Holiday homes (HHs) are becoming increasingly popular, offering guests a more local and flexible experience than hotels. However, there are also some key differences between these two types of accommodation. In the article, we will discuss the advantages and disadvantages of HH, as well as the operational differences between holiday homes and hotels.
But first, let’s start with a guest story:
“Elizabeth was excited to start her vacation in Dubai. She had booked a holiday home through a popular online platform. The apartment looked great in the photos, and the price was right. On her fifth day in Dubai, Elizabeth was taking a shower in the bathroom, and had just soaped her hair with shampoo, when the water suddenly stopped running. She didn't know what to do, what number to call or whom to go to for help. Apparently, the water went out in the entire building”.
Such cases are a common problem with short-term rentals, which are often managed by individuals who may not be available 24/7. The operations and guest service run differently in hotels. Let’s check the other differences between a hotel and a holiday home.
Hotels often lean towards a conservative approach when it comes to local experiences, being less flexible to changes.
On the contrary, holiday homes can offer guests a more authentic and immersive experience of a destination. They are often located in residential neighborhoods, giving guests a chance to experience local culture and cuisine. This can be a great way to learn about the destination and meet new people.
Hotel chains follow developed standards for quality and services. Top hotel operators are often trusted and chosen by guests because there is no chance of getting poor-quality towels or linen. Their standards even specify the number of loops in the terry cloth. Standards are not just about having two towels, but about their quality. Hygienic requirements and fire safety regulations are the other things that short-term rentals may neglect, but hotels strictly adhere to. For example, hotels are not allowed to have inflammable carpeting.
Holiday homes come in both "local" and professional varieties. The professional short-term rental can be run by property management companies or rental agencies. They often attempt to automate processes and standardize procedures. Standardization serves as a forerunner of digitization. Without operation scripts in place, digitization stays beyond grasp. Slowly, digital solutions tailored to the specifics of short-term rental are emerging on the market.
"Hotels offer services, smaller rooms and more amenities, making them suitable for shorter stays and travelers who prefer convenience. Holiday homes provide larger, private spaces with kitchens, ideal for longer stays and those seeking independence and a local experience. Oftentimes, holiday homes are associated with a lower service-level, but with more and more service providers such as XAAN, holiday homes can really level up to hotel standards and boost guest experience and satisfaction"
- Andrea Rother, Expansion Director, Limehome, and XAAN advisor.
Holiday homes can be complex to manage from an operational standpoint. Unlike hotels, which are typically located in a single building, holiday homes can be spread out over a large area, making logistics more challenging. This can lead to higher costs per service and lower margins, as well as less time for hosts to focus on providing additional amenities or services.
Another challenge of managing holiday homes is inventory management. In a hotel, linens can be easily collected from each floor and taken to a central laundry room. However, in a holiday home, linens may need to be collected from multiple locations and then transported to a central location for laundry. This can be a time-consuming and inefficient process.
The complexity of managing holiday homes can also affect the comfort of guests. For example, there may be nowhere to store luggage, or guests may need to make multiple calls or communicate with the host to request services or ask about check-in and check-out times.
Both hotels and holiday homes are about people, and people are about service, and service is a two-way street.
Sales and booking systems:
Airbnb is more difficult to sell than a hotel. There is no room typology, and each accommodation must be registered as a separate property. This makes it difficult to manage inventory and sales. In case of an emergency, it is also difficult to transfer guests to another accommodation. In XAAN, we are working on a solution to help holiday homes overcome these challenges.
There are already technologies that help the hotel business. For example, STR.com is a system that compares your performance results to competitors in terms of the core industry indicators (Occ, ADR, RevPAR) collected directly from their PMSs reducing the fraud factor. Using other tools, hotels can view room pick-up trends, price changes, average market prices, and recommended pricing policy. However, these tools are less effective or not yet available in the short-term rental market because there are too many additional factors to consider.
The most popular tool for the short-term rentals is airDNA, which collects data on sales through Airbnb. It gives at least a part of the whole picture. However, many holiday homes do not use it and are looking for better solutions. Price benchmarking would help the market to develop and would eliminate the issue of dumping.
Guest service and reputation:
Guest service is not a priority for all holiday homes. Some hosts focus only on sales and operations, but guest service is the foundation of trust and loyalty in the hospitality industry. Without sufficient data on guest preferences, feedback and satisfaction rate, analytics, and tools to design guest behavior models, it is difficult to ensure maximum guest comfort and the required services. Guest service is often provided in a manual and individual format, which is an inefficient process in terms of time and cost.
Hotels, on the other hand, have CRM systems, worldwide customer databases, and analytics that allow them to quickly process requests, provide guest service and optimize service operations. Hotels use costly reputation management tools such as ReviewPro and TrustYou for guest reviews. However, these tools can be expensive for holiday homes, so they have to manage reviews manually.
Guest service has an impact on sales, but when a host is overloaded with maintenance and operations, they may not have enough time to offer additional guest service that would create a "wow" factor.
Among the automated tools for short-term rentals, XAAN stands out as a digital-first guest service solution that connects guests, holiday homes, and suppliers. XAAN is developing a network to support short-term rental owners in offering guest services, ensuring a seamless experience for guests and effortless management for STRs. These services are provided by verified service partners, which expands their service reach and maximizes profit potential for both service suppliers and holiday home owners.