increase the number of homes offered in these launch destinations.
The company said that the new offering would be run separately from the core hotel business, with separate sources of funds for marketing and running the business.
Marriott said: “Our goal as a company is to innovate to meet travellers’ needs. In a recent Marriott survey, 27% of our loyalty members used home rentals in the prior 12 months; these guests are leaving our portfolio to book on other sites. We also dipped our toe into the waters through a 2018 pilot in Europe under the name of Tribute Portfolio Homes and found that nearly 90% of bookings were made by existing members of Marriott Bonvoy.
“We believe the short-term residential rental industry faces two challenges today – first, there is too much inventory without quality filters or brand assurances. Second, there is inconsistency across guest experiences that often lead to consumers feeling stranded or disappointed with their travel experience.
“Last year, we launched a home rental pilot in London. We saw success during the pilot and expanded it to three additional cities: Paris, Rome, Lisbon. Based on the insights gleaned during this pilot we believe the time is right for Marriott to enter this market with a more robust product offering and believe our strategic and disciplined approach will allow us to do so while complementing our core business.”
During the pilot, the average guest stay was more than triple the typical hotel stay. The company said it had learned that guests were looking for “unique and different accommodations” including spacious homes with one or more bedrooms, large kitchens and in-unit laundry.
The introduction of Homes & Villas by Marriott International adds nearly 40 new leisure destinations including Sorrento, Italy and the Amalfi Coast, Italy; North Lake Tahoe, California; and St. Barts in the Caribbean.
At the company’s security analyst meeting in March, Linnartz commented on the group’s home sharing offering under the Tribute Portfolio flag, where 85% of the guests were already members of the loyalty programme. Linnartz said: “We realise a premium price for our home rentals and we have growth opportunity in this space. This type of offering does not add meaningful profit, but we believe it will add value to the Bonvoy programme.”
At Selina, the company announced that it had raised USD100m in a Series C financing round, bringing the company’s total funding to USD225m to date. The company has 46 locations in 13 countries, with over 22,000 beds open or under conversion, combining private and shared accommodation with co-working facilities.
Selina co-founder & CEO, Rafael Museri, said: “We’ll continue to invest in our technology innovation team in Tel Aviv as we explore digitally-driven ways to disrupt the hospitality industry, enhance the complete booking and user experience for travellers, and continue rapid expansion into new markets across the globe.
“As we’ve seen across a number of industries from co-working to ridesharing, millennials and Gen Z are redefining how they want to live, work and explore the world. The ambitious and adventurous nature of these generations prove that there is a demand for our experiential hospitality model today and for years to come.”
At OYO Rooms, the group paid EUR360m for @Leisure Group, which includes more than 30,000 fully managed rental properties across Europe, operating nine brands including Belvilla, DanCenter and Danland.
Maninder Gulati, OYO chief strategy officer, said: “With Europe spearheading the vacation and urban home rental trend globally, @Leisure Group is uniquely positioned to capitalise on its experience and insights aided with OYO’s full-stack approach towards building the world’s largest global vacation rentals business. If one were to look at Europe alone, there is an ever-increasing demand for vacation homes with an increasing trend of booking an entire home.”
HA Perspective [by Katherine Doggrell]: Hoteliers, are you irritated by Airbnb? Fear not! You can now become Airbnb! Marriott is offering the added choice of home rentals (it’s not ‘sharing’ at the luxury end of the market) but without getting its hands dirty, offering itself up as a platform.
It has clearly learned must from Accor’s adventures with Onefinestay, where the group delisted a number of properties where it was failing to make a profit because they weren’t available to rent often enough to cover the additional services which the hotel group was providing. In this case, Marriott is providing the Marriott name and that’s where it ends.
The company – which involved itself in a public letter writing spat with Airbnb not so long ago – has long looked at home rentals much as one would look at a towel used to mop up something unsavoury. Best held at a distance and possibly burned. By using management companies and with no plans to sully itself with the lower end of the market, it is maintaining this remove, but still giving loyalty members what they want.
Additional comment [by Andrew Sangster]: Does this move mean Marriott is taking on Airbnb? No. Is it reacting to the threat posed by the home listing site? Very much so.
Marriott is well aware that offering 2,000 homes on its platform is small beer relative to the six million listings on Airbnb (according to an Airbnb press release on 27 March).
What Marriott could offer is a better curated selection than is available on Airbnb. Six million is simply too many to cope with for most people and despite Airbnb’s sophisticated filters, many customers might prefer to look at a site that offers a much smaller range but in tune with the types of place a customer might want to stay.
This has been Hotel Tonight’s model. But wait, Airbnb has already bought this app and is no doubt working out solutions to present more curated experiences.
When I say “could” in respect of Marriott’s initiative to curate, it is because I am a little puzzled as to why Marriott is not working harder to have an exclusive selection of properties. Maybe the plan is to do just this in a while when it has built traction in the business. But maybe it will never be able to build this traction and will be yet another also-ran booking platform.
Offering to list homes is very different from branding them. But perhaps Marriott’s distribution engine, which after all taps into an enormous array of offline activity such as corporate travellers and meetings, is capable of delivering something meaningful to property owners. If this is the case, then the next step would surely to offer some form of collection brand to property owners.
According to Gartner, Airbnb beats all hotel brands in terms of raw site traffic. It has over 40 million monthly visitors which is more than Hilton and Marriott combined. In terms of apps, Airbnb only lags three competitors in the travel space – Uber, Lyft and Yelp.
If Marriott goes head-to-head with Airbnb in competition for organic traffic it is going to lose. It is far too far behind and does not have the marketing budget to catch-up. But it can beat Airbnb by leveraging its existing relationships and it needs to do this before too much is booked online where it becomes too transparent and difficult for Marriott to effectively compete.