Hotels vs Rentals: What Do Travelers Value Most? 

February 09, 2023 | More from

In conversation, companies like Airbnb and Vrbo have been “beating” hotels for a while, but how accurate is that sentiment? And if true, is it here to stay or just a trend? For years, alternative accommodations chipped away at the hotel industry’s market with customer-friendly technology and the appeal of something different. However, hotels have recently seen an uptick in growth and revenue post-pandemic, indicating they may have bounced back. By the end of 2021, the hotel industry recovered back to 61% of its pre-pandemic performance levels.

Even better news, from 2021 to 2025, the global hotel and travel accommodation industry is projected to have an annual growth rate of 7%. This will result in a market value of $1.05 trillion in 2025. Whereas, the global vacation rental market is expected to have an annual growth rate of 5.3% from 2022 to 2030. 

So, yes. It is safe to say the hotel industry is recovering but how is it competing? Especially when the popularity of rentals continues to mount. How are hotels providing greater value to travelers? And more important, what will it take to keep the industry’s upward momentum? In this blog, we go over what it means to stay at a hotel and the unique experiences they provide. We’ll also cover why it’s important to leverage travelers’ trends to not only stay relevant but ensure a competitive advantage.

What It Means to Stay at a Hotel

It is important that hotels continue to focus on what it means to stay at a hotel. This means leveraging their unique experience offerings to provide the most value to travelers. Hotels should emphasize location, special amenities, and services. They are the three areas where the average rental host cannot compete with an established hotel. 

For example, location is one of the most important factors travelers consider when deciding on accommodations — alongside price and amenities. Most hotels have an advantage with central locations, easy access to transportation, and points of interest. On the other hand, vacation rental maps will often look like a donut around the city’s center. This is because they are typically in residential neighborhoods.

Trends in the Hotel Industry

Capitalizing on trends will be vital to the success of hotels. For example, data from Zippia indicates that incorporating more and more smart technology has become a mainstay of the industry. Whether it’s a keyless entry or controlling the room’s temperature with an app. 

Another way in which many hotels are looking to stay relevant is by considering their sustainability and eco-friendly practices. The rise of sustainable travel has hotels looking for ways to reduce their environmental impact and carbon footprint. This may be through water conversation, single-use plastic reduction, and earning LEED certifications. 

Another shift in the industry is that travelers (especially Millennials) are seeking out hotels and other accommodations that have personality. Whether it is furniture or decor, the goal is often finding places that reflect the local culture. This has resulted in more boutique hotels and facilities considering more unique decor, offering interesting amenities and experiences, and even experimenting with floor plans. This trend signifies a departure from past efforts to provide familiarity and consistency across different stays.

In addition, 78% of Millennials surveyed stated they want to spend their money on experiences rather than things. Hotels are starting to cater to that by offering experiential packages as well as accommodations.

Give Travelers What They Want

As hospitality options increase, hotels will continue to share their hold on travelers — whether individuals, large groups or even families — to short-term whole-home and apartment rental accommodations.

For example, large groups are often looking for accommodations that allow them to easily book multi-room experiences, with shared kitchens, living rooms, and even outdoor space. Rethinking floor plans and the kinds of rooms within the inventory will ensure that hotels are still relevant to travelers. Short-term rentals’ attractiveness to family and group travelers can be offset by offering connecting and/or multiple rooms for one price, creating more suite and lifestyle-focused designs and layouts. 

This also leads to the next consideration for hotels, which is the kind of furniture that fills rooms and spaces. It is important for hotels to consider how they are furnishing communal spaces. Whether it’s productivity spaces with flexible furniture or even coffee bars that transform into traditional bars. Understanding what people want and how to outfit the space with furniture that fits their needs will be critical to creating value among travelers. 

Another consideration that hotels face is shifting perspectives on the “luxury experience.” Travelers are drawn to “new luxury” which is seeking out unique, authentic experiences. By leveraging experience economy — escapism, education, entertainment, and esthetic —  in all facets of the facility, a hotel can create an even more memorable experience for guests and build brand loyalty. 

Hotels also need to give travelers the tech experiences they are used to having. This means thinking about high-tech, high-touch experiences, and digital communication. As well as optimizing for mobile to provide a unique, more handheld experience. This also means hotels may be able to provide a variety of travelers with their preferred amount of human interaction. Whether it’s checking in with a person or doing everything virtually, having the ability to adapt to each unique desire of a traveler ensures a highly memorable experience. 

Finally, it’s important to show travelers what you have. According to data from Zippia, hotels that have a significant number of high-quality photos on their websites see a 15% increase in conversion rates. This is compared to hotels that use few and/or low-quality photos. It is imperative that hotels include nice photos of not just the rooms, but of the amenities, communal space, and surrounding area to help travelers glean an idea of what they’re getting into. It also helps travelers to imagine themselves actually there. 

The Takeaway

It is important for the hotel industry as a whole to remember that travel is all about people. If you run a hotel, you can duplicate some of the unique selling points of companies like Airbnb and Vrbo — while pushing additional levels of customer service and opportunities unique to hotels — for a highly competitive advantage. 

Staying at a hotel is a unique experience that can’t be mirrored within short or long-term accommodations. That can, and should, be leveraged to ensure that hotels remain relevant as travel ramps up following years of decline due to a global pandemic. The industry is recovering, but instead of just surviving, with some unique positioning and creativity, there is great potential for thriving.

Amenities are another very important factor. While some vacation rentals may have a pool or even a hot tub, they won’t have a spa for those looking to be pampered. Hotels can range in a variety of services that amplify the experience including restaurants, spas, clubs, and lounges onsite that can all be leveraged in positioning hotels as better options over short and long-term rental accommodations. 

Service is one of the hotel industry’s biggest strengths and must be used as an advantage. When a traveler has a bad experience, whether it’s broken plumbing, inoperative air conditioners, or any other issue can be a big damper on the stay. Rental hosts don’t always have the ability to move customers around in the same way that a hotel might. Simply getting in touch with a host can sometimes be an issue, which means timeliness can present a problem as well.  

Finally, when considering the difference between hotels and short or long-term accommodations like Airbnb and Vrbo, staffing is one of the most valuable distinguishing factors. An amazing recommendation from a concierge and an attentive staff member is what travelers remember. However, it does ultimately come down to the experience that a traveler is looking for. Some may be looking to get away from people in which case a rental might be more appealing. There will always be tradeoffs and even risks no matter where someone picks to stay so being aware and considering the options is important.