Alternative accommodations present an opportunity for institutional capital and traditional brands to join the sector

CHICAGO, June 22, 2022 – What started as a marketplace for individuals to rent out their primary or secondary homes as a means of generating extra income has evolved into a complex, highly matrixed space akin to the traditional lodging industry. The alternative accommodation sector’s evolution intensified during the Covid-19 pandemic as increasing flexibility to work remotely, coupled with a heightened focus on quality of life and the need for social distancing, created strong demand. This paradigm shift has resulted in the alternative accommodations sector’s unprecedented growth over the past two years.

“Following Covid, we’ve seen an evolution of consumer preferences as many travelers have the flexibility to live or work from anywhere and many are choosing short term rentals to accommodate longer stays and larger group travel. We see this phenomenon contributing to the growth of the alternative accommodation space, as well as benefitting traditional lodging, including extending stay hotels, which have outperformed post-Covid,” said Kevin Davis, Americas CEO, JLL Hotels & Hospitality Group.

JLL’s Hotels & Hospitality Group has released their latest report, Alternative Accommodations Global Trends & Outlook, which dives into the transformational shift in the alternative accommodations sector.

The alternative accommodations sector, which was initially designed to appeal to younger leisure travelers on a budget, has considerably expanded its demand base due to the pandemic. Now, corporate travelers, bleisure, business groups and affluent families on vacation make up a greater share of the sector’s consumer base. This has resulted in the creation of a multitude of sub-sectors, including:

Short-term rentals (STR), such as Sonder, Casai and Mint House, are typically the rental of an entire furnished home, accessory dwelling or room for a short period of time, generally less than 30 days.

Distribution platforms, such as Booking.com, Airbnb and Expedia/ Vrbo, act strictly as distribution intermediaries and often feature companies from across all other sub-sectors.

Branded home property managers, such as Vacasa, Avant Stay and VTrips, focus on managing the rental, maintenance and design of luxury vacation homes.

Branded multi-housing alternatives, such as Zeus, Sentral, Edyn and Kasa, closely align with traditional multi-housing units but feature short-term leases, furnished units, tech enabled operation solutions and consumer interfaces.

Membership programs, such as Soho House, Inspirato and Pacaso, require guests to pay a monthly or annual fee to access an exclusive club/accommodation experience, discounted hotel deals or unlimited travel.

Shared accommodations, such as Selina, Generator, Freehand and Found, offer rooms or apartment units where multiple guests, who are not traveling together, stay and pay for their bed, while sharing restrooms, common areas and other amenities.

The term “alternative” fails to capture the size and scope of the sector. Given that the alternative accommodations sector comprised 20% of the roughly $300 billion in global lodging revenue generated in 2021, it should be thought of as part of the global lodging industry and not simply an “alternative.”

With more than $60 billion of revenue opportunity, relatively high investment yields and a growing consumer base, it's only a matter of time before institutional capital, lodging brands and distribution companies aggressively enter the sector.

JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totaling $83 billion worldwide. The group’s 350-strong global team in over 20 countries also closed more than 7,350 advisory, valuation and asset management assignments. Our hotel valuation, brokerage, asset management and consultancy services have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.

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