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https://www.wsj.com/articles/marriott-to-take-on-airbnb-in-booming-home-rental-market-11556535600

REAL ESTATE

Marriott to Take On Airbnb in Booming

Home-Rental Market
Company poised to be the first major hotel company to create a U.S. home-rental platform

Marriott’s European pilot program extends to Paris, including this three-bedroom home. PHOTO: MARRIOTT

By Craig Karmin
Updated April 29, 2019 6 42 p.m. ET

Marriott International Inc. is starting a new home-rental business, aiming to take on Airbnb
Inc. and other home-sharing companies in one of the lodging industry’s hottest segments.

The Bethesda, Md.-based company said that starting next week it will offer accommodations in
about 2,000 high-end homes throughout 100 markets across the U.S., Europe and Latin
America.

Marriott is the world’s biggest hotel operator with about 1.3 million guest rooms globally,
according to data tracker STR Inc. Now, the company is poised to be one of the first major hotel
companies to create a U.S. home-rental platform. It follows a pilot program in Europe and
marks the next step in the company’s plans to go global with the business.

Guests will be able to book their home-rental reservations through the Marriott website,
the company said. They will earn and can redeem loyalty points as they do when booking a
stay with any of Marriott’s 29 brands, which include Sheraton, W Hotels, and Ritz-Carlton.

Other big U.S. hotel operators, including Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp.
, also have been exploring or studying the home-rental business, say people familiar with the
matter. Some hotel executives, who had long dismissed Airbnb and Expedia Group Inc.’s
HomeAway as competitors, now believe they are growing partly at the expense of hotel
companies, especially with leisure travelers and large families.

At the same time, Airbnb has been moving aggressively into the traditional hospitality
business. Airbnb said last month it was acquiring Hotel Tonight Inc., a company that culls
inventory from hotels and offers discounted rooms. It also recently invested in the Indian hotel-
booking company Oyo Hotels & Homes.

Airbnb has the largest home-rental platform with nearly five million accommodations globally,
according to data tracker AirDNA and based on listings with at least one booking in a month.
 Airbnb’s website puts the
figure at more than six
million, based on active
listings.

The San Francisco startup

is expected to pursue an
initial public offering next
year, bankers say, and
some hotel-industry
executives say that
prospect is driving a
convergence between
This home in Lisbon is included in Marriott’s European pilot program. PHOTO: MARRIOTT
home-rental companies
and hotel operators. Airbnb is looking to diversify its offerings before going public, while hotel
companies want a piece of the home-rental business before an IPO helps Airbnb solidify its
position.

The promise of new competition in its core business comes as Airbnb already faces heightened
scrutiny from city governments that say some Airbnb hosts have turned their homes into illegal
hotels.

New York City passed a law last year that would have required Airbnb and other home-sharing
services to disclose to the city detailed listing information, although a federal judge in
Manhattan blocked it as too broad. Airbnb has said the law protected the hotel industry while
trampling on hosts’ rights.

Marriott would have to abide by any other local restrictions on short-term rentals, but people
familiar with the company’s thinking say executives decided the home-rental market was too
big an opportunity to pass up.

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On a business trip or vacation, would you stay in an apartment rental from Marriott or
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“It’s clear that the home-sharing phenomenon is here to stay, and hotel companies want to
make sure they get their piece of this pie,” said Ryan Meliker, an industry professional who has
worked as a hotel investor and a Wall Street lodging analyst.

Entering the home-sharing business isn’t without risk. The big hotel operators work primarily
on management or franchise basis these days, licensing their brands to hotel owners. By
offering home rentals, they risk alienating their hotel partners by creating new competition.

Maintaining the brands’ same fire and safety requirements in apartment buildings has been
another challenge. Hotels often have stricter standards than many apartment buildings. Fire
stairwells in some residential buildings are too narrow to meet the hotel operators’ code, which
would eliminate certain buildings.

Marriott’s home-rental program follows a pilot initiative in Europe. The hotel company joined
with Hostmaker, a London-based home-rental management company, to offer home-sharing
stays at 340 properties in Paris, Rome, Lisbon and London. Marriott is working with a number
of other property management firms in the U.S. and around the globe, the company said.

Marriott found that guests in Europe tended to stay more than triple the typical hotel length,
and the rentals appealed to customers who wanted more space and kitchen and laundry
facilities. The European homes included a 24-hour support line and an in-person check-in at the
property through Hostmaker, Marriott said.
Other global hospitality brands have also dabbled in the home-rental business, but without
much to show for it. Hyatt took a minority stake in onefinestay, a company that enables
travelers to rent upscale private homes.

Accor, the giant Paris-based hotel company, acquired onefinestay in 2016 but noted in an
October 2018 press release that the unit had turned in a “negative performance.” An Accor
spokeswoman said the company is “continuing its work to turn onefinestay around, primarily
through rationalization programs,” and that it was introducing new home collections.

Hyatt also took a stake in Oasis Collections and incorporated the home-rental firm’s listings
into its distribution system and loyalty program. After the rental-management company
Vacasa LLC bought Oasis last year, Hyatt said it was ending its affiliation with Oasis.

Airbnb, meanwhile, is courting business travelers. It developed a unit aimed at corporate

travelers that Airbnb says has attracted 400,000 companies, and it is leading a $160 million
funding round for Lyric, a luxury-rental startup that caters to business travelers by offering
hotel services such as room cleaning and 24-hour customer support.

Referring to any new competitors in the home-rental business, Airbnb’s head of policy and
communications Chris Lehane said: “We welcome them to the party and wish them bon
voyage.”

Marriott’s foray into the home-rental business shows how far the hotel industry has come in
recognizing the threat to its business from Airbnb.

Even with much of the hospitality industry now embracing the home-rental business, many key
players remain ambivalent, including Hilton chief executive officer Chris Nassetta. “We really
view home sharing as a different business,” he said in a statement, adding, “we may think
differently in the future.”

—Konrad Putzier
contributed to this article.

Write to Craig Karmin at craig.karmin@wsj.com

Appeared in the April 30, 2019, print edition as 'Marriott Faces Airbnb on Its Turf.'

Copyright © 2019 Dow Jones & Company, Inc. All Rights Reserved

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