New data from PriceLabs, a revenue management software provider, underscores a fundamental shift in how travelers choose lodging. The company's survey of more than 1,000 travelers across the US, UK, France, Spain, and Portugal found that 82% of guests who stayed at a B&B, inn, or small hotel would consider a short-term rental if the price were comparable. The finding suggests that the traditional boundary between hotels and rentals is rapidly dissolving, a trend with direct implications for independent hoteliers and larger chains alike.
Independent hotels face stiffer rental competition
The study reveals that independent properties are disproportionately affected by the rise of short-term rentals. While 30% of guests who booked a B&B or small hotel also weighed a rental for the same trip, only 16% of large hotel guests did the same. This means independent hotels are competing with rentals at nearly double the rate of their chain counterparts, a competitive pressure that is unlikely to ease.
Booking platforms play a pivotal role in this crossover. On sites like Booking.com, which list both hotels and rentals, 45% of guests compared the two options, whereas only 29% did so when booking directly with a property. This suggests that hoteliers who rely on direct bookings may be missing a key segment of comparison shoppers. At the same time, platforms like Airbnb, which now includes hotel listings, are blurring the lines further, offering travelers a single marketplace for both lodging types.
Price alignment accelerates the trend
PriceLabs' data also shows that hotel and rental rates are increasingly moving in tandem. In popular destinations such as Mallorca and Barcelona, hotel and rental price correlations reached 94% and 84%, respectively, indicating that rates rise and fall together throughout the year. This alignment removes a major barrier for travelers who might otherwise choose a hotel for cost certainty.
Anurag Verma, Co-Founder of PriceLabs, commented: "For a long time, hotels and short-term rentals were treated as separate markets. Our research shows that many travellers stopped making that distinction some time ago." Verma's observation points to a new reality where revenue managers must monitor both hotel and rental pricing to stay competitive.
For hoteliers, the takeaway is clear: adopting dynamic pricing tools that incorporate rental market data is no longer optional. As the lines between hotels and rentals continue to blur, properties that fail to adapt risk losing guests to alternative accommodations. The study also highlights the importance of leveraging booking platforms that offer both options, as they capture the highest share of comparison shoppers.
This trend aligns with broader shifts in traveler preferences. Recent research has shown that adventure and nature trips now top global travel preferences, and travelers are increasingly seeking unique, local experiences that short-term rentals often provide. Meanwhile, the rise of hotel AI adoption is helping some properties respond to these changing demands, though strategy often lags behind technology.
For independent hoteliers, the competitive landscape is evolving rapidly. The study's findings suggest that traditional differentiators—such as service and amenities—may be less important than price parity and visibility on comparison platforms. As Verma noted, travelers have already moved on; it's time for the industry to catch up.
