July 29, 2015
Is 2015 the Vacation Rental Industry’s 1952 Moment? (Part 1: The History)
Without question, the vacation rental industry is poised for a historic shift in 2015.
How can that be said so authoritatively? Yes, it is true that HomeAway is now a full decade into the revolution of lodging, with its global consolidation of the peer-to-peer rental space, and Airbnb’s latest valuation is believed to be $20B. Given these facts, most people can be forgiven for believing that the tectonic shifts set to transform the hospitality industry have already occurred in recent years and there is no more room for change.
However, HomeAway and Airbnb’s development and growth merely set the stage for more momentous changes soon to come, including the transformation of the vacation rental industry from a $100B cottage industry to one that is more than double that size and dominated by massive, internationally scaled entities. Lessons from the evolution and consolidation of the hotel industry in the 1950s and 60s are informative in understanding the potential for this seismic growth impacting the lodging industry decades later.
The history of hoteling – from grand hotel to international brand
According to a December 2013 article in The Economist entitled “A Short History of Hotels: Be My Guest,” the age of the grand hotel lasted from 1860-1960. Empress Eugenie opened the original in 1862 and Le Grand Hotel opened as a palatial 800 rooms that she designed “like a home” that celebrated French science and art. As one would imagine, such large one-off lodging were unique and rich experiences, as they were run individually and without modern day economies of scale.
It took almost a century for the hotel industry to change, and the 1950s and 60s began the second age of the hotel. At this time, Conrad Hilton began the internationalization of hotel brands, and in doing so had to muzzle the grand hotel model to conform to growth in other territories. At the same time – in 1952 – Kemmons Wilson unveiled the Holiday Inn after being disappointed by poor quality and inconsistent lodging on a family trip. Promising consistency from San Francisco to St. Louis to St. Augustine, Holiday Inn’s sign told travelers to have confidence that the price and quality would be consistent no matter where they traveled – with the certainty that the sheets would always be clean and the service friendly.
And now, a few short decades later, Holiday Inn and Hilton are not the only immediately recognizable international brands that provide travelers with a consistent place to rest their heads. International travelers easily recognize Hyatt, Marriott and Starwood – to name a few – sometimes even based solely on interior design. And, many people seek out a particular brand for lodging to replicate favorite hotel experiences no matter where they are in the world.
As we review the emergence of hotel conglomerates from one-off hotels, patterns show similar potential for the vacation rental industry and landscape is poised for parallel consolidation.
To read the next part in this three-part series, visit:
Part 2: Vacation Rentals Today