STR Global Unlocked with Simon Lehmann: Unfiltered knowledge for the short term rental industry

029: What Marriott Really Thinks About Short-Term Rentals: Chris Stephenson on Loyalty, Quality Standards, and the Future of Alternative Accommodations

• Powered by AJL Atelier • Season 1 • Episode 29

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 43:15

How did short-term rentals become a strategic priority for one of the world’s largest hotel companies?

Short-term rentals now represent more than 14% of global lodging supply. When one of the world's largest hotel companies builds a platform inside that category, it is not a trend play. It is a structural decision about where hospitality is going.

In this episode of STR Global Unlocked, Simon Lehmann sits down with Chris Stephenson, Vice President of Homes and Villas by Marriott Bonvoy, the home rental platform embedded inside one of the world's most powerful loyalty programs, with over 270 million members and over 200,000 homes across global markets. 

Chris joined Marriott 11 years ago through its global operations innovation team and has led Homes and Villas from its pilot launch in 2019 to its current scale across EMEA, the Americas, and Asia Pacific.

This is not a story about a hotel company taking on Airbnb. It is a ground-level account of what it actually takes to build a quality-first vacation rental business inside an institutional framework, and why that constraint turned out to be a competitive advantage.

In this conversation, we discuss:

  • Why Marriott entered the home rental category not to compete with Airbnb but to close a loyalty gap.
  • How Homes and Villas by Marriott Bonvoy selects inventory.
  • What 96% of guests being Bonvoy members signals about behavioral fluidity, and how Marriott captures share of wallet across an entire trip rather than a single stay.
  • Why Marriott built a completely independent tech stack, and now uses it as a learning lab for AI-powered natural language search across the wider enterprise.
  • How the onboarding process went from three to four months to an average of four weeks, and why it will never be a one-click upload by design.
  • Where Marriott sees the next wave of STR demand emerging.

Explore more:

Connect with Chris Stephenson on LinkedIn: https://www.linkedin.com/in/chrisstephenson/ to learn more about Homes and Villas by Marriott Bonvoy: https://homes-and-villas.marriott.com 

Podcast supported by eviivo

eviivo Suite brings booking management, payments, automation, and OTA connectivity together in one platform used by 28,000 accommodation providers.

👉 Exclusive 50% off the first 6 months for STR Global Unlocked listeners who book a free demo: https://tinyurl.com/eviivo-strgu 

Resources

Stay connected:

SPEAKER_00

So I assume that you're no longer the ugly duckling within a hotel organization, which definitely wasn't easier to do people choosing mentals and as a business that it didn't make sense to let the revenues leak uh from that perspective.

SPEAKER_01

Aggregate inventory and get the product up and running when the product in itself is decentralized and obviously not standardized.

SPEAKER_00

I mean that must have been a massive challenge for you if we want to grow for the sake of growing customers are telling us that we want you to be that.

SPEAKER_01

I remember I saw this checklist the first time. I was like, oh my god.

SPEAKER_00

This was like a copy paste from a hotel operation compared to other platforms where copy managers are used to just upload analysis and we're not that and we'll never will be that.

SPEAKER_01

You are listening to STR Global Unlock, brought to you by AJL today, the show where I speak with the leaders shaping short-term rentals worldwide. I am Simon Lee, and after two decades buying, selling, advising, and investing to build a network that spans continents and categories. This podcast brings that network to you. Real conversations, global insight, no PR fluff. Let's get started. Short-term rentals are no longer a fringe experiment in hospitality. They represent more than 14% of global lodging supply. What began as an alternative has become infrastructure. And when one of the world's largest hotel companies leans into alternative accommodations, it is no longer a trend. It is a signal. A signal that hospitality is not splitting into categories but converging into ecosystems. Today we explore what that conversion looks like from the inside of Marriott International. It's a great pleasure to have Chris Stevenson, vice president of Homes and Villas by Mario Bonvoy on the show. And when a company of that scale enters and shapes his category, it changes the narrative. Chris, it's a great pleasure to have you here today.

SPEAKER_00

Thank you, Simon. Pleasure to be here as well. And um good to see you again.

SPEAKER_01

Yeah, likewise, it's been a while. I think last time I saw you in the hallway of the hotel at BRMA in not so good shape. So it's been a while. So it's good to see you back in full force. So before we dig a bit deeper into this, you we have to do a quick rapid fire together as well. Um so I'm gonna read out a question and then you just give me as short an answer as you possibly can. Are you ready for that?

SPEAKER_00

Okay, let's go. I'm ready.

SPEAKER_01

One misconception about short-term rentals.

SPEAKER_00

I think probably that it's alternative. I think it's becoming less and less alternative and more mainstream.

SPEAKER_01

One metric you personally monitor closely.

SPEAKER_00

Guess satisfaction.

SPEAKER_01

One capability operators must build for the next decade.

SPEAKER_00

I think making sure you've got the tech stack and the operational structure to support the size of your business.

SPEAKER_01

Excellent. Um, I would like to sort of start with the personal context and how you ended up in this fascinating intersection. You're breaching institutional hospitality with alternative accommodations, which historically evolved outside of the traditional hotel system. And how did your journey bring you into this role?

SPEAKER_00

Happy to give you a bit of background. So my my whole career's been in kind of product and service development and innovation. Actually, kind of studied quantum qual consumer research, the kind of customers, product, and innovation have always been at the heart of what I've been passionate about. And I joined Marriott um 11 years ago now, uh time flies. And I joined in Marriott's global operations innovation team. So that team was really sort of the link between the brand team and the hotels. Um and the purpose of the team was to bring ideas to life. Um so I worked on a few things from the launch of um the Moxie Hotel brand um to Marriott's guest room entertainment platform, the rollout of our global CRM system, um, and a few other really interesting projects that kind of um really helped me um get immersed in the hotel space because before that I worked for um for retail, for John Lewis and Waitros, and then um British Airways before that. So it was kind of my first um role in hospitality. So it was a great role to kind of get up to speed with the industry and and and how it works. And then towards sort of the the end of my first four years in the company, um, I got pulled into this really interesting project, um, which was to explore um Marriott's entry into the home rental space. So at the time, um we were working on a brand called Tribute Portfolio, which is actually one of our hotel brands. And we developed a brand called Tribute Portfolio Homes, um, did a pilot entry into, we actually picked Europe with it being kind of one of the more complicated markets. And we entered into four cities over here just to test and learn and find out how we could play in this space, what could our model be? So we ran that pilot for about six months and then kind of went back to Marriott's board and said, hey, this is what we found, and we think this is a really interesting space. We took some learnings from it and we kind of came back um as homes and villas. Uh, we decided to kind of differentiate the brand from the hotel brand tribute portfolio just to avoid any consumer confusion between what was a hotel and what was a home rental. We um we built the website, we've got everything up and running. It was a very small, tight team, so really exciting to kind of uh to have been part of that. And then usually um in innovation, you'll kind of, you know, you'll throw the ball over the fence and you hand it to the operational team. And um and my leader, Jenny Shay, she said, Hey, how about you kind of join me to help lead the business and kind of get it, get it to um from startup to scale up. So I decided to kind of make the switch and kind of move out of innovation and into the into the business unit. And I've and I've been in this, um, been in the business now for about seven years.

SPEAKER_01

Incredible story. Let's go a little bit deeper. What makes this category strategically important? I remember um when this sort of became public, the headline in the US was uh Marriott is taking on Airbnb. So I thought that was a bit of a a long shot when the announcement made. But it was always it was always brought uh to the public that obviously Marriott having one of the largest loyalty programs in the world, and then all of a sudden these people who do a lot of corporate traveling, they have different needs, and that sort of fueled that conversation for Marriott to have a product that also goes into a homes and villa's STR type business.

SPEAKER_00

Yeah, so I mean I mean our core purpose is really about loyalty. So we want Marriott Bonvoy to be the best loyalty program, and to do that, you need to have all the products and services that guests want from a travel-based loyalty program. So, really, what we're trying to do is capture spend within Marriott Bonvoy. We were completely aware that sometimes hotels are by far going to be your best choice for your trip purpose. And sometimes, you know, if you're traveling as a bigger group or maybe it's a it's a longer stay or you need more space, then a home rental could be a better alternative for you. And we want to make sure that based on that stay situation, we've got a product that suits a need. So we've we've kind of explored a number of areas. We kind of recently um launched kind of an outdoor category um to kind of tap into the needs of guests who want to follow out outdoor pursuits and passions. And we just really want to make sure that no matter what your trip purpose is, no matter what you're looking for, that we have a we have an accommodation product um to suit our need.

SPEAKER_01

So it's more about the loyalty, not about growth or relevance or even something deeper. And I think that's a very important context also to the short-term rental industry and our listeners to think, okay, uh homes and millers by Mary Bonvoy is about, you know, the loyalty program in itself to have that hospitality offering basically complete. And that's another sector which has that strategic relevance. So let's go a little bit further in the category shift. Over the past decade, we've watched college short-term rental, alternative accommodation move from being disruptive to more mainstream in a way. So from Marriott's vantage point, what fundamentally changed for you?

SPEAKER_00

I think looking at kind of the industry, it was kind of interesting. When we came into it, you know, we were and we were building the business seven years ago, as I say, um, and you sort of looked at the landscape. It felt like it had a long way to go in terms of professionalization. Um and I've actually been really surprised as to how quickly the industry has embraced um professionalization. And I don't know if COVID was potentially part of that massive boom in short-term rentals during COVID. But then to retain the same kind of levels of revenue and growth beyond COVID, companies needed to kind of professionalize, get better, improve their quality, improve their standards. So I've been really impressed to see like how quickly the industry has really embraced professionalization. Um I think some regions around the world are maybe slower than others, but generally, sort of when you look at kind of North America, Europe, parts of the Middle East, it's just been really, really interesting to see how quickly um this pref professionalization has really been taken on board and taken seriously. And I think we've been to many conferences together. I don't think there's a single conference that you go to that folks can talk about professionalization.

SPEAKER_01

Without a doubt, that's something we're still working on in the industry, and it will take a while. And then at the end, it really depends what is the definition of professionalization. Obviously, we're taking standards in a bit of a different light than the classical hotel industry, but we're still bringing in customers who have far higher expectations that has probably elevated the quality and the business, uh, the vertical in itself as well. But based on that, I want to go a little bit deeper about is is the alternative accommodation for for you guys more a format extension, as you alluded to with the loyalty program, or does it represent a broader shift in how consumers, classical hotel guests, define hospitality? Do you think do you see a trend there, or is that still a minority?

SPEAKER_00

For us, it's more of a um, we see it as a complementary accommodation product. So when we when we were kind of looking at you know, pulling all the data together in the business case originally, we could tell from market insights like our credit card data that people were spending money on vacation rentals with our competitors. So we knew that for certain state types, people were choosing um vacation rentals. And we just, as a business, it didn't really make sense to kind of let the revenue kind of leak from that perspective. But also um, we've, you know, I guess we've got about 270 million Bonvoy members extremely loyal to us and just their ability to kind of earn and redeem points and stay within the program, and their elite night credits towards um, you know, the the titanium and platinum and ambassador status. Um, we just knew there was a real need for that. And I think we it just made sense for us to um to tap into it.

SPEAKER_01

Do you think is it complementary to the core product uh of merit or does it reshape the portfolio logic over time? I think that's probably a bit far-fetched.

SPEAKER_00

Yeah, I'd say I'd say more complementary. You know, we are predominantly um a hotel company. There's this product there is is is really to complement that when we can't accommodate a particular stay type um through through a hotel product. Um, you know, I I I feel the same myself, right? You know, if I if I'm going to stay in um a city for a couple of nights or it's one night or two nights on a business trip, I'm likely to choose a hotel just because you know I find it it's easier and I don't have to think as much. Whereas, you know, if I'm going on a um a trip with my friends to a Greek island and we want to swimming pool and there's eight of us, then I'll choose a home rental, right? So we just want to make sure that um when people do want to make that choice, that they can make that choice within within Mariet Bonvoy.

SPEAKER_01

I think one of the biggest challenges that you guys face right from the start, and that's what everybody was thinking about when you started to build relationships with property managers, you started aggregate inventory and get the product up and running, is about product uh brand integrity when the product in itself is decentralized and obviously not standardized. I mean, that must have been a massive challenge for you, especially also towards your customers and your guests.

SPEAKER_00

Yeah. We made one decision kind of really early on, and that was that we only wanted to work with professional property managers. So the the companies that we work with are companies that they're established, they have processes in place, and they're already operating with good quality products. And then we we take kind of a second cut of that and make sure that the specific product that we work with within that home management company is right for our customers. We rarely accept all inventory from a property manager. But one of the things that I I really noticed we, when we entered the industry and we went to property managers with our, and I remember talking to you about it, Simon, like a long list of standards, property managers would look at that list and go, like, wow, you guys are crazy. Luckily, they wanted to work with us. So people, I mean, these companies worked towards the standards and they improved their businesses, and then we kind of onboarded them. Now, when we go to talk to a property manager, you'll find that the vast majority of them um are close to meeting the standards. There's a few tweaks that they need to make and they're and they're willing to make, but actually the gap is much um smaller now than it was seven years ago. And to my kind of earlier point at the start of the call, the gap's closed much quicker than I probably expected it to, which is great news for the industry, um the industry's reputation, for property managers and of course for for guests. I'd still say there's still some opportunity, right? You know, we'll um frequently encounter property managers that we want to work with, but maybe they still don't offer linens, particularly in sort of, you know, like kind of cabin remote product, or they don't have 24-7 support, which for us is um non-negotiable. If you're locked out um at two o'clock in the morning, then you then you then you need some help. So I still think that there is kind of more room um and we do encounter it, but the gap has definitely closed quite significantly over the last seven years.

SPEAKER_01

So yeah, we can thank you for having helped the industry to put to lift our game and and putting these standards out. I remember that day very well when I saw this checklist the first time. I was like, oh my God. This was like a copy-paste from a hotel operation. This is what we need. And I said, you know, when you when you request blackout blinds in every bedroom, I think that's going to be a very challenge uh uh in in the property management industry, especially where you don't have direct access to the to the ownership of the property and you need to, you still have owners in between that you need to talk about. But without a doubt, I think we had to lift the game in the industry regardless, because obviously post-COVID, we had a lot more classical hotel guests uh exploring the short-term rental product. And they have clearly had higher requirements and standards and expectations to those towards the product. And and obviously Marriott helped pushing that forward with a lot of property managers. And it's interesting to see that even today we still have certain shortfalls, uh, such as bedlinen, which in a way could be understandable depending on the logistics of such a property. I mean, in the mainstream, bedlinen is is standard, but there's still exceptions. Uh, and then the other one is the 24-7. And I think that will, you know, that will uh, let's say, evolve itself or sort itself out, especially with uh artificial intelligence in relation to how can you automate some of these services as well. So I think that is definitely an ongoing process for you as well. And but one thing that I find very interesting, and maybe I want to allude a little bit further on that, you said you're not taking entire inventories of property managers you partner with. How does that selection process work? And and what are these criteria and and how do you actually separate a supply of a property manager?

SPEAKER_00

So the first thing we do is um our kind of due diligence on the company itself. So when we enter a relationship with a property manager, we're in it for the the long term. It's not kind of a short, let's try this out for six months and see how it goes. You know, we we want to build long-term relationships. So we do a lot of due diligence on the company and that and that's kind of really around making sure that they understand and are compliant with the regulations in the market that they operate, that they collect and pay their taxes properly, that they have the right operational um processes in place for the happy path when things are all great, but also kind of the sad path when something goes wrong. And place to make sure that um that they can that they can deal with that. We do kind of financial checks because we want to make sure that obviously the companies we work with are financially healthy and robust. So we do all those checks on the company. And then kind of once we're satisfied from that perspective, we'll review their inventory. A lot of it is digital, but we also do a lot of kind of um market visits to do that, um, to do that in person. And then we look at the property against all of our criteria and then feedback to the property manager to say, like, okay, we have a five, we have a five-point rating system. So we accept properties that are rated three, four, and five. And we don't accept properties that are kind of a one and two. And if they fall into a kind of one or two category, we'll feed back and say, like, hey, you know, this property is great, but it just needs X, Y, and Z. We give that feedback and the property managers tend to go to the homeowners and say, look, we really want to get you on the merit channel. This is what you need to do. And then the homeowner will then make a decision as to whether they want to make the assessment to kind of get the property to the right standard. So yeah, it's a real kind of collaborative approach, come back and forward with a property manager. So the property managers are on in tough positions because it's not their money a lot of the time, and they have to try and convince the homeowner to kind of invest in the product and get it, you know, and raise the standard.

SPEAKER_01

And that's definitely a very interesting and highly leveraged opportunity in relation with the Marriott brand as well. And I heard that many times with property managers who said working with the Marriott program has also other benefits. Also, speaking to homeowners that hey, I'm on the Marriott uh uh channel, obviously, especially in North America, uh, literally every homeowner will be familiar with Marriott and and its standards and everything else. And and that has definitely helped as well to improve potential quality. When it's say the property manager said, hey, you want to be on the Marriott program, you need to lift your game. And I know for a fact that a lot of property managers have leveraged that. And that brings us that's a good segue to talk about asset light and and uh talk about your operating philosophy. And and Marriott at its core has mastered an asset light model in hotels. What the advantage it brings to have curated distribution versus direct operational ownership, and that's what you don't do. So is that something that you are contemplating or or have thought about, or because of that, it doesn't translate into the exact model that Merriott has?

SPEAKER_00

So when we were looking at various different business models and the ways that we could kind of like enter this space, that was one of the considerations. And I guess we took cues from the hotel side of the business, which as you mentioned is is an asset-light business. We're a management and franchising company. And when you look at this sector and kind of the complexity of it, um, you could see that kind of the best option was going to be to work with local operators that know their market, know their homeowners, um, and then we sort of match as a as a as a distribution and marketplace, we kind of match our bonvoy demand with the great supply that these local partners can provide. Um, and it's interesting as well because looking at the industry seven, eight years ago, like you could franchise and felt like a natural way this industry could grow. And actually, I've, you know, the growth of franchising over the last kind of three or four years has surpassed my expectations as well. We know the approach that Vicasser and Cassago are taking. So it's really interesting to kind of see the growth of that franchise and model, which again kind of plays perfectly into the model that we have, which is to contract with these franchisees who can then deliver a great experience.

SPEAKER_01

So, what do you think that truly matters to scale in this category right now? Is it is it inventory size? Is it quality control? Is it loyalty integration, or is it something entirely different?

SPEAKER_00

Yeah, so for us, the number one thing is kind of loyalty. So we won't grow for the sake of growing. When we when we move into a market, it's because customers are telling us that we want you to be there. So about 40% of the markets that we operate in with homes and villas by Mario Bonvoy don't have hotels in those markets. And they don't have hotels a lot of the time for kind of good reason. Maybe it's like it's highly seasonal demand, for example, um, could be a smaller Greek island and doesn't make sense given the season to kind of have a hotel there, but actually vacation rental product makes makes perfect sense. So we're we always go into destinations that our guests telling us that they want us to be in. And then we don't want to compromise on quality to do that. So if that means that we have to grow slowly, um, then then we take that over compromising on the promise that we want to make to our guests because ultimately, if you say that you're a loyalty proposition, but then you don't deliver a good product to those loyal members, then you know you're not doing what you set out to do.

SPEAKER_01

So before we talk about a traveler, I quickly want to go back into the operation, the things we've touched on. I remember some of the conversations in the earlier days that, you know, married has massive leverage. Also to provide additional, call it services and amenities or anything for property managers, from linen to cutlery to All of the supplies, all the way down to even training. Is that something you guys have continued to follow on, or is that something that you realize that's not going to happen?

SPEAKER_00

Yeah. So we do um from an operational perspective, we do kind of like operational workshops and masterclasses, both in person and kind of remotely. So we we're kind of split into kind of two broad operational teams. We have kind of the US and Canada team and then the international team. So the each team will typically do four to five market visits per year. So we'll go into Paris, for example, and we'll do a masterclass operational workshop and invite all the Paris-based HMCs, but also kind of anybody else from around France who wants to kind of travel into that market. Where we can, we'll try and tie them together with conferences so that people aren't kind of traveling twice to come to a masterclass and a conference. So those operational workshops have been really helpful. We've done some stuff in the past with our partners at Ecolab, for example, to take property managers through cleaning processes and cleaning products and best practice from that side of things. Kierman program that property managers can kind of opt into. So if they do decide that they want to kind of procure any of their kind of linens or FLS product through us, then there's an option for them to do that. It's not something that we kind of, you know, push or force, but it's like, hey, if you want help with any of this stuff to help meet our standards, then we're we're here to help.

SPEAKER_01

So that's still available. Excellent. So let's talk about the traveler. You know, the what has what do you see in terms of the modern traveler moving between hotels and alternative accommodation, short-term rentals? Are we seeing clear segmentation or are we seeing more behavioral fluidity?

SPEAKER_00

So 96% of people, this is kind of a 2025 number, um, 96% of guests that stayed with us are part of Mariette Bonvoy, which is great because it means that we're doing what we set out to do, which was kind of give those specific customers an alternative. And what we're seeing is that we're managing to capture much more of the whole trip. So we'll frequently see somebody maybe fly into Athens, maybe they stay in a hotel in Athens. If it's kind of like kind of a layover, they're flying in from the States, and you know, there's a are they over for a night or two, they'll stay in a hotel. If they're staying longer in Athens and they'll stay in a home rental, then they'll fly off to a Greek island and then stay on a vacation rental product, and then maybe back to another city in Europe and then and then back again to the States. So it's great to kind of see the travel patterns and us achieve what we wanted to do, which was kind of join the whole trip up and keep the guests within Bonvoy for the entirety of the trip. And we see that through like a number of date data points, including kind of um share of wallet and credit card spend, we were capturing, recapturing some of that money that we knew we were kind of um losing before to our competitors.

SPEAKER_01

How does that actually work? Like in terms of how Marriott Bonvoy play in normalizing accommodations for hotel first guests, for example. I mean, the people who come onto the platform. How does this work?

SPEAKER_00

Yeah, so the the typical guest journey is um uh you'll go onto kind of Marriott.com or um or the Marriott Bonvoy app. Um, you'll do your kind of destination and date search. And then we have criteria in that basically says, you know, if you're booking further out and it's a longer stay, we then surface the homes and villas um promotional banner, which kind of shows in the search results. So you'll see hotel one, two, and three, and then you'll see a promotional banner for the homes and villas product. You then click on that, which takes you to our site and shows you all the available vacation rental accommodation for the dates that you searched for. So it's making it really clear to the guest that they're kind of moving into a vacation rental booking platform, which helps kind of you know set expectations because we don't want people as a hotel company, we don't want people to get confused that maybe they're a book in an apartment um with homes and villas on Mario.com. And perhaps they think that's kind of a hotel product. So we already differentiated through two different booking platforms and we send traffic um between each one. We also get guests that will start their journey on um homes and villas um and end up going back to book a hotel because they actually decide that's best for um for their state trip. Of course.

SPEAKER_01

Yeah, that's super interesting. Being the devil's advocate, I think Marriott is in a different position who have taken a clear um position in relation to accommodating STR for its customer base because it's in need in terms of hospitality, whereas other large hotel brands have clearly stood out of that. And uh one thing that I'm really looking forward to is uh in June I'll I'll be speaking, I'll be a keynote speaker at the hotel summit in Switzerland. And it's the first time that actually somebody from the STR industry comes on stage and I hopefully don't need to wear a bulletproof vest because it's the thought in silos to what is happening here and being the devil. And I think Marriott has clearly shown, hey, this is super complimentary, it adds for all the points that you mentioned. So looking a little bit forward, do you think we're moving towards a hospitality ecosystem where the distinction between hotels, extended stay, which is growing as well, and residential rental becomes increasingly irrelevant, or is it still super siloed?

SPEAKER_00

I still think it's quite distinct. I think the ecosystem and vacation rentals like evolving. You know, if you look at what's happening with kind of you know technology, whether it's connectivity providers, PMSs, lots of kind of mergers and acquisitions in that space. That's how the product getting stronger and much more professional and kind of hotel-like in terms of like how the technology product operates, through to you know, companies that are offering like you know, the 24-7 remote remote support, the number of kind of revenue management tools and systems that are out there that are getting kind of increasingly advanced. So I think all of those things are kind of even um in the right direction. But I still um for me anyway, I still see the product as quite as quite quite distinct.

SPEAKER_01

This episode of STR Global Unlocked is supported by Avivo. Avivo provides an all-in-one property management platform designed to help independent hosts and professional rental operators simplify distribution, automate workflows, and gain better visibility across their portfolio. If you're looking to streamline your operation with advanced automation, Avivo are offering SCR Global Unlocked Listeners an exclusive 50% of the first six months. Simply book a free demo using the link in this episode show notes. Now back to the conversation. So where do you see the biggest demand opportunity merging in the next coming years? I mean, you have an enormous amount of visibility in terms of travel trends and destinations and everything else.

SPEAKER_00

So I think um in the US, we've got um a lot of kind of your mountain and seaside um opportunity that we're kind of pursuing. We've got a good presence in most of the kind of city locations that we want to be in. So I think um mountain and seaside. Um if you look um to Europe, there's some destinations that we're kind of seeing grow faster than we expected. So, for example, um some of Eastern Europe, Bulgaria, some of those kind of places. So it's interesting to kind of see um faster growth there. Asia Pacific, um, we're seeing really good growth in markets like Japan. And then we've got a close eye on the Middle East. So I think the Middle East is very evolved in terms of you know, the Emirates, um, Dubai, Abu Dhabi to an extent, but looking kind of broader out of the UAE, I think the Middle East is kind of a really interesting opportunity that we've got a got a close eye on. Um, I think a lot of the countries, like Oman recently have, you know, they've developed their STR kind of framework and legislation and registration processes. And, you know, once all that framework's in place, I think it kind of paves the way to growth. So it'll be interesting to kind of see what happens in that part of the world.

SPEAKER_01

Can you comment on the membership split uh of Bonvoy? How many of those are North American or American?

SPEAKER_00

I'd have to come back to you on that one. But what I can share is that um right now, like if you look at homes and brothers specifically, the percentage of American travelers like into Europe, for example, is about like 70%. So um we're heavily we're heavily skewed towards um American travelers and into Europe and then obviously kind of even more skewed um in the domestic market in uh in America.

SPEAKER_01

That's exactly what I wanted to allude to, also in terms of opportunities, especially for Europe. Obviously, Married is a far stronger brand than the United States. Yes, Marriott is here too, but obviously Europe is not a classical chain hotel destination. We have a lot of independent hotels, the market structure is totally different, and we've seen a massive influx of Americans coming into the European market, which could be interesting to really focus on that as an additional inbound market for the short-term rental industry. One thing you talked about before is already about technology, PMS's operating model. What that's been challenging for you because I've been very close to the evolution for some historical reasons. I've been very close when you started, especially on the distribution capabilities and technology capabilities. But what internal capabilities must the global hospitality company build to compete credibly in this category thinking about technology and operations?

SPEAKER_00

We took a decision kind of early on that we wanted to kind of build our own tech stack. So our tech stack is completely separate to the the Marriott Enterprise. Of course, we have like links into it. So, for example, like we have APIs that link to the Bonvoy program to make sure we can pull points balances and debit and credit points sort of stuff. But actually, our core um tech stack is is independent. Now, when we launched, we wanted to get to market really quick. And I think we made the decision to launch in December 2018, and we were launched by May 2019. So for a for a company of kind of our size and um in scale to kind of get us launched in six months, it was quick. But it came with its challenges, right? You know, um alluding to a point before, like we, the systems that we originally built, they were fit for purpose, but they had they had glitches that it wasn't kind of where we wanted to be. And then sort of like two years in, we kind of overhauled our tech stack and completely rebuilt it, enabling us to connect with not just one connectivity provider, but like multiple connectivity providers, because we were kind of, you know, we were tied to one connectivity provider when we first launched. So the tech stacks kind of really evolved to the point now, actually, where we're kind of a learning lab for the rest of the business. We launched kind of AI natural language search kind of two years ago now, actually, where guests could go and search for hey, I want to go somewhere with cobbled streets that's 25 degrees in Europe, and we'll surface all the kind of inventory. We launched that a couple of years ago as a test bed on behalf of the wider business. So having a separate tech stack means that we can kind of learn, experiment really quickly, and then feed those learnings back into the enterprise.

SPEAKER_01

Yeah, that makes a ton of sense and uh gives you a lot of strength at the same time. Let's go a little bit deeper in in relation to the operation from tech to operation. And one thing that is very challenging, I could assume, is how do you balance decentralization with quality control uh on a global scale? And can you use technology for that at the same time as well?

SPEAKER_00

It's a good point because you can't just kind of onboard the property manager, check the units, on board the property manager, and then assume like everything else is going to be great. It's all gonna work seamlessly. We send obviously kind of customer surveys, go out to kind of every customer, um, and they're visible to like us and the property manager. We have regularly reviews of those customer surveys, and we're we're really driven by the nines and tens. So we ask people about their experience on a 10-point scale, and then we measure the percentage of people that would rate us nine or 10 out of 10, and we're really kind of driven by that to kind of the people that are the real promoters. So we don't deliver kind of experiences that are ambivalent. We want them to be um, we want them to be really strong experiences. So we work with our property managers very regularly on that. If we feel like anybody has kind of declined in scores or they're kind of moving out of line, we'll jump on a call and be like, hey, what's happening? We're getting feedback through on X, Y, and Z. And then to the discussion earlier, that's kind of when we'll jump in and we're happy to kind of operations team, we'll jump on a plane and go and spend time with a partner and and help share any knowledge that we have that might be able to help them, either from the hotel side or also kind of things that we've picked up online from other property managers that have maybe figured out how to solve a problem. Then we do kind of market visits um and audits. So when we're out in market, we will go and check properties. There's actually, I think our next market visit is to um Curacao, and I think we have seven or eight property managers over there, and we're going to visit kind of all of them on that trip and check a sample of properties and feedback, learn lessons, and then again we take that knowledge and then it's knowledge that we can kind of you know um pass on to other partners in the industry when we do do future visits. So it's really it's definitely a hands-on approach. It's not something that we just kind of take a box and and leave.

SPEAKER_01

So if you're short of staff to go to Curacao, you you know where to find me, okay?

SPEAKER_00

You're welcome anytime, just bring more your red shoes.

SPEAKER_01

Um, so talking a little bit further here, because obviously there's quite a bit of stringent processes behind it to assure that quality as well. But when we now talk from the property manager's viewpoint, what is underestimating or underestimated most by them to deal within an institutional framework such as Marriott? Like what are their experiences to look uh the other way?

SPEAKER_00

We've our onboarding process, and I know we talked about this again like a very earlier early on when we launched, our onboarding process used to take, oh you know, it was three to four months. And that was that was kind of a fairly quick onboarding process, lots of kind of paperwork, all that sort of stuff. We now have kind of more of a self-service onboarding portal. Um we get partners live in an average of about four weeks. So we've significantly cut that back. But I still think compared to other platforms where property managers are used to kind of, you know, just uploading a list and plugging. You're right, what not we're not that, and we'll never will be that by nature of our model of wanting to work with the right companies and the kind of right inventory. So I still think sometimes there could be an expectation gap between what pro how quickly property managers think they can go live with us and then the actual date. But still, you know, we're happy with given the crow given the criteria we lay we lay on, um, we're we're happy with this kind of your three, four-week period.

SPEAKER_01

So before we wrap this up, let's look at the road ahead. Five years is an awful long time. Let's talk three. If we fast forward three years, how will will short-term rentals inside Marriott look different from today, do you think?

SPEAKER_00

I don't think it'll I don't think it'll look too different. I think we'll, from a product perspective, we'll stay true to kind of our Croatians. Uh, you know, I kind of mentioned before, we don't want to loosen Croatians um for the sake of growth. Um, you know, we play in the premium and luxury space, but that's still quite a big space. You know, we have just over 200,000 homes on the platform at the moment. And when you look at the fact that we play in probably the top third of the market globally, that's a pretty small number. So there's plenty of room for growth. But as I mentioned before, we want to grow in the right way and we want to grow in markets that customers kind of really want to travel to. We don't want to kind of oversaturate a market with, you know, bring on three or four property managers in a market where we think actually we should be working with the best single property manager in that market. So I think we'll continue to grow and you'll you'll definitely see us grow in the right way and then stay true to kind of what we what we want to promise and and the creation standards that we that we adhere to.

SPEAKER_01

So, you know, I assume that you're no longer the ugly duckling within a mar within a hotel organization, which definitely wasn't easier. It's like, it's like Porsche who goes and builds electric cars all of a sudden, and then everybody's thinking, how does that work? But we're going with time. And I think with Marriott, where this is one of the most respected hotel brands in the world and coming with STR, that was for sure not a walk in the park internally to get acceptance. But I'm thinking looking ahead, I think that has definitely that has passed uh behind you, I assume.

SPEAKER_00

Yeah, I mean, and it's it's back to the point around kind of growing carefully as well. I mean, you're growing carefully from a quality and a guest perspective, and then you're also growing carefully from um a hotel owner perspective. So we put like a number of guardrails around the program. So for example, you know, we have a two-night uh minimum length of stay. Uh we have a we have more strict cancellation policies than the hotel side of the side of the business. We don't accept any kind of studio product because it's very hotel-like. It has to be, you know, separate bedroom. There's got to be a kitchen in there, there's got to be kind of amenities. And when you look at the data, you know, we're kind of attracted 2.7 rooms per stay. So each property we book on Homes and Villas has 2.7 rooms in it. Um, and our lentist stays five nights. So you can clearly tell on the data that actually we're attracting a different type of guest. And, you know, and obviously that kind of resonates really well with our hotel owners that want to make sure that we are attracting a different um type of guest. So we have um we have the data points that I think has made the business feel very comfortable that we're we're moving in the right direction.

SPEAKER_01

Where do you think short-term rental is is underestimating the biggest opportunities right now from your lens?

SPEAKER_00

I mean, I think I think the narrative around things that we talk about is probably gonna change significantly over the next few years, like fueled by technology, right? So just give some kind of base examples. You know, when we talk about sustainability, we're talking about how do we remove plastic and boar communities from properties. Um, I think it's not going to be too long before our conferences were talking about like short-term rentals that have been quickly built out of carbon-negative 3D printed architecture, right? Um, or regenerative stays where people are kind of visiting destinations and the the purpose is that they leave the destination in a better condition than when they when they arrived. So I think I think the narrative of things that will that we talk about will kind of advance quite rapidly. Um, you know, we talk a lot about self-check-in and lockboxes and self-entry. And I think in the future it's going to be biometric entry and, you know, humanoid hosts, for example, that are there to kind of welcome you. I don't think we're gonna be that far off that. Like, you know, that we talk about trends like, I don't know, look-alike destination, but people want to visit a destination that's like a key destination, but um it's maybe kind of less touristed. That's the kind of thing we're talking about. I just think there's a huge amount that's that's gonna happen and gonna change that's gonna significantly kind of like shift kind of what we're what we're talking about. AI obviously is gonna be talked about everywhere, but how that's gonna affect the booking experience, hyper-personalization, so that you know, you've been recommended a villa you might want to book next year because it's gonna get snapped up quickly and that's been kind of proactively served to you versus kind of going on there and doing a traditional search. Some other things I find really interesting, like flak fractional ownership and the tokenization of ownership. So you, you know, you're almost buying a token or a credit to own part of a property which is then traded on a digital marketplace. I think that will open up different types of inventory type and investment, um, investment models. So I think there's a lot that this industry um is going to see kind of change. And I'm just really excited to um be part of the the journey as and when these things go along. Excellent.

SPEAKER_01

And you can clearly determine that your business development background comes through uh very strong and your open mind to this. And this uh you've made some incredible examples uh also for our audience to to really think about what does that mean and and and how is that going to transition, you know, when I like the robot on the on the arrival, that's something I predicted at DARM conference two years ago. I made a video uh showing, you know, how could an experience of the future uh look like in STR as well. And to be perfectly honest, we're not that far and and we have never seen a faster compounding technology uh you know facing us than than AI. So, you know, I think uh there's a lot of things that uh will continue to evolve and have a massive impact on our industry as well. This was amazing, uh Chris, uh, to have you here. Because thank you for joining STR Global Unlocked. It's been a great pleasure. Thank you for your insights. And if you enjoyed this conversation, subscribe to STR Global Unlocked, share it with your network, and stay tuned as we continue unlocking the global future of hospitality. Until next time, thank you so much, Chris.

SPEAKER_00

Thank you, Simon. It's a pleasure.

SPEAKER_01

That was STR Global Unlocked, where we say what others want. If you got value from today's episode, send it to someone who is still playing it safe. Follow the show and get more global insight at ajlortelier.com. A globally recognized STR consultancy, I founded and that proudly brings to you this show. More bold conversations are on the way, so stay tuned.