The short-term rental ecosystem is getting bigger, which means many winners are set to emerge from the pack. Expect further brand-driven professionalization, more outside investment, and vendor consolidation. Those getting on board will benefit, but is a backlash in the cards?
Airbnb has signaled that this will be the year that it will finally go public. Investors and vendors are jostling for position to benefit from the added spotlight this will put on alternative accommodations. Airbnb itself is also acquiring and investing in companies to ensure a positive outcome.
With the added scrutiny, 2020 promises to see clear winners emerging from this fragmented category.
A BOOMING SECTOR
Skift Research estimates that global gross bookings of short-term rental properties grew 7 percent in 2019 to a total of $115 billion. Five companies — Airbnb, Booking Holdings with its Booking.com and Agoda platforms, Expedia Group with its Vrbo/HomeAway, TripAdvisor, and Chinese platform Tujia — registered 73 percent of all bookings, showing how the booking landscape has become highly consolidated.
In many other aspects, however, the short-term rental sector is extremely fragmented. There are millions of independent hosts, over 100,000 property managers, and thousands of business-to-business vendors supporting the renting out of first and second homes, villas, houseboats, yurts, and any other type of accommodation imaginable.
STRENGTHENING BRAND IDENTITY
Branded home managers will find rich pickings in 2020 and beyond. Brand recognition is moving from the online platforms, which will continue to push their brands to attract customers, to on-the-ground branding. Property managers like Vacasa, Onefinestay, and Altido are professionalizing the sector by setting hotel-like standards with exemplary guest communication.
Rather than relying on individual hosts, companies like Sonder, Lyric, Stay Alfred, and Domio, meanwhile, are using master leases, where they lease and convert a partial or entire building to branded short-term rentals.
And it’s not just startups and venture capital money driving the growth of branded home rentals. Hotel behemoth Marriott International introduced its own Homes & Villas brand in April 2019.