WSJ: Marriott moves into home-sharing market with Airbnb-like service

Dive Brief:

• Marriott will announce a home-sharing service akin to Airbnb as early as next month, according to a report in The Wall Street Journal citing anonymous sources familiar with the matter. The company tested such a program in Europe, and the pilot was successful enough to serve as a model for a broader, U.S.-focused business, the sources said.
• The move would make Marriott, the owner of brands like Sheraton and Ritz-Carlton, the first major U.S. hotel chain to dive fully into the lucrative home-sharing market with a proprietary platform. Loyalty points and other rewards offered by Marriott would work the same way for the home-sharing service as they do for the company’s legacy hotel properties, per the Journal’s sources.
• Key Marriott rivals like Hyatt and Hilton have also investigated the potential for a home-sharing business to varying degrees, as Airbnb and similar sites like HomeAway are taking a bigger bite out of their customer bases, the Journal said. But the strategy carries heavy risks: Most hotel chains abide by far more stringent fire and safety codes than the apartments where users would typically rent an Airbnb, for example, and they could put off existing franchise partners by creating more competition in the market. Marriott has decided those risks are worth taking to remain on the leading edge of its category and ahead of Airbnb.

Dive Insight:

Marriott jumping into the home-sharing market could spell bad news for Airbnb. The digital disruptor has proved a standout success story — unlike many of its tech peers, Airbnb is profitable and valued by Forbes at around $35 billion — but might have to grapple more with the Bethesda, Maryland-based hotel chain’s globe-spanning infrastructure and loyal customer base.

On that front, Marriott linking its existing rewards program to a home-sharing service could be a crucial differentiator for consumers, allowing them to translate points and other deals to both short-term apartment rentals and stays in traditional hotels. Similarly, the launch of a home-sharing service would coincide with Marriott’s push to sign more people on to a new, streamlined loyalty program called Bonvoy.

Unlike past loyalty offerings from Marriott that were tailored to individual brands, Bonvoy encompasses the suite of the marketer’s three biggest properties — Marriott, Ritz-Carlton and Starwood — and integrates them into a single app. Rolled out in February, Bonvoy came as a response to a massive cyberattack on Starwood’s reservation system, one of the worst corporate security breaches in recent memory. Marriott being able to pair the fledgling Bonvoy, which it has marketed heavily this year, with a new home-sharing could spin a change born of crisis into a big business opportunity.

At the same time, Airbnb is diversifying its business to more closely mirror traditional competitors, as noted by the Journal. Last month, it bought the mobile-first, last-minute booking service Hotel Tonight in a deal estimated to be worth about $465 million.

The startup, which is expected to go public in 2020, this week also revealed a partnership with the New York-based real estate developer RXR Realty to create a new lodging system that would act more like a hotel than its current booking system, CNBC reported. The approach could help Airbnb combat growing restrictions and potential regulations on short-term rentals in New York City, a critical market for the platform.