Hotels like Zoku Vienna, described as "Airbnb meets WeWork," are at the forefront of the alternative accommodations mania. — Photo by Zoku Vienna

Alternative lodging options, also referred to as short-term rental properties or “Airbnbs”, have grown in popularity in recent years and are increasingly seen as a viable alternative to traditional hotels. As a hotelier, it’s important to be aware of this new neighbour, it’s value drivers and KPIs in order to stay competitive and attract a diverse range of guests to maintain or win market share.

Growing in numbers

The alternative lodging industry has seen an exponential growth in supply of properties within the past few years. Europe is the strongest market with well over 6,5 million properties listed for short term rental. North America currently sits at about half of this number with 3,3 million listings however, this market is seeing rapid growth in various states.

Looking at US cities like Austin, Houston, Las Vegas and Miami we see rapid growth with an increase of over 25% in the number of listings between 2019 and now. This brings the total number of listings in these cities well above the 10.000 mark. Comparing 2019 levels to current, we see the largest growth in France (+22%), Belgium (+16%), Great Britain (+12%) and Spain (+12%) for Europe. Bear in mind European markets were already strong in numbers in 2019. Next to that, Airbnb has made leaps forward in its support and insurance for hosts since it was founded. As a result fewer Airbnb hosts are churning every year.

It’s not all rainbows and butterflies however in the short term rental world. In some cities or countries local governments are formulating stronger regulations around short term rentals as they correlate the growth to increasing rent and housing shortages for the local population. In Amsterdam, the Netherlands, for instance properties can be rented out for a maximum of 30 days per year and even then stiff registration and operation rules apply. As a result, we have seen an 18% decrease in supply in the Netherlands. In New York, US property owners must be present meaning it’s only possible to rent shared accommodation as a guest. The supply of properties has decreased by 26%.

Competing for the same guest

Hotels and alternative lodging properties are competing for guests in the short-term rental market. Both types of accommodation offer travellers a place to stay while on vacation or on a business trip.

However, there are some key differences between the two types of accommodation, which can make them appealing to different types of travellers. For example, hotels are often more expensive than rental properties and offer a range of amenities and services, such as a pool, fitness centre, and on-site restaurant. Short term rentals, on the other hand, may be more budget-friendly and offer a more unique and local experience. As a result, hoteliers and Airbnb hosts may be competing for the same pool of travellers, depending on the location, type of property, budget, travel purpose and length of stay. The average global length of stay for Airbnb bookings has varied between 4 and 5 nights between 2019 and today.

Alternative lodging options have been popular with leisure travellers for some time, however they are becoming more popular for business travellers as well, especially those looking for a place for longer length of stays. Bleisure travellers, or business travellers who combine leisure activities with their business trips, may be more interested in short term rental accommodations than hotels for a variety of reasons. The cost-effectiveness of these options might be particularly appealing to those who will fund a longer stay out of their own pocket. Next to that, business travellers appreciate being able to book a fully furnished apartment or house, as it allows them to have more space and flexibility than they would in a traditional hotel room. This becomes quite the asset as more and more people have the flexibility to work from anywhere and for longer periods of time.

Additionally, Airbnb's partnerships with companies such as Concur and TravelPerk have made it easier for businesses to book and pay for Airbnb accommodations through their corporate travel programs.

Professionalising rapidly

The alternative lodging industry is professionalising rapidly. One factor that has contributed to the professionalisation of the market is the rise of online platforms, such as Airbnb and HomeAway, which make it easier for owners to list and rent out their properties.

Airbnb just reported its most profitable quarter ever at the end of Q3 2022 with a total revenue of $2.9 billion. This is a 29% increase in revenue since the previous year’s Q3 which was again record breaking at the time. Platforms like Airbnb often have strict guidelines and regulations for hosts, which has helped to improve the overall quality and professionalism of the market. Initiatives like Airbnb’s AirCover reassure guests and hosts that they are protected in case anything would not go as planned. Alternative lodging options are also finding their way into more hotel-centred platforms such as or expedia’s vrbo.

In addition, many alternative lodging providers are now using professional management companies to handle the day-to-day operations of their properties. These companies manage hundreds to thousands of properties in various locations and handle tasks such as marketing, booking, and property maintenance, which can help to improve reliability and the quality of the experience for guests.

You can expect to see the lines between alternative lodging options and more traditional forms of lodging like hotels blur even more over the next few years.

Similar pricing

The price of a hotel room and a rental property can vary greatly, depending on the location, size, and amenities of the property. Generally, hotels tend to be more expensive than rental properties, but this is not always the case. Bear in mind that short term rentals often charge a separate service and cleaning fee to guests per stay which makes the properties more budget friendly for longer stays.

Alternative lodging property managers are also implementing dynamic pricing strategies to their listings. Worldwide 55% of properties are priced dynamically. Another 18.5% of property owners/managers say they want to start implementing dynamic pricing strategies this year. 75% of property owners are using or plan to start using technology solutions to do so, making the short term rental industry an industry that is technologically adept.

High occupancy and early pick up

The drastic increase in alternative lodging supply could result in a decrease in occupancy but the data is telling a different story. If we look at Airbnb occupancy for the current winter months of December, January and February and compare to 2019 levels we see a 96% increase in alternative lodging occupancy. For hotels we still see a slight drop compared to 2019 levels.

We’ve been doing a lot of research lately into hotel versus Airbnb booking patterns. We see that, for most destinations, Airbnb pickup follows a similar curve to hotel bookings but that bookings are being made much earlier. We call this the hotel pick up lag. This makes alternative lodging pickup an excellent early predictor for hotel demand.

An explanation for the hotel pick up lag could be that Airbnbs have a certain uniqueness (location, amenities, experience) which could prompt potential guests to book early as a reaction to perceived scarcity. Hotels on the other hand have a more predictable availability and plenty of rooms which could make them a more popular choice for last-minute bookings.

What hoteliers can do in 2023

  • Understanding your competition and competitiveness - Research Airbnb properties in your area to get a sense of the types of properties, prices being offered and availability over time. This can help you understand how your hotel compares to this new competitor and identify any potential threats.
  • Knowing your target market - Determine who your target market is and what they value in an accommodation. This can help you tailor your offering to better meet the needs of your guests and make your hotel more competitive.
  • Offering unique experiences - Consider what makes your hotel unique and how you can differentiate it from Airbnb properties in your market. This could include offering unique experiences or amenities that Airbnb properties cannot match. This is increasingly important
  • Leveraging technology - Use technology to understand the alternative lodging industry from a market- to individual property level. Implement a strong online presence and leverage data to optimise pricing and demand. This can help you attract more bookings and stay competitive in the market.

About Lighthouse

Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into confidence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth. We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways.

Trusted by over 65,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners—their success is our success.