Short-term rentals are not yet popular for business travel

While many travel management companies and businesses are beginning to recognize vacation rentals as lodging, there is room for growth.

A recent Mastercard survey found that 53% of people who make travel arrangements say their company allows them to book vacation rentals.

In addition to hotels, Sabre's global distribution system lists more than 400,000 lodging properties, and it also manages the corporate booking tool GetThere, which allows business travelers to stay at these properties.

“Interest in this space has increased from our agency partners, and we have been selectively increasing supply in the category based on their needs,” a Sabre spokesperson wrote to Skift. “While bookings are still low compared to hotels, growth is encouraging and in the high double digits compared to the same period last year.”

BizAway, a corporate travel and technology company, has noticed a “notable increase in the preference for short-term rentals among travelers.”

The desire for flexibility sparked by the pandemic is impacting office and corporate travel culture, and vacation rentals could help meet that growing demand as some travelers look to extend their business trips or “work from anywhere,” said Chad Wallace, head of global commerce solutions at Mastercard.

Skift Research surveyed more than 50 business travelers who stayed in short-term rentals last year.

Of these guests, 58% said they were “very likely” to book another short-term rental in the next year.

Potential benefits: convenience, comfort, cost

Location and comfort during long-term stays were the two main reasons travelers chose to rent.

“Extended-stay hotels are very popular with travelers staying longer than three or four days,” says Jamie Lane, chief economist at short-term rental analysis firm AirDNA. “Similarly, that's why short-term rentals are popular with business travelers, who can stock their fridge with food, don't have to eat out for every meal, and all they need is a desk.”

Among its clients, BizAway has seen retail chains that send employees out to train staff at new stores turn to short-term rentals, as do companies involved with machinery and construction equipment, “due to the long duration of their projects.”

Several Short term rentals may be cheaperAnother consideration for business travelers.

“Travel managers are now adjusting their policies to provide more flexible options to meet employee demand for more convenient travel options, as well as build cost efficiencies for their organizations,” Wallace said.

The gap between businesses and travelers

While just over half of decision makers allow vacation rentals when traveling for business, there is a discrepancy: In the same Mastercard survey, 74% of corporate travelers claim their company allows vacation rentals.

Lane speculated that the discrepancy may be because some companies “explicitly allow” rentals while other employers don't have clear policies, meaning the data may reflect the number of employees who actually rent.

What's in the way?

Safety and being able to track employee whereabouts are top priorities.

“As it became more and more prevalent, companies started putting out specific policies to prohibit it if they didn't want it,” Lane said, “and a big part of the decision to not allow it was to make it untraceable.”

Companies are using corporate booking tools to track business travelers and ensure employee safety, which Lane said could be useful during lockdowns and other events.

“Six in 10 companies require travelers to adhere to minimum requirements by using their booking tool, travel management company, payment card, or all three,” Wallace says. “These minimum requirements allow companies to owe travelers a duty of care. [encouraging health and safety] “It provides safety and cost containment for travelers and aligns the expansion of vacation rental policies with duty of care responsibilities.”

A potential pitfall with short-term rentals is reliability.

“If I'm staying overnight, I'll stay in a hotel,” says Lane. Time is of the essence.

Business travelers need to know that they will be guaranteed suitable accommodations when booking a short-term rental.

“In business, you're in and out and you can't afford to waste a second and deal with issues, so you need reliability,” Airbnb CEO Brian Chesky said in a recent interview with Skift.

This can deter travelers from considering renting, especially with private hosts, where there's a lot more unpredictability.

“When booking a short-term rental, especially if you're booking through an individual host, there's additional risk involved in terms of quality and authenticity. If you're booking through a large property management company, there may not be as much risk,” Lane said.

Advance

Chesky emphasized that Airbnb is shifting toward “higher quality listings.”

“Guest favourites have been hugely popular, with over 2 million views. [of] “It's the most beloved list,” Chesky said, “and the reason I bring it up is because I think business travelers, in particular, have a low tolerance for mistakes.”

With Airbnb being the most popular choice for business travelers surveyed, it’s essential that the company place an increased emphasis on authenticity.

“They're trying to promote and build a brand within Airbnb that says, 'These are properties you can trust,' in the same way that you think of a hotel room as trustworthy and there's no potential risk in booking a short-term stay,” Lane said.

The future of rentals in corporate travel depends on wider acceptance by travel managers and booking platforms.

This is something vacation rental and apartment company MintHouse continues to struggle with. Speaking at the Skift Short-Term Rental Summit on Wednesday, MintHouse CEO Christian Lee explained how the company engages with corporate travelers.

Mint House can source groceries and partner with local establishments to provide an elevated experience for guests, but it's still taking some time to convince travel managers, Lee said, a process he described as a “hand-to-hand combat exercise.” In particular, he's hopeful that legacy systems will leverage technology to ease travelers' experiences going forward.

Sabre is one platform that believes it can further expand these services.

“We have the capacity to add more of this type of inventory,” a Sabre spokesperson said. “We aim to address the needs of our travel agent partners and address some of their duty of care requirements.”

Photo credit: Hotels aren't the only accommodation option for business travelers.