Typically, major players in an industry are not pioneers into uncharted and untested niche territories; territories that promise to disrupt the status quo of long proven performances and produce huge revenues and “cash-cow” models that make C-suite executives and stockholders giddy. An atmosphere of invulnerability supported by decades of dominance in an industry has torpedoed many once dominate brands. Does anyone remember Kodak? Likewise, tobacco companies dismissed burgeoning e-cigarette marketers until they realized the potential threat to their nicotine delivery dominance. Perhaps due to a similar perceived threat, Marriott International is announcing its entry into a home rental market niche that will feature 2,000 “premium and luxury homes” in more than 100 locations in the US, Europe, Caribbean, and Latin America.
The new brand effort, called “Homes and Villas by Marriott International”, will collaborate with property management companies around the world to make private residences available to customers seeking upscale residences for business and personal travel accommodations. The effort appears to be in response to Airbnb’s launch of Airbnb Plus, which features high-end listings with strict hotel-like benefits. Marriott’s new plan infringes on Airbnb efforts, but doesn’t completely compete with it in every way. Homes & Villas will have minimum three-night stays, with prices ranging from $200 – $10,000 per night.
Airbnb offers mostly single-room accommodations from a menu of 6 million listings, primarily privately-owned properties. Its target market is mostly budget-minded travelers who would prefer staying in a hotel but can’t afford the higher costs. In comparison, while Marriott operates 7,000 properties in 130 countries, its entry into Airbnb territory offers just 2,000 selections. Still, many industry experts see Marriott’s move as proof that the hospitality industry leader is feeling the heat from Airbnb, VRBO and HomeAway. “People stay at different hotels for different trip purposes,” Stephanie Linnartz, the global chief commercial officer at Marriott. “Home sharing is another offering.”
If Marriott is to be successful in its attempt to stall Airbnb’s progress into its territory, it will need to figure out a way to ensure delivery of the same high-end quality of product and service that the company is known for. Working with outside property managers who represent independent property owners poses a challenge to maintaining the brand image. Will Marriott’s management be able to effectively enforce the demanding processes that have resulted in the brand’s lofty image?
Perhaps a better question is whether Airbnb, best known for its credibility in low-cost, hostel-type accommodations, will be able to make inroads into an upscale hospitality environment dominated by a long-standing leader in the high-end market niche. Either way, it is refreshing to see an accomplished industry player respond to a credible challenge to its market dominance. Experience has demonstrated that size, market position and dominance is not guaranteed to any player.