Hotels, Private Rentals & the Battle for Europe’s Millennial Travelers

Hotels, Private Rentals & the Battle for Europe’s Millennial Travelers

By: Douglas Quinby, Vice President, Research

Vacation rentals and holiday homes have long been a substantial alternative to hotels for European travelers. The market for private accommodation in Europe is significantly larger than in the U.S., and the direct competitive threat for hotels has generally varied depending upon the destination where hotels and alternative lodging compete for travelers.

The rapid rise of Airbnb and the global digital onboarding of private accommodations worldwide through the efforts of, HomeAway and others have brought home rentals into direct competition with hotels in a much broader way. Travelers can consider rentals in markets – especially urban centers where Airbnb has been strongest – that were traditionally the domain of hotels.

What Risk Rentals?
The central question before hotel operators is just how much of a potential risk does private accommodation pose. Despite the growth of private accommodation and the mixed fortunes of the Continent’s various economies, the European hotel market continues to grow, from €80 billion in 2012 to a forecasted €88 billion in 2015.

Hotels can also take heart that, while more travelers may be choosing private accommodations, the traveler population for hotels is substantial. A significant majority of European travelers – 62% – did not stay in a rental over the past year, and nearly three in four of those did not even consider renting.

The impact to hotels may come slowly, but it will be felt as demographics shift. A deeper look at generational segmentation indicates that hotels’ lock on travelers is not as solid with millennials. Europe’s 18-34 year-old travelers are more likely to stay in private accommodation (41% of millennials vs. 36% of all other travelers), and those younger travelers who did not stay in any private accommodation last year are much more likely to have considered a rental (34% vs. 23%).

Millennials Do Both
Although it is millennials who are driving some of these shifts toward private accommodation, hotels still have plenty of opportunity to make their case to Europe’s younger travelers. Millennial renters are far more likely to consider both hotels and rentals when planning their leisure trips. More than half – 56% – of millennial renters considered both hotels and rentals when planning their last stay in private accommodation, while just 38% of older renters also considered hotels.

What is driving that consideration – or lack of it – among renters and travelers who don’t rent? And what is driving that ultimate decision? Join me in Dublin at Phocuswright Europe (12 – 14 May), where I present exclusive Phocuswright research on Europe’s private accommodation market and interview Airbnb’s managing director, EMEA, Olivier Grémillon, on the future of private accommodation and what it means for travel.

The rapid rise of private accommodation is transforming global hospitality. Nowhere is the market bigger than in Europe, and hotels – and hotel distributors – should take note.

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