Hotels Playing Up Services to Push Strongly Into Short-Term Rentals Hotels' Inevitable Entry Into Short-Term Rentals

25.08.2023 - 13:56 / skift.com / Jan Freitag / Srividya Kalyanaraman / Richard Clarke / Chris Silcock / Tyler Morse

Santa Fe, New Mexico hotel La Fonda’s move to branch into short-term rentals to accommodate the demand for hotel guests is yet another affirmation in the world of blended travel.

Hotels have been playing the rental game for a while now, but now is the time to play the wild card — economies of scale. To pander to the globe-trotting “bleisure” traveler (business plus leisure), all hotels need to do is strike that delicate balance between privacy and community, hyper-personalize amenities to imbue a sense of home and there they can have it — a customer who doesn’t care if it’s a rental or a hotel so long as it has room service.

Recently speaking at Skift’s Future of Lodging event in London, Richard Clarke, managing director at AB Bernstein agreed that the demand for overnight hotel stays has grown at about 4 percent a year, on average fairly steadily for a long stretch of time. This long-term growth is driven by a rising middle class in emerging markets.

In January last year, La Fonda bought the Old Santa Fe Inn. Then, a month later, the hotel partnered with AdobeStar Properties, which bought and renovated different buildings around town to create 26 short-term rentals. 

Some hotels are responding differently — hotel owner operator MCR Hotels bought 70 hotels during the pandemic and is closing on four soon, with another 12 in the pipeline, its chairman and CEO Tyler Morse told Skift.

Chris Silcock, Hilton’s chief commercial officer repeated Hilton’s stance that it wouldn’t necessarily get into the short-term rental or vacation rental space — remaining one of the only major brands to forsake the sector — because it seems that it is a difficult area to ensure high quality and to build hospitality services around it.

But even those hotels are yielding to consumer demands in different ways — through “powerful personalization” and other things.

“The idea of hotel brands saying this is where the customers are going so then we are there as well,” said Jan Freitag, national director of hospitality market analytics at the CoStar Group. “The homes and villas by Marriott is an exploration of this.”

An AB Bernstein report cited a ResearchGate study of consumer ranking for hotels and rentals and found that consumers ranked hotels higher on cleanliness, service, and ease of checking in and out. And hotel companies can play up its strength.  

“Scale is the biggest advantage,” said Jamie Lane, vice president of research at AirDNA. “The power of having commercial laundry, people don’t talk about much, but it’s a big deal — the fact that hotels already have that within a central location can be a big benefit.”

An in-house cleaning staff, commercial laundry and a concierge service — who wouldn’t want these at an Airbnb,