How the Hotel Industry Can Compete with Vacation Rentals

In a previous blog post, we discussed how the growing popularity of peer-to-peer vacation rentals such as Airbnb, HomeAway and VRBO is impacting the hotel industry. Travelers who don’t want to spend top dollar on lodging or who prefer a more homely environment are increasingly opting to stay in other people’s homes — especially in big cities and during large events. But while the hotel industry has long maintained that vacation rentals play a purely supplemental role, research shows otherwise.

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The Statistics

A 2016 study showed that in the 10 biggest U.S. markets, Airbnb lodgings accounted for nine percent of all lodging units. Moreover, vacation rentals were adding units much faster than the hotel industry.

Furthermore, a 2018 study showed that in 2014 in the 50 U.S. metropolitan areas with the largest numbers of hotel rooms, hotel profits diminished by 3.7 percent due to the presence of Airbnb vacation rentals. In addition, without the presence of Airbnb, hotels would generate 1.5 percent more in revenue.

Finally, a 2018 study by EHL revealed two interesting facts. First, the higher the prices of Airbnb rentals, the more positive the impact on the revenue per available room (RevPAR). And second, higher quality Airbnb lodgings led to lower RevPAR for hotels.

All of these facts together indicate that peer-to-peer vacation rentals are no longer just a supplemental hospitality service. Instead, they now pose direct competition to the hotel industry.

Tips for Competing

So how can the hotel industry compete with this growing segment of the hospitality industry?

  • Highlight location. Many travelers prefer lodgings in central locations. This is where hotels have a considerable advantage over vacation rentals, which are usually located in residential areas, as Medium points out. By highlighting location in all marketing messaging and concentrating new construction in city centers whenever possible, hotels can deliver an inner-city experience.
  • Price competitively. Hotels can no longer simply look at other hotels when it comes to pricing — they also need to consider the prices of vacation rental units in their vicinity.
  • Focus on amenities. Even luxurious vacation rentals are limited when it comes to amenities. Hotels, on the other hand, have the potential to offer everything from restaurants and bars to spas and pools right on their premises, which makes it easy for guests to enjoy them.
  • Deliver exceptional service. Peer-to-peer vacation rentals are self-service, meaning that guests have to do everything themselves, just like they do at home. Hotels, in contrast, have the ability to provide well-trained staff — as well as advanced technology — to cater to their guests’ every need. Whether it’s ensuring that travelers can check in remotely so their arrival is more streamlined or providing a top-notch concierge to help guests find the right restaurants, service has to be a focal point for hotels.
  • Embrace personalization. Today’s travelers want a personalized experience. That can be delivered thanks to smart technology that delivers everything from preferred temperature and lighting settings to enabling guests to listen to their favorite playlist.

It’s imperative for hotels to understand that they need to stay abreast of what consumers want. They must consistently ask the question, “Why do travelers choose vacation rentals over a hotel?” By being able to answer that question and making the necessary changes, they stand a good chance of competing for their share of the hospitality market. And when it comes to making the most of renovation and design changes, there’s nothing like the value of a hotel remodeling contractor like InterServ, LP.

Hotel Remodeling Contractor

As one of the more experienced hotel remodeling contractors in the industry, we understand that the value of quality craftsmanship and service. Interserv is proud to be comprised of leaders that are well-versed in all facets of the business and treasure the personal connections and relationships that are established with every project. To learn more about our services, contact us today.


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