Will hotels finally beat rental prices in the accommodation tug-of-war?

In cities from New York to Viennanew short-term rental restrictions – intended to improve the availability of housing for residents – are poised to improve hotel profits. In New York in November, shortly after Airbnb and the like were limited to stays of 30 days or longer, hotel occupancy rose 6 percent and rates rose 8 percent, according to commercial real estate firm CoStar.

However, remote travelers continue to prefer rental properties, which remain strong in rural areas where rental properties outnumber hotels.

“We have seen the strongest demand in small and mid-sized cities, coastal and mountain areas and areas outside major urban centers,” said Jamie Lane, senior vice president of analytics and chief economist at Air DNA, a market research company specializing in short-term rentals. “The hotel supply is mainly located in larger urban centers or along highways,” he added.

Although rental prices are expected to account for just over 15 percent of accommodation demand in 2024, compared to around 12 percent before the pandemic, they have seriously challenged hotels. In response, hotels have adopted more residential features.

“Hotels have taken a page from the short-term rental playbook and said, 'We want our restaurants to be open to the public and we want the rooms not to be beige boxes,'” said Jan Freitag, the national director for hospitality analytics at CoStar . . “On the facilities side, the room that used to be a place to sleep will now serve as an office.”

With amenities like kitchenettes and expansive living areas, extended-stay hotels are booming. New brands expected to debut this year include MidX Studios from Marriot, Hilton's LivSmart Studios And Hyatt Studios.

“We have never seen ourselves as a competitor to hotels,” said David Whiteside, Global Chief Operating Officer at Onefinestay, which rents luxury homes and apartments with concierge service. It was acquired by Accor Hotels in 2016. “There will be times when a hotel is a perfect fit for a family or individual, and times when a house, villa or chalet would be the better option.”

Meanwhile, hotels are focusing on what sets them apart most: the human element.

Makarand Mody, an associate professor of hospitality marketing at Boston University, noted that “certain travelers value hotel service, and that's where they trump rentals.”