The Rise of Brands in the Vacation Rental Industry

Branding, they say, is everything.

If you’re starting a company, one of the first things you’ll hear is that you need a strong brand. People need to know who you are. They need to know what they can expect from you. They need to be able to distinguish what you offer from all your competitors in the marketplace.

Yet, there are few if any national or global brands in our industry. There are of course quite a few well-recognized US vacation rental brands—Meyer Vacation Rentals in Gulf Shores, Sun Realty in the Outer Banks, Southern Resorts in the Florida panhandle, or Taylor-Made Deep Creek Vacations come to mind—but they are typically local and mostly apply in drive-to markets.

Hotel brands are entering the market.

At the national or global level, 99 percent of vacation rentals are completely unbranded compared with 40 percent of hotels. The private accommodation sector has no equivalents to Marriott, Hilton, or Hyatt. Expedia, HomeAway, VRBO, or Booking.com are distribution channels.

Airbnb is a hybrid: while it clearly has built a powerful global brand, with its recent expansion in scope it is arguably becoming more of a distribution channel than a brand. The company is clearly trying to address this with the introduction of Airbnb Plus: Airbnb is qualifying and inspecting a subsection of its inventory and is thus now leveraging its brand at the listing level.

Hotel brands are also entering the industry: Hyatt distributes Oasis Collection listings via its soft brand “The Unbound Collection”; Marriott distributes 200 HostMaker-managed properties in a trial in London via its soft brand “Tribute Portfolio Homes,” and AccorHotels acquired three alternative accommodation providers and consolidated them under the Onefinestay brand.

Then there are a few nascent brand contenders in the property management sector: Sonder advertises “deconstructed hotels” that are “modern and exciting.” Stay Alfred is offering “upscale” and “high-end” vacation rentals specifically in downtown locations of major cities. TheGuild, Lyric, and Domio are in on the act, too, and all these new companies are building a business model on the theory that an industry that lacks branding needs new brands.

What’s a brand?

Before I argue why creating sleek new brands isn’t necessarily the vacation rental industry’s next move, let’s take a look at what we mean by a brand. We’re talking about what distinguishes one type of product from another.

Strong brands are easy to identify on sight, and their offerings are differentiated: an Apple product is distinguishable not only because it looks like an Apple product, but because it operates like an Apple product and is backed by the service you expect from the Apple company. Because strong brands consistently deliver the experience their customers expect, their customers tend to be extremely loyal and to choose that brand over others.

Sounds desirable so far, and you can see why so many companies are striving to create the strong brand that guarantees such loyalty.

The problem is that vacation rentals, by their very nature, don’t brand.

Vacation rentals resist uniformity, but need consistency.

You can’t offer uniformity with vacation rentals because they are inherently unique. Uniqueness is the selling point—it’s why guests choose vacation rentals over hotels in the first place. They want to stay someplace that feels like a home, and every home is different.

Of course, identical vacation rentals sold in blocks like hotel rooms have existed for ages. They’re stocked with identical furniture, kitchen supplies, and decor. But those aren’t what people think of when they think “vacation rental.” Those are just hotel rooms that happen to have kitchens.

You will never be able to create a vacation rental brand that guarantees uniform spaces across all its properties, because vacation rentals are not uniform. There’s the ski chalet, the urban mid-century modern, the contemporary beach house, the quirky cabin, the treehouse, the houseboat, the family-friendly place for family reunions, the romantic spot for a weekend getaway, or the hyper-urban loft for the millennial on a business trip—their uniqueness is what makes them what we call alternative or private accommodation, cottages, holiday houses, baches, sleepouts, serviced apartments, aparthotels, or vacation rentals.

That’s the bad news about branding uniformity. But while our customers don’t seek uniformity, they do seek consistency. Consistency doesn’t mean that units necessarily need to look the same, but it does mean that they should all meet a set of expectations consistently.

Consistency of expectation is not uniformity of place.

Because of my work, I stay in vacation rentals and other private accommodation up to 30 times per year. I very much enjoy the variety of accommodations, which have ranged from a VW bus in San Francisco booked on Airbnb to an upscale, impeccably appointed Edwardian from Oasis Collections in London. I’m rarely, if ever, disappointed by the place; however, too often the experience doesn’t quite measure up to expectations.

When industry observers talk about convergence between traditional lodging and our industry—and the growth that can drive it—lack of consistency is often cited as a main obstacle holding our industry back.

Great expectations

Here’s a set of consistent standards that should be expected (and delivered) for every vacation rental:

Accuracy

Each listing is accurately described in detail, with a professional, standard set of photographs. What you see is what you get, every time. Great photography is available for each main room in the listing, the photography is up-to-date, and expectations are managed all the way from listing platform through to housekeeping. This means that the housekeeper stages the room each time exactly the way the guest saw it in the listing photos from your website, HomeAway, or Airbnb.

Health and Safety

Every home has both the attributes and the processes to ensure guests’ health and safety. This includes ensuring that smoke detectors, fire extinguishers, exit information, and first aid kits are available to guests, and processes are in place to ensure proper sanitation during cleanings, as well as regular checks that all health and safety attributes and processes function accurately and reliably.

Access

Guests can count on 24/7 access with backup access methods in place.

Amenities

Quality sheets, linens, and amenities are available to guests during their stay. Kitchens are stocked with key necessities and process fail-safes are in place to manage quality over time.

Utilities

Wi-Fi that always works, hot water, heat, air conditioning, TV, remote controls (batteries!).

Communications

Standard processes with confirmation, key code, welcome, post-arrival check-in, mid-stay check-in, post departure, etc.

Inspection processes

Inspection processes are in place for every stay—these inspections can be integrated with housekeeping or stand-alone processes.

Standard Operating Procedures

Standard Operating Procedures are in place for staff to follow to deal with everything that will go wrong.

Learning from hotels: soft brands

For a while now, hotels have somewhat unbundled distribution from the actual brand via soft brands. If a hotel is strongly established in an area and wants to maintain its diversity or uniqueness or has its own recognizable brand, the operator may choose a soft brand, such as Marriott’s “Tribute Portfolio Collection” or Hyatt’s “Unbound Collection.”

Hotels choosing soft brands get the same distribution, and guests choosing a hotel with a soft brand can expect very similar services as those offered by the main flag, if in a unique place. Interestingly, franchise fees for soft brands seem to be only marginally lower than for the main brand, indicating that much of the “brand” value doesn’t stem from the brand itself but from the distribution that comes with it and from the general expectation that such soft brands are curated and vetted collections that deliver a unique service experience, if each in a unique and diverse place.

The anatomy of a private accommodation brand promise

The brand promise can start with distribution: at one end of the spectrum is largely unbranded distribution (e.g. Expedia or Booking.com), where the key value proposition is around comprehensiveness and best price; at the other end of the distribution spectrum are more branded channels such as HomeAway or Airbnb, with stronger brands and exclusive inventory. Arguably, however, the branding power of distribution platforms is weakening as they add more diverse inventory. For example, in Airbnb’s case the “Live there” campaign theme strongly reflects its core inventory, but much less so for newly added boutique hotel rooms.

Next are curated collections: castles, family friendly, tree-houses, romantic getaways, and business-friendly are all examples of curated “light” collections, likely self-reported or with minimum inspection, that intend to give an additional layer of consistency.

Airbnb Plus is currently only using one-time inspections; this provides an additional layer of a brand promise by ensuring that a place has met certain requirements at least at one point in time. However, without control of management or at least of processes or brand standards, that’s still quite different from a hotel soft brand.

Next are property managers like Vacasa, which have comprehensive and consistent, fully integrated processes. Airbnb’s luxury brand “Beyond by Airbnb,” Oasis Collections, or AccorHotels’ Onefinestay also exercise granular control over most processes, even if a third party might deliver the latter.

Last is a new breed of VR brands, like Domio, Sonder, Lyric, or Stay Alfred, which fully control not just curation and processes, but also design. Here we have come full circle with traditional hotels—these brands can deliver both a consistent service experience and a standard space.

Why does it matter, and what does it mean for VR managers?

Private accommodation and vacation rentals are different from hotels—uniqueness of inventory is a very valuable attribute in our category. However, delivering consistent services and accurately describing listings against standard criteria are critical in meeting guest expectations, supporting convergence with mainstream lodging, and driving industry growth.

The hotel chains’ early experiments in introducing brands into the category are illuminating. Soft brands focus on distribution and a set of brand standards but don’t put much value on the brand itself. This might be perfectly sufficient for our industry. It is unclear that we need new brands; there are plenty of well-established brands out there.

Arguably, the real opportunity is in expanding distribution. The three main listing platforms are continuing to drive more bookings for many VRMs. As hotel chains get acquainted with this category, and as convergence continues, it would only be natural for them to source inventory from the VRMs just as Marriott did in its experiment with HostMaker in London.

This should provide welcome additional distribution channels to our industry. The entrance of the hotel brands should also further accelerate convergence, as it will drive further professionalization. One key question will be how the hotel chains will source inventory at scale.

Likely, those VRMs with the best standard operating procedures, delivered across the most interoperable platforms, will be the winners. They’ll have access to broader distribution channels and should capture brand premiums across multiple brand portfolios, whether Airbnb Plus or hotel and other travel brands. And the more we standardize and certify processes and inspections as an industry, the more we’ll be able to cater to broader audience segments and drive industry growth.