6 Lessons for Independent Hotels from the Short-Term Rental Industry

When Airbnb first took off, many hotels viewed it as an existential threat. The idea of homeowners renting out rooms and entire properties quickly caused panic among tradit

ional hotel operators afraid of the competition. Over time, however, the rivalry between short-term rentals and hotels has evolved. Large hotel chains have adapted by implementing similar models and leveraging technology but independent hotels are still playing catch-up in several key areas.

The pandemic was a great case in point as travelers changed their booking behavior, forcing hospitality businesses to rethink their approaches. The short-term rental industry demonstrated remarkable resilience and agility during this period, embracing technology, data usage and operational flexibility. As short-term rental operators continue to thrive despite financial limitations, there are valuable lessons that independent hotels can learn from this dynamic industry.

1. Embrace Technology & Automation

One of the most significant advantages that short-term rentals operators have over their independent hotel counterparts is in their swift adoption of technology.

As our 2024 AI Survey showed, 70.1% of short-term rental hosts have already embraced AI technology, using it for tasks ranging from price optimization and customer service to operational efficiency and smart energy management. This is a big leap from the only 29.9% who were using AI in their business at the end of 2023.

Independent hotels, in contrast, often lag behind in adopting such technological tools. An all-in-one property management system for example can streamline and automate daily operations, reduce labor needs and improve guest satisfaction by offering features such as self check-in, automated messages and real-time housekeeping updates. This gives hoteliers the time and energy to focus on bigger-picture tasks like branding, marketing and growing revenue.

2. Adopt a Multi-Channel Distribution Strategy

Short-term rental managers are not afraid to market their properties across channels, extending visibility and reach. As our 2023 Year-End Review Survey revealed, short-term rental operators list on multiple OTAs — from giants like Airbnb and Booking.com to smaller players like Hopper and niche players like Whimstay. They use local partners like Florida Rentals and their own direct booking websites. They get bookings from Facebook and travel agents and even listed on event and film location booking platforms like Peerspace and Avvay.

Independent hoteliers too can leverage the power of a multi-channel distribution strategy. Large OTAs like Expedia and Booking.com allow hotels to list, as do niche players like misterb&b and HotelTonight. Google Hotels existed long before Google Vacation Rentals. A direct booking website not only acts as a booking platform but as a digital showroom for your business and brand. A reliable channel manager that can manage multi-unit listings will remove the risk of double bookings and streamline listing management so it doesn’t require more work.

3. Leverage Data for Smarter Decisions

Short-term rental operators harness the power of data to make better business decisions. By analyzing their own data, gathered over time, they track guest preferences, booking and pricing patterns and seasonal trends to continuously tweak their offerings for higher occupancy, revenue or both. More than a fifth — according to our year-end survey — also opt for data and analytics made available to them through providers like AllTheRooms and KeyData to optimize their business. And nearly 60% plan to use AI for data analysis and business intelligence in the future.

Many independent hotel operators however still underutilize data, whether it's their own or from a provider, missing out on granular insights that can help them make informed decisions about pricing, promotions and guest services. Data-driven decisions allow short-term rental operators to react in real time to changes in demand and competitor behavior — something independent hotels should be emulating.

4. Be Flexible to Traveler Preferences

One of the reasons short-term rentals have become so popular is their ability to cater to a wide variety of traveler preferences. From sprawling villas that can host large groups to single rooms and RVs, there’s a wide range of short-term rentals out there offering a more personal stay. Independent hotels can often feel rigid in comparison, offering standardized services that don’t always align with the evolving demands of modern travelers.

One way hotels can draw from the short-term rental playbook is to offer some accommodation spaces tailored to specific needs, like rooms with a great setup for working remotely or family-friendly suites. Self check-in with smart locks allows guests to check-in without having to queue up at the front desk and reduces labor. A digital guidebook is another great fit for independent hotels. Guests have a clear guide on how to use amenities so there’s no need to have a dedicated staff member just to help guests with that. Plus, it’s a non-cringe way to upsell curated local experiences that can bring in added revenue.

5. Elevate the Guest Experience through Direct Communication

Short-term rental hosts build strong relationships with their guests through direct and responsive communication, which helps them understand guest needs and preferences on a personal level. Independent hotels often rely on traditional interactions that start at check-in at the front desk. Short-term rental operators know the guest journey begins at the first inquiry and only ends after they’ve left a review.

Nearly 30% of short-term rental operators are using AI tools like ChatGPT and AI chatbots for customer service, automating guest messaging without losing the personal touch. Independent hoteliers can do the same, building rapport and fostering positive reviews by regularly reaching out and rapidly responding to guests' queries and feedback, without hiring additional staff.

6. Streamline Operations & Maximize Efficiency

Despite their smaller scale and often fewer resources, many short-term rental operators manage to operate highly efficient businesses. Independent hotels, on the other hand, frequently suffer from bloated cost structures, which limit their ability to compete on price. The larger the operation, the more difficult it becomes to maintain efficiency.

Short-term rental hosts use lean operational models, leveraging technology and outsourcing certain services like cleaning and maintenance, while focusing on providing high-quality guest experiences without the overheads that often bog down traditional hotels. With the efficiencies offered by the right tech stack and flexible staffing models, short-term rental operators are scaling at pace. Nearly 14% of property managers who responded to our end of the year survey count over 50 properties in their portfolio, 19.1% have zero employees and 17.7% make over $1 million in annual revenue.

Learn, Evolve, Repeat

The hospitality landscape has evolved dramatically since short-term rentals took off, and independent hotels must keep up if they are not to be squeezed out by chain hotels and vacation rentals. Short-term rental operators have benefited from the dynamism of the market they operate in, having to always be on their toes and adapt to stay competitive or be lost in the wilderness of underperforming and loss-making listings. By embracing lessons from the short-term rental industry, independent hoteliers can secure their place in the hospitality industry.