82% of small hotel guests would take a short-term rental at the same price, PriceLabs finds

A traveller survey run by PriceLabs puts a number on something small hotel operators have suspected for years. Of travellers who had stayed at a bed and breakfast, an inn or a small hotel, 82% said they would consider booking a short-term rental instead at the same or a slightly lower price.

Just under half, 48%, said they would switch at exactly the same price. Only 18% ruled it out.

PriceLabs surveyed 1,082 travellers across the US, UK, France, Spain and Portugal for a report titled "Who Do Independent Hotels Really Compete With?". Short Term Rentalz reported the findings on 21 October.

The competitive set is not what the comp set says

The more useful figure is not the hypothetical switch but the actual one. Thirty per cent of guests who booked a bed and breakfast, inn or small hotel also considered a short-term rental for that same trip. Among large hotel guests the figure was 16%.

So the substitution pressure sits on independents, not on the chains. The small property competing on the things a rental cannot offer, meaning service, breakfast and a staffed front desk, is also the one whose guest was shopping rentals the same evening.

The overlap concentrates in two trip types. Travellers considered both categories for 30% of work and leisure trips, and 25% of stays lasting between one and two weeks. Longer stays and blended trips are where a rental's kitchen and extra space start to matter, which is intuitive but now measured.

Where someone shops changes the comparison too. Among travellers searching on Booking.com, which lists hotels and rentals on the same results page, 45% compared both categories. Among those booking direct with a property, it fell to 29%.

That gap is the finding with the clearest operational edge. Your channel mix is not just a cost question. Sending a larger share of demand through a marketplace that shelves you next to a three bedroom apartment changes what you are being compared against before a guest ever sees your rate.

Rates are already moving together

PriceLabs also compared daily median hotel and short-term rental rates in Mallorca and Barcelona over twelve months. The two series correlated at 94% and 84% respectively.

Anurag Verma, co-founder of PriceLabs, said: "For a long time, hotels and short-term rentals were treated as separate markets serving different groups of guests. Our research shows that many travellers stopped making that distinction some time ago."

Worth weighing

Two caveats belong next to these numbers.

The survey covers five markets and 1,082 people, so it is indicative rather than representative of accommodation guests generally, a limitation Short Term Rentalz noted in its write up. Mallorca and Barcelona are also two of the most rental dense markets in Europe, which is where you would most expect rates to track each other. A correlation that strong in Leeds or Lyon would be a bigger claim.

And PriceLabs sells revenue management software to hotels and to rental managers both. A finding that the two are one market, and that each should therefore be watching the other's rates, is a finding that argues for the product. That does not make the data wrong, and the methodology is stated plainly, but it is worth holding in mind.

For operators the practical takeaway survives the caveats. If you set rates against a comp set of similar hotels only, you are watching half the market your guest is looking at. Pull the rental rates for your area for a one week stay in your shoulder season and compare them to your own. The answer is often uncomfortable.