The incredible growth of vacation rentals
Whether you’ve heard of VRBO, stayed at an Airbnb, or rented a home through HomeAway, you are likely familiar with the idea: nowadays, empty properties can be transformed into mini hotels with minimal effort and massive reward. Airbnb in particular is recognized as being a major disruptor to the global hotel industry.
Independently, these vacation rental brands have seen incredible growth over the past twenty years. And collectively, they represent an innovative new lifestyle that blurs the line between business and pleasure.
The rise of the folksonomy has been built on the human need for the familiar – and the self-catering holiday rental as an accommodation type is ideally suited to benefit from this.
Which is why growth in this market currently vastly outstrips commensurate strides made in the hotel sector – a hotel is perceived as faceless and staid, whereas a home, whether you call it a holiday property, a vacation rental or refer to it as ‘an Airbnb’ (now also a verb i.e. “Let’s Airbnb it”) is seen as infinitely friendlier, more welcoming, and more human.
The average number of Airbnb units is said to be doubling year upon year, whereas hotel supply increased by only 1.1%. And remember: Airbnb only accounts for a segment of all vacation rental properties.
That said, Airbnb’s growth has slowed the last 12 months despite being valued at over 30 billion USD and now the second largest accommodation group in the world after Marriott.
Airbnb is rolling out new services aimed at attracting travelers looking for luxury accommodations and traditional hotels, the latest move to contend with this sputtering growth in its original home-renting business.
The result of Airbnb’s disruption to the global hotel industry is that the vacation rental companies are looking to offer services that can better compete with the traditional hotels and the hotels are looking to offer services and product that can compete with the vacation rentals thereby bringing the two competitors closer together while wanting to maintain their unique selling points. One thing is for sure they will have to decide how best to address these market changes to survive the evolution. Watch this space.
Airbnb % of Hotel Demand
2018 6% (projected)
Source: Morgan Stanley Research
Private accommodation as % of global accommodations market
2014 USD 69 Billion (16%)
2018 USD 106 Billion (19%)
Source: Susquehanna International Group Research
- Private accommodation will account for almost a fifth of global hospitality bookings within two years – and the online travel agency giants are tipped to benefit. (Susquehanna International Group Research or SIG)
- Private accommodation forecast to continue to grow
- Airbnb growing its inventory far quicker than the hotel industry can add rooms
- 3000 lodgings in 2009, 2.3M rentals in 2016. 153% compound annual growth!
- As of 206 Airbnb most valuable accommodations company in the world valued at 30 USD billion. 25% ore than Hilton
- Airbnb grows countries between 2009 to 2015 while Hilton took 100 years to reach 93 countries
- The hotel industry saw its second lowest level of nightly rate growth in 2016 in 20 years, excluding the recession
- Airbnb users also appear to be using Airbnb for longer stays as opposed to one-night stays. In its survey, Morgan Stanley found 6 percent of Airbnb stays are one night and 22 percent are for six nights or more. Twenty-six percent of hotel users, by comparison, stay for just one night.