Why Are Travelers Open to Alternative Accommodations?

NEW YORK—As Airbnb expands its efforts to capture market share in the hospitality segment, the game appears to be changing rapidly and other vacation home platforms are taking notice.

“Airbnb is really becoming an OTA like Expedia and Booking.com,” said Jay Roberts, CEO, Domio, a tech-enabled hospitality company that is professionalizing the urban and vacation rental market. “Its release of Airbnb Plus now provides travelers with hotel listings side-by-side with professional rentals. This has certainly further blurred the lines between hotels and professionally operated travel rentals, and increased competition among the players that list across these aforementioned OTAs.”

Domio is competing within this group of property operators listing across different OTAs, and they differentiate themselves in a few ways.

Jay Roberts, CEO, Domio.
Jay Roberts, CEO, Domio

“One way we do that is by focusing on upscale urban and vacation rentals for groups of two or more. Another way we differentiate is by signing multi-year leases with property owners,” said Roberts. “In doing so, Domio takes control over both sourcing potential guests and properties. With this model, the risk inherent in unoccupied nights and property management shifts from owners to Domio.”

Roberts explained that this approach helps in securing properties in metropolitan areas with limited supply and sets up Domio to manage end-to-end design and operation of properties.

“Just like staying at a boutique hotel, or getting a Starbucks in any market around the world, you always know what you’re going to get,” he said. “The strategy has paid off as the industry goes through further disruption this year. In 2018, we’re looking at a 400% projected annual growth rate, and our occupancy rate is 84%, roughly 20% greater than the national hotel average.”

Domio conducted an annual Alternative Accommodations Survey and the insights may surprise you. For one, cost is a key factor in turning the tide for travelers when it comes to short-term rentals than in years past.

“I think travelers are much more comfortable with the idea of swapping a hotel stay for a well-operated short-term rental in 2018, and vice versa, than they even were just three years ago. Travelers see these accommodations on a level playing field, and cost is often the top consideration in choosing one over the other,” he explained.

“Safety and privacy concerns were some of the top reasons travelers were avoiding Airbnb in 2015, according to a Morgan Stanley survey,” he said, adding that it’s no longer a primary reason. “The main reason travelers are opting for hotels over Airbnb and other short-term rental accommodations today are cost comparisons, lack of amenities and no online support at short-term rentals. Safety concerns often score below all of those.”

In addition, the survey found that a large percentage of Domio’s guests are millennials, a demographic that enjoys traveling in groups.

“As millennials put off marriage, children and starting a family much longer than previous generations, they have a prolonged time period where they have the disposable income and independence to travel with friends,” he said.

“As they plan group travels, I think travel rentals are attractive for a few different reasons. Airbnb certainly made it cool to book a travel rental with a well-designed brand and technology product. Millennials want the ability to utilize the latest technology to book their travel and enjoy their lodging on their own timetable,” he said. “Airbnb set a baseline here, and the alternative accommodation operators that will continue to succeed will be those that bring new technology to the table.”

Domio’s properties are integrated with the latest technology, such as keyless Bluetooth entry, voice-activated rooms, and personalized content streaming. In addition, the company offers guests a $25 credit toward Lyft transportation from the airport to a Domio accommodation.

“Outside of these reasons that make travel rentals appealing to millennials, I think most group travelers simply enjoy the price they are paying per sq. ft. of room for a rental versus a hotel in most markets,” he said. “You have more space at a lower cost, and often a kitchen that you can leverage to make meals and congregate in as a group for games and friendly conversation.”

Airbnb has come under fire for how short-term rental sites are allegedly renting out “illegal hotels” and “negatively impacting local communities,” according to the American Hotel & Lodging Association. Roberts acknowledged the current landscape and explained how Domio is taking steps to be a local partner in the cities they operate.

“We work with the local government to secure requisite short-term rental permits and in some cases securing full hotel licenses. We’re highly focused on preserving the character of the local communities we serve, so we partner with local businesses so our guests and travelers’ dollars go back into the hands of the locals. We’ve created hundreds of jobs in the cities we operate in and we are actively involved in giving back to the local communities,” he said. “We take regulations and taxes very seriously in every city we operate. Before launching a city, we make sure we are fully aware of how to adhere to local regulations and policies in regard to short-term rentals, and we work with the local municipalities to ensure compliance.”