This week brought fresh evidence that the hotel and home-sharing industries are converging.
Marriott announced it's expanding its home-rental pilot to 100 destinationsworldwide. Meanwhile, Airbnb announced it's developing 10 floors of Rockefeller Center for short-term rentals in a hotel-like offering. That comes on the heels of its deal to buy HotelTonight, an online booking site.
"We're already seeing that convergence happen," and that is benefiting consumers with better prices and more selection, says Lorraine Sileo, senior vice president of research at Phocuswright, which tracks the travel industry. Other hotel chains, including Accor, Choice and Wyndham, have already ventured into home sharing, with varying success.
Historically, the businesses have catered to different markets: Home sharing markets itself for its unique properties, while hotel chains have thrived by offering reliable service and uniform accommodations. But recent acquisitions have blurred those business lines.
Expedia, for example, acquired HomeAway and Vrbo, and it now lists hotel rooms and rentals side by side in search results. Similar deals tied up Booking.com with Priceline and ActiveHotels.com.
"You really do need to think of it as 'lodging,' " not hotel versus home rental, Sileo says. "I don't think we're going to have these definitions a few years from now."
Marriott and other hotels' recent investments in home renting are a testament to how popular — and threatening — Airbnb's business model has become.
"I think what we're doing here is an example of a 91-year-old company kind of disrupting itself," says Stephanie Linnartz, chief commercial officer of Marriott International.
The global hotel business is still about $500 billion, or more than three times the size of the home-sharing industry. However, home sharing is growing twice as fast, at about 20 percent a year, says Dan Wasiolek, a research analyst with Morningstar.
At the same time, going head-to-head isn't easy.
For one thing, Airbnb, Booking and Expedia already control 80 percent of the home-sharing market and, more critically, have millions of homeowners who rent their homes on those sites.
"It's certainly going to take time and cost if Marriott wants to get anywhere near where those guys are," Wasiolek says.
Marriott says it's focusing on a narrow niche. Its initial offering includes 2,000 luxury homes, but customers staying there can earn loyalty points.
The hotel giant also does not want to risk cannibalizing its existing business, which relies heavily on franchisees whose business would compete more at the lower end of the market. "We see it as very complementary to the hotel business," Linnartz says.
The risk of straying too far from the legacy business goes both ways.
Airbnb isn't getting into the traditional hotel business, because doing so would jeopardize what made the site popular in the first place, says Chris Lehane, a spokesman for Airbnb.
Instead, the company's hotel business is focused on independent boutique hotels. "If [customers] had come on the platform and their stay had been a cookie-cutter stay, they're just far less likely to want to come back ... and certainly far less likely to want to come back and do one of our short-term rentals," Lehane says.
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