The increase in restrictions on short-term rentals in several cities could benefit the traditional hotel sector, and traditional hospitality brands are already preparing to meet this demand, at least that’s what market giants such as Hyatt’s house.
In recent years, platforms like Airbnb have transformed the travel market, impacting prices, tourism, hospitality, and infrastructure in the most sought-after destinations. This new form of accommodation has transformed the way we travel, but it has also brought challenges to life in large urban centers. The impact of short-term rentals extends beyond tourism, exacerbating housing shortages and prices in cities like Barcelona, Berlin, and New York.
To curb the impact of the growth in short-term rentals, several cities have adopted restrictions and new rules, which has generated controversy among residents, landlords, and investors. In this context, the traditional hospitality sector has sought to reinforce its differentiators to attract this audience.
Regulatory pressure is already being felt in the market: Airbnb shares fell more than 6% after the earnings conference call, accumulating a loss of more than 7% since the earnings release.
Faced with this shift, hotels have been positioning themselves strategically, highlighting attributes that contrast with the weaknesses of alternative accommodations, often associated with risk, lack of standard, and instability. While vacation rentals still attract investors, they pose challenges such as high workloads, legal barriers, and unpredictable income. Hotels, on the other hand, offer established advantages such as security, cleanliness, 24-hour service, and leisure options, capable of attracting increasingly discerning consumers. Highlighting these advantages becomes crucial amid growing travelers’ frustration with the limitations of the alternative model.
The current scenario also presents an opportunity for hotels to attract digital nomads and corporate travelers seeking stability and professional infrastructure. Many already avoid vacation rentals due to unpredictability and prefer hotels for longer stays, according to research by Morning Consult, which shows that 61% of corporate travelers prefer hotels to vacation rentals when their stay exceeds seven days..
While Airbnb once stood out for offering a certain “authenticity,” hotels are now also investing in more local and personalized experiences to attract guests. An example of this is the Hyatt Inclusive Collection, Hyatt’s line of all-inclusive resorts. “At our resorts, we’ve begun investing in local experiences, partnering with small businesses and valuing regional cuisine, without sacrificing technology, with solutions like digital check-in and personalized services,” explains Antonio Fungairino, Head of Development for the Americas at Hyatt Inclusive Collection.
Hotels can invest more in extended stays, with management outsourced to specialized operators, making the model more practical and profitable. Long-term stays have more stable occupancy and predictable cash flow. Operating multiple units allows for economies of scale and greater profitability.
Investing in multiple units in extended-stay hotels helps mitigate risk and address instability. With an eye on this market, some chains have launched new brands focused on this model, betting on greater resilience and profitability. With pressure on Airbnb due to its impact on neighborhoods, hotels can reposition themselves as leaders in sustainable tourism, creating jobs and contributing to the local economy.
