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Airbnb’s Newest Neighbor in the Home Rental Space: Marriott Hotels

Marriott is hitting back at Airbnb, which has been expanding its reach into the hotel industry, by rolling out its own home-rental service.

Next week, Marriott said it would start renting 2,000 homes in 100 cities across the U.S., Europe, and Latin America. Its expansion into the home-rental space coincides with Airbnb’s expansion into the hotel industry, transportation, and a new category of short-term rentals that offer hotel-like services including housekeeping and a concierge.

“The launch of Homes & Villas by Marriott International reflects our ongoing commitment to innovation as consumer travel needs evolve,” Stephanie Linnartz, Marriott’s global chief commercial officer, said in a statement. “What started out as a pilot a year ago is now a global offering.”

Marriott’s announcement about pushing into Airbnb’s turf comes as Airbnb readies for an initial public offering. Airbnb CEO Brian Chesky has said the company will be prepared to go public this year, but he did not say if or when the company would file the paperwork to do so.

When it comes to the home-rental business, Chesky said that he’s not worried about Marriott.

“I don’t think anyone is going to be so large that they’re a major threat,” he told CNBC’s “Squawk Box” on Monday.

Airbnb declined to comment further on the matter.

During a test of its home rental service, Marriott said the average guest stayed three times as long as those who stay in hotels. The target market is clearly upscale.

Some of Marriott’s luxury home rentals include a six bedroom villa in Sorrento, Italy with an infinity pool overlooking the Mediterranean Sea and a wood-fire pizza oven; an oceanfront villa in Anguilla with private beach and a personal butler and house staff; and a 18th century Irish Castle that sleeps 17 and features a private lake for boating and fishing.

Although Marriott wields deep pockets—it generated $20.76 billion in revenue in 2018, up 1.5% from the previous year—and a big consumer name in hospitality, it has a long way to go to compete with Airbnb or Booking.com in home rentals. Airbnb has more than 6 million listings including hotel rooms while Booking has 28 million places to stay, 5.7 million of which are apartments and homes.

Meanwhile Airbnb, most recently valued at $35 billion, has been adding to the number of hotel and hotel-like listings on its service in recent months.

The company bought last-minute hotel booking app HotelTonight for an undisclosed amount and today announced plans to develop a new type of accommodation that combines the comforts of a home with the hospitality of a hotel. The new suites—similar to those offered by Lyric, the startup in which it recently invested—will be the result of a partnership with New York-based RXR Realty. The first project will occupy 10 floors of 75 Rockefeller Plaza in Midtown Manhattan when completed.

During its expansion, Airbnb has faced push back from regulators. Some of it was spurred on by the hotel industry, which felt threatened.

In 2016, the Federal Trade Commission began investigating how Airbnb affects rising housing costs. That same year, New York passed a law to fine Airbnb hosts who break local housing rules. The American Hotel Lodging Association, which includes Marriott, called both moves “notable accomplishments.”

Chesky said that Marriott’s move into home rentals validates Airbnb’s business. He also suggested that Airbnb is diversifying its revenue to build a “multigenerational company” that could soon go public.

“The sooner you can get your vision out before you go public, the sooner investors know what they’re buying,” he told CNBC.