According to the Market Statsville Group (MSG), the global alternative accommodation market size is expected to grow from USD 137.2 billion in 2021 to USD 534.2 billion by 2030, at a CAGR of 16.3% from 2022 to 2030. Alternative accommodations are available outside any formal/organized accommodation sector like hotels. They are budget-friendly properties to provide a homely experience to travelers. The global alternative accommodation market is primarily driven by the consumers' inclination towards affordable stay choices and the ever-rising international tourism sector. Luxury private homes like private villas, flats, cottages, and others are also a form of alternative accommodation. These rental homes provide comparable luxury services to hotels but at considerably lower prices. The key players in this industry are continuously adding a range of services to get an edge over the hotel industry.
Also, the comfort of online booking, hassle-free cancellation, one-of-a-kind experience, and a highly personalized experience are key factors attracting millennials and the genZ.
The COVID-19 pandemic significantly impacts the global economy, putting further pressure on world tourism. The worldwide lockdown to mitigate the virus's spread adversely affected travel and tourism. The industry witnessed a negative downturn, with key players suffering financially due to the low occupancy rates.
Players started to take certain measures to survive the crisis and implemented them as soon as the lockdown lifted. For instance, San-Francisco-based Unicorn startup, Sonder Holdings, launched the enhanced cleaning protocols and provided an overview of the sanitization measures they are taking over a blog. They even partnered with another startup for door-to-door food delivery, making the social distancing even more comfortable for travelers.
Gradually, when most countries lifted their pandemic travel ban, a surge in travelers was seen during the holiday season. The alternate accommodation options made family reunions, adventurous vacations, and leisure trips easy and affordable.
The rapid development of transportation and communication technologies, the extension of the right to travel, and changes in the distribution of money around the world are all contributing to the exponential growth of the global tourist business. Diversifying submarkets, such as alternative accommodations that address the various conceptions of lodging and vacation, are emerging in the expanding tourist business as a result of the diversifying consumer expectations. Individual preferences for non-traditional lodging that falls outside these categories, such as serviced apartments and villas, are anticipated to gain significant traction.
The growing student community traveling to different places for academic purposes like workshops, internships, projects, training, and others need a budget-friendly, safe accommodation. It acts as another driving force for the alternate accommodation market.
The major restraint faced by the alternative accommodation market is safety. The property's host is capable of making the traveler's stay pleasant and equally capable of making it worse. They can interfere and can make the customer uncomfortable. The host’s right to cancel the customer's stay and the lack of physical interaction between the booking platform ( Company) and the customer creates a sense of insecurity.
Another pitfall of this budget-friendly stay option is the risk of non-disclosure. Details of some basic amenities that are not provided prior or considered obvious could turn into a major discomfort for the customer.
Unless a proper customer care mechanism is introduced, tourists will fail to trust the alternate accommodation platforms, eventually restraining the market's growth.
Hotel companies are willing to diversify their portfolio and enter the alternative accommodation segment globally. For instance, Leisure Hotel Group, a Dehradun-based hospitality firm, is diversifying into the hostel segment to unlock the potential of alternative accommodation.
Post Covid-19, consumer preferences have changed owing to the flexibility to work or live from anywhere. They hunt for short-term rentals for longer stays. This preference shift is expected to accelerate the market growth and creates lucrative growth opportunities for the market players.
Also, increasing government investments in the tourism industry is enhancing the infrastructure (both physical and digital) and laying a strong foundation for future growth.
The study categorizes the alternative accommodation market based on accommodation type service, mode of booking service, and application service at the regional and global levels.
Based on accommodation type service, the market is bifurcated into private property, hostels, camping tents & others. The private property sector is expected to control a significant portion of the domestic and international market. This is due to the comfort, safety, and ease that the homestay provides. Travelers across the globe are inclined towards pet-friendly, private, and low-cost stays.
The hostel segment is projected to register an increasing CAGR in the coming years. Firstly, as the student community is traveling for academic purposes, the people traveling solo look for community spaces like hostels to connect with people.
Based on the regions, the global alternative accommodation market has been segmented across North America, Asia-Pacific, Europe, South America, and the Middle East & Africa. North America will dominate the global alternative accommodation market in 2021.
The tourism industry flourishes exponentially due to the highly popular destinations in North America, followed by the technologically advanced infrastructure. The key players are keen to invest in micro hotels and apartments in the urban cities as they have a high footfall of travelers.
The Asia Pacific is registering the fasted growing alternate accommodation market. The growth is basically due to rising consumer expenditures on staycations and traveling. Governments of countries like India, China, Vietnam, and Australia are constantly promoting tourism to develop the region’s overall growth by producing infrastructure and jobs. The demand for alternate accommodation is also being fueled by tourists who are more aware of the availability of such rental options. Hence the Asia Pacific is expected to grow in the years to come.
The global alternative accommodation market is highly competitive, with key industry players adopting strategies such as product development, partnerships, acquisitions, agreements, and expansion to strengthen their market positions. Most market companies focus on expanding operations across regions, augmenting their capabilities, and building strong partner relations.
Major players in the global alternative accommodation market are:
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