Marriott Opens Its Doors to Home Sharing

On the same day that Airbnb’s CEO confirmed that the company will file for an IPO later this year, Marriott announced its biggest move yet into home sharing. But, in a sign of how difficult it is for a traditional company to disrupt itself, investors sent the hotel chain’s shares down in trading the same day.

After a year of experimentation, Marriott stated Monday that it is officially launching a unit dedicated exclusively to home sharing, called Homes & Villas. The move, experts say, is akin to a cable television company moving into streaming video or a fast-food company adjusting to the healthy eating trend: it’s ripe with opportunities and fraught with challenges.

“People want the experience of staying in a home instead of a hotel now, and hospitality companies have to provide what the consumer is demanding,” says Radhika Papandreou, head of Korn Ferry’s North American Travel, Hospitality, and Leisure practice. “But it has to be done in a measured way that avoids cannibalizing the existing business.”

Papandreou says the way Marriott is moving into the market—via partnerships rather than spending billions to acquire a company or build an Airbnb killer from scratch—is smart and low risk. And offering consumers the ability to earn and redeem points and incentives toward Marriott’s new Bonvoy rewards system gives it an advantage over Airbnb, HomeAway, or other disruptors.

“Marriott is big with business travelers, and home sharing is more for the leisure traveler,” says Papandreou. “So this gives the business traveler who racks up lots of points for work to redeem them for a family holiday.”

It also gives the leisure traveler a bit of comfort knowing that the Marriott name is backing the home rentals. That’s a major advantage considering the bad publicity that is as attendant with home sharing as it is with ride sharing. But it also represents the biggest challenge traditional hospitality companies like Marriott face as they move into this arena.

The credibility Marriott bestows also brings with it a standard that could be unwieldy to uphold and enforce among thousands of individual homeowners. Already, the owners of Marriott brand hotels are concerned that the proliferation of lodging brands is leading to confusion and attrition. Marriott currently has more than 7,000 hotels across 30 brands.

“They will be attracting Bonvoy members [who] will book a Marriott Home & Villa where they might otherwise book a Marriott hotel,” one Marriott hotel owner told the travel news website Skift. At the same time, Marriott and other traditional hotel brands are beholden to regulations that don’t apply to new home-sharing services. Such concerns are part of the reason why Marriott shares declined 48 cents to close trading at $135.97 per share Monday.

The former global chief marketing officer for Hyatt Hotels tweeted about the news Monday, stating: “Hotels have been playing in the [home-sharing] space for some time. The question is if Marriott is going to do something different to be meaningful in this space.”

Authors

  • Radhika Papandreou

    Senior Client Partner

    Bio >