Key Details:
The battle for the U.S. lodging market is shifting. Short-term rentals have gone from a fringe option to a serious threat, steadily cutting into the hotel industry's dominance. As of 2023, STRs captured about 15% of the total lodging revenue—roughly $35 billion out of a $232 billion market. Hotels still lead with $197 billion, but STRs have nearly doubled their market share since 2018. The message is clear: travelers are choosing homes over hotel rooms more often than ever before.
Facing the ongoing losses in market share, hotel giants are making substantial investments to try and copy Airbnb’s appeal.
Major hotel brands are expanding into what they call "apartment-style accommodations," "residence-style hotels," or "lifestyle hotels" that offer complete kitchens, laundry facilities, and larger living spaces—placing them in direct competition with local Airbnbs.
Marriott, Wyndham, and Hyatt have quickly embraced these Airbnb-style models.
In February, Marriott opened The Ann Savannah in Savannah, GA, a 157-unit hotel designed explicitly to mirror Airbnb’s key features: offering rooms ranging from studios to four-bedroom duplexes, fully equipped with kitchens and laundry amenities - specifically targeting guests seeking a home-like experience. Marriott also recently inked a licensing partnership with Sonder, integrating roughly 9,000 apartment-style rooms and boutique properties into its global distribution channels under the new "Sonder by Marriott Bonvoy" collection.
Wyndham and Hyatt have been similarly aggressive. Wyndham has launched two Airbnb-style properties in Houston and Seattle, each offering apartment-style units with full kitchens and laundry, catering to longer-stay guests. Three additional Wyndham projects are also in development: one in New Orleans and two in Washington D.C. Hyatt’s recent acquisition of Standard International further shows this market shift, adding 21 lifestyle-oriented hotels to its portfolio.
Collectively, these moves indicate traditional hotels are trying hard to replicate Airbnb’s successful formula and regain the market share they’ve been losing.
Our Take:
This trend is worth monitoring closely, as it could have a substantial impact on the STR industry.
It's not clear if hotels that adopt Airbnb-style amenities will be able to take back some of the consumer demand they lost to Airbnb in the long-term. However, in the short term, hosts in major markets should prepare for more competition that comes from a large increase in the supply of units, potentially weakening their pricing power.
Specifically, hosts with apartments or condos in downtown areas are likely to feel more competitive pressure if hotel chains continue expanding into this segment.
In a conversation with Casey, CEO of Southern Comfort Management in Savannah, GA, she reported her March bookings have increased year-over-year, despite the Ann Savannah's recent opening in February. When asked about the impact of Ann Savannah, Casey said, "At the end of the day, it's all about the type of property the customer is looking for." She acknowledged the additional supply of Airbnb-style units might have minor negative effects but emphasized that most guests prefer standalone homes.
Casey’s insight highlights a key point: certain Airbnb experiences just can't be replaced. Features like spacious dining rooms for family meals, private backyards, pet-friendly spaces, and unique amenities & themes give Airbnb’s a clear advantage.
Tim from Timber Meadow, also based in Savannah, shared similar sentiments. Despite Ann Savannah’s recent launch, his bookings have been healthy. Tim emphasized a competitive advantage all short-term rental hosts have: personalized attention and superior service—qualities that large hotel chains struggle to replicate.
Bottom line:
Hosts should remain aware of hotel brands entering their markets but can maintain strong pricing by emphasizing what guests love about their properties. Doubling down on advantages such as unique amenities, outdoor spaces, and excellent service will help hosts sustain premium rates.
Sources: Grand View Research, Phocuswire, Vantage, Marriott, Wyndham, Hyatt
