Over the last few years, the growth in innovation and investment in the technology solutions for the short-term rental sector (combining vacation rentals, corporate housing, and ‘home-like’ brands such as Sonder and Life House) has been phenomenal to witness. Property managers now have plenty of options to help them run better, more streamlined businesses covering all aspects of in-property management, guest experience, customer relationship management, revenue management, ancillary services, and more. The technology adoption in the hotel industry has seemed slower, with SaaS adoption less the standard. 

While the hotel and short-term rental segments are highly fragmented, around 35-40% of hotels are independently owned and managed, and single hosts or micro-businesses own 85% of rental property companies. Equally fragmented is the technology that serves both sectors. Many tools, such as in-room technology, smart locks, and guest communication devices, can effectively service hotels and short-term rentals (both sectors have rooms and guests, right?). There have been relatively small inroads made toward technology brands providing both sectors with solutions tending to stay in their own lane. They are rarely converging. At least for now. 

The short-term rental industry is fractured and comprises many small businesses. The types of properties are also exceptionally diverse, and managing short-term rentals is hard work. Rather than being in one building like a hotel, units are typically dispersed across cities, resorts, along a beachfront, around a lake - requiring logistical agility to manage and maintain. Part of the charm of rentals is their ‘unique spaces’, which makes creating a brand and standardized experience more challenging. Short-term rentals have had to get creative with communication tools and virtual concierges without a shared entrance, front desk or concierge, or ability to create a consistent first experience. 

By its nature, technology has had to be innovative and flexible to cover a whole different host of situations and provide solutions to the complex pain points of managing rentals. Flexibility has been key here. Without the history of legacy tech, we’ve seen more advancement in cloud-based property management software, better and less expensive (so far) API integrations and a more open partnership system of vendors. Solutions, while on one level being competitors going after the same customer, rely on good relationships to drive customers through the sales funnel. 

Building a tailored tech stack with fluidity and robustness at its center is critical for a streamlined hospitality business. Third-party integrations are vital here, but only if they are offered at a reasonable cost and there is an open dialogue between suppliers. Leading on from this, the technology underlying STRs tends to be better at setting up third-party API integrations that legacy tech in hotels can’t support. There is also the high cost of integration that many hotel tech tools are burdened with. Short-term rentals on the other hand have flourished here. Tools and property management solutions partner with one another - each bringing its expertise to the table.

There is much talk about a merging of the lodging sectors. On the outside, it may look like short-term rentals and hotels are converging - at least in some areas. It may look like this because some hotels are offering more unit diversity or creating their own STR brand (e.g., Marriott), while short-term rentals are leaning into the hospitality experience of hotels and have taken from hotel market share. Distribution channels like Booking.com and Airbnb are blurring categories by blending the two in the search function - distilling any sense of distinction in the minds of the consumer. 

From a technology perspective, some tools now aim to service both industries (especially with many STR operators trying to professionalize their business). However, more often than not, they tend to stay in their own lane - despite clear parallels in the pain points of hotel and STR managers. 

However, we are seeing more significant inroads towards a natural convergence of lodging technology. Recent news of Transparent (STR data) being acquired by OTA Insight is interesting - it’s the first time data on both sectors will be combined and compared. I predict that we will see more hotel software acquiring STR software capabilities - rather than the other way around. As more portfolio diversity is created to match quest demands, legacy technologies and established hotel brands will fully wake up to the opportunities the merging of the sectors offers each other and their customers.

Jessica Gillingham, CEO of Abode PR