Why the gap between boutique hotels and vacation rentals is narrowing

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Why the gap between boutique hotels and vacation rentals is narrowing

Why the gap between boutique hotels and vacation rentals is narrowing

Jeremy Gall, CEO of Breezeway, outlines the similarities between boutique hotels and vacation rentals.

As the hospitality industry evolves, the line between hotels and vacation rentals has been slightly blurred. In recent years, their convergence was being driven at a macro-level (looking at trends in the wider industry), but now this is accelerating further at a micro-level (looking at operations and technology).

Between boutique hotels and vacation rentals is where the gap is at its narrowest. By understanding why that is, operators in both spaces learn and grow from each other.

Setting this in context

To understand the background of this evolution, you have to look at what global hotel chains and the big OTAs have been doing over the past few years.

Hotels and vacation rentals began to compete for space on OTAs – and this wasn’t exclusively in one direction. Airbnb added boutique hotel rooms to its site after Booking.com and Expedia started listing rentals on their platforms. Vrbo has always played to its strength of offering family-orientated rentals in popular markets – and even started adding hotels to its inventory to meet intense demand last summer.

Then global hotel chains began to diversify their offering in the vacation rental space. Accor acquired OneFineStay in 2016, and Homes & Villas by Marriott was launched in 2019. This all happened way before the outbreak of the pandemic when vacation rentals experienced a surge in popularity amongst consumers. But the attractiveness of the standardisation of hotels never faded during this time, as the emergence of specific types of vacation rental brands that felt more like hotels slowly grew in influence. Sonder’s recent debut on the public market is a great example.

Already we can see that the stage has been set for convergence between the two types of product. Let’s now take a look at what’s been happening at a micro-level.

Delivering a quality guest experience

What once defined and separated the vacation rental industry from other accommodation types in hospitality has disappeared or distorted over the years to meet the needs of the modern traveller. When I started working in the industry it was accepted that you’d bring your own sheets and towels, even toilet paper to a home. Today that seems unthinkable.

The influence of hotels has absolutely played a part in this, particularly over the last two years where many people who tried a vacation rental for the first time had expected a “hotel like experience”. Increasing guest expectations and trying to differentiate from the competition (especially in saturated, ‘traditional vacation rental’ markets like many parts of Florida in the US, or Cornwall in the UK) have manifested themselves in elevated quality of service delivery in properties. Technology has also enabled the sector to mature by giving property managers more time to focus on the finer details.

Concierge comforts like mid-stay cleans, stocked refrigerators, and even airport transfers have become typical offerings within the industry. Property managers are now really trying to emulate that ‘hospitality experience’ that was previously only felt in hotels. I would also add that it’s more of a boutique hotel experience that is being created by individual hosts and smaller property managers: it’s personal and really tuned into the fact that often the home itself is the biggest draw of a holiday, so it needs to be unique.

On the flip side, the guest experience in many hotels is also undergoing a transformation. The pandemic showed that guests do often want to be left to their own devices when on holiday. Virtual concierges, keyless entry, and other forms of contactless technology have become the norm in many hotels. Vacation rentals tend to leave limited interaction with any staff or hosts, and are also using similar technology. Both types of experience are being brought closer together in this regard.

Powered by technology

The inevitable advancement in technology underpins everything that’s happening in vacation rentals and hotels. It develops in response to consumer demand. Just think about your average type of traveller today: millennials and Gen Z were taking four vacations a year pre-pandemic and have been brought up with tech as part of their day-to-day lives. They expect technology to create a seamless vacation experience and the contactless tech outlined above is part of that.

Technology also develops through the problems facing hospitality operators. I have spoken before about the need for more purpose-built operational tools to support boutique hotels. Legacy technology deployed in larger hotel chains isn’t always a great fit for boutique hotels that have smaller operations. In fact, the technology often utilised  by boutique hotels is subsequently used in vacation rentals. At Breezeway, a property care and operations platform, around 10 per cent of our customer base is small hoteliers. This is because they need to create custom lists for cleaning and maintenance since most of their rooms and amenities are highly individualised from one another.

The impact of regulations

Ask any vacation rental operator what the biggest challenge facing the industry is right now and a good proportion of them are going to say regulations. As Airbnb in particular has grown, it’s shone a spotlight on our industry that has sparked discussions and enacted regulatory change across the world. As a result, OTAs have introduced far more standards and processes to better vet and control their properties. Airbnb Plus, for example, was a move to create a collection of high-quality homes that would deliver all the charm of a vacation rental but with a predictable, hotel-like experience.

I predict that in the future, we may see more guidelines for operating vacation rentals in line with how boutique hotels are currently being controlled and run. Not only would this have a huge and positive impact on the reputation of vacation rentals, but it would also encourage operators to professionalise along the lines of hoteliers.

The push for the perfect guest experience has always driven every part of the travel industry but has been instrumental in bringing the vacation rental product closer to that of boutique hotels. This is having a deeper impact on the operational side of running these businesses, particularly in technology. The gap has never been narrower but time will tell where it goes next.

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