As Renting Goes Mainstream, the Risk to OTAs Grows

While much has been made of the potential threat private accommodation poses to hotels, there has been far less industry discussion of the risk to online travel agencies (OTAs), which derive most of their profits from selling hotels. But as rentals increasingly move into the mainstream for leisure and business travelers alike, the potential risk to OTAs and their hotel business is rising.

The growth of private accommodation in the U.S. has been nothing short of extraordinary. The percentage of U.S. travelers who have rented a home, or a room or space within a home, has nearly doubled from 13% in 2012 to 25% in 2014, according to Phocuswright's Rentals Rising: The State of Private Accommodation in U.S. Travel.

But with this rise comes another interesting finding: The percentage of rental travelers (travelers who have rented a home or room or space within a private home) who have cross-shopped hotels for their last rental stay has also grown remarkably, and within just the past year. 

The surge in rental travelers, and the surge in those who consider hotels as well as rentals when planning a trip, clearly indicate that private accommodation has become a mainstream lodging option. More travelers are shopping across OTAs and rental sites for more trips, and this has been nibbling away at conversion rates within the OTA hotel shopping path.

Phocuswright's U.S. Online Travel Traffic Report, 2013-2014, conducted in partnership with Millward Brown Digital (a webinar and summary presentation deck of this report can be accessed for free here) found that the percentage of U.S. travelers who shopped for a hotel on an OTA and also shopped on Airbnb more than doubled between July 2014 and February 2015. Moreover, as more OTA hotel shoppers also visited Airbnb, the conversion rate of those same shoppers on OTAs declined significantly. 

As travelers increasingly consider private accommodation options right alongside hotels, two key questions arise for OTAs and hotels:

1. Which hotel segments are most at risk?
2. How should OTAs address private accommodation?

Phocuswright's Rentals Rising: The State of Private Accommodation in U.S. Travel charts the dramatic rise of rental accommodation in the U.S. travel marketplace, assesses the impact and implications for hotels and OTAs, and identifies the key trends defining this segment's future. The report addresses the following key topics:

• An in-depth profile of the U.S. rental traveler
• Sizing of the rental traveler population from 2010-2014
• How OTAs are addressing the private accommodation challenge
• The impact of rentals on hotels
• The key inhibitors to rental consideration and booking by travelers who do not rent
• How private accommodation suppliers and online marketplaces will win over today's non-renter

Purchase Rentals Rising: The State of Private Accommodation in U.S. Travel for insight into this widely used and fast-growing segment.