When travelers weigh a hotel against a short-term rental, most book the hotel, and two of the top reasons they give can be adjusted by you.
- What changed: A PriceLabs report on independent hotels found that when travelers weigh a hotel and a short-term rental for the same trip, 60% book the hotel and 35% the rental.
- Who it impacts: Managers with high cleaning fees on short stays, listings with strict cancellation policies, and portfolios in markets where Airbnb or Booking.com shows hotels next to homes.
- What to watch: Whether fees and cancellation terms, two of the top reasons travelers give for choosing a hotel, come up more as Airbnb adds hotels to its results, and Expedia sells Vrbo homes in packages.
More guests are about to compare your rental with a hotel, and right now, the hotel usually wins. Booking.com has shown hotels and homes side by side for years, Airbnb now lists independent hotels alongside rentals, and Expedia is bringing Vrbo homes into its travel packages.
A report on independent hotels by PriceLabs (a revenue management and dynamic pricing platform) put a number on it. Of the travelers who weighed a hotel and a short-term rental for the same trip, 60% booked the hotel and 35% the rental.
PriceLabs surveyed 1,082 travelers in the US, UK, France, Spain, and Portugal through Pollfish (an online survey platform). Respondents answered about their most recent paid stay in the previous 12 months.
Part of a series: This article is part of an RSU series based on PriceLabs reports, which together survey thousands of hosts and travelers. Read More: Airbnb’s New House Rules Policy: What Hosts Can and Can’t Ask Guests to Do From November 20
That 60-35 split comes from a smaller group, about 18% of travelers surveyed, and it covers every hotel-type stay, from chains to B&Bs. That group is likely to grow as more platforms mix the two.
Being compared isn’t the same as losing the booking, though. Travelers told PriceLabs what would tip them toward a hotel, and two of their top reasons are things a property manager sets.
Travelers name four reasons to choose a hotel, and two can be adjusted
Asked what would make them choose a hotel over a short-term rental, travelers named:
- A better location (44%)
- Breakfast included (38%)
- Free cancellation (31%)
- No extra fees (29%)
Location is fixed, and breakfast is hard for most rentals to match. The other two sit within a property manager’s control: the report calls fees short-term rentals’ weak spot and notes that, according to travelers, many rentals make cancelling hard.
Fees: the gap guests find at checkout
For now, perception helps rentals. A quarter of short-term rental guests (25%) said they didn’t consider a hotel because they assumed it would cost more, and 21% of hotel bookers said the same about rentals. Only 6% to 7% of either group cited a bad experience. The report argues that rental guests’ belief that hotels cost more is often wrong once cleaning and service fees are added. If that is true, booking sites that show hotels and rentals together are where many of these guests could find out.
Airbnb’s own fee change points the same way. Its move to a single host-paid fee removed the separate guest service fee, so guests react to a cleaner price instead of itemised fees they may see at checkout. Cleaning fees still show as their own line.
A flat cleaning fee weighs most on short stays. Spread over two nights, a $150 fee adds $75 to each night. Over 10 nights, it adds $15.
Cancellation: an option to test
Free cancellation was named by 31% of travelers, and the report notes that many short-term rentals make cancelling hard. There are good reasons managers set strict policies. A late cancellation can mean a turnover planned around the stay, nights that may not get rebooked, and a real cost to the business.
Flexible terms can still bring in bookings. Airbnb said more flexible cancellation policies were one of three changes that lifted its booking growth in the first quarter. If you test it, try it first on trips where guests compare most, such as blended work-and-leisure stays, where 30% weighed both a hotel and a rental.
Most guests do not compare yet, but platforms are changing that
Today, 62% of travelers pick an accommodation type first and search only within it. That changes when a site shows both. Booking.com guests weighed more than one type of accommodation 45% of the time, against 29% for guests who booked direct with a property.
Booking.com is no longer alone. Airbnb has started listing boutique and independent hotels alongside homes and is scaling that push, while Expedia is making Vrbo homes bookable inside Expedia packages. As those platforms expand, more guests who have only booked short-term rentals are likely to see your listing next to a boutique hotel.
What this means for property managers
- Your competitive set may be missing hotels. Most managers benchmark against similar rentals nearby. But guests who see both on the same screen are comparing your total against a hotel’s, especially on short stays. Adding the nightly rate and fees for your most common stay length, then checking it against two or three nearby hotels, shows which bookings are most exposed.
- How fees are shown matters as much as how much they are. A flat $150 cleaning fee adds $75 a night to a two-night stay and $15 a night to a ten-night one, so short stays carry the most sticker shock. Some managers lower the cleaning fee on one- to three-night bookings and recover part of it in the nightly rate.
- Flexibility is one of the hotel’s strongest arguments. A strict policy protects against late cancellations that are hard to rebook. A more flexible one removes a reason to choose the hotel. Trips where guests compare most, such as blended work-and-leisure stays, are a natural place to test it.
- Lead with what hotels cannot offer. Put the kitchen, the space, and the shared living areas in your title and first photos, especially for groups and longer stays.
Most guests still don’t compare, but for the ones who do, two of the hotel’s arguments are a fee and a cancellation policy, and both are within your control.
Frequently asked questions
When guests compare a hotel and a short-term rental, which do they book?
In a PriceLabs report on independent hotels, 60% of travelers who weighed both for the same trip booked the hotel, and 35% booked the rental. That group made up about 18% of respondents.
What makes travelers choose a hotel over a short-term rental?
Travelers named a better location (44%), breakfast included (38%), free cancellation (31%), and no extra fees (29%) as the top reasons. A kitchen (31%) and a gym or pool (25%) were also named.
Do travelers compare hotels and short-term rentals?
Most do not: 62% pick an accommodation type first. But on platforms that show both together, such as Booking.com, 45% of guests compared more than one type, against 29% of guests who booked directly.
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