Pando

If hotel chains are so great, why not work with Airbnb instead of fighting?

By Paul Bradley Carr , written on April 17, 2017

From The Sharing Economy Desk

 “Inside the hotel industry's plan to combat Airbnb”

An enticing headline in yesterday's New York Times, hinting at a shift away from the hotel industry's previous anti-Airbnb strategy of resist-resist-resist.

Nope. Instead, according to the Times, members of the Hotel and Lodging Association want to...

Build on the success of 2016 efforts to ensure comprehensive legislation in key markets around the country >and create a receptive environment to launch a wave of strong bills at the state level while advancing a national narrative >that furthers the focus on reining in commercial operators and the need for commonsense regulations on short-term rentals.

In other words, the hotel industry continues to believe that making new laws, and trying to change the public narrative around short term lets, will permanently foil the existential threat to its centuries' old business model.

That more laws, more lobbyists will be sufficient to not only outmatch Airbnb's own increasingly well-funded lobbying efforts but also those of the millions of constituents who want to let their properties on the platform, or find a cheap place to stay when they travel.

Resist-resist-resist-resist-resist.

To understand why the hotel industry's strategy is doomed to fail, you need only look at Uber. How much money and legislative time has been spent trying to crush ridesharing, only to see the company (and its competitors) continue to grow like a weed. Ultimately the only thing that has meaningfully threatened to destroy Uber is... Uber.

The bad news for hoteliers is that Airbnb isn't Uber. There's little sign the company generating the same string of scandals and unforced errors that have slowed the rise of ridesharing. For many millennials and even younger travelers, Airbnb isn't just the best option, it's the only option they've ever known. Little wonder, then, that when those same millennials start their own companies, they choose Airbnb not Starwood for their business travel. It's only a matter of time until those millennials are in charge of making travel policy for major corporations. When that day comes, the impact on the hotel industry will be cataclysmic. And heaven help the poor hotel lobby-funded lawmaker who tries to tell corporate America that Airbnb is a no-go.

And yet.

Long-time Pando readers might recall I literally wrote the book on living in hotels. I come from a family of hoteliers. I love hotels. I want the hotel industry to thrive. Within the ranks of tech industry commentators there is probably nobody more bullish on hotels than I. If anyone wants to see a bright future for hotels in an Airbnb world, it's me.

So the members of the Hotel and Lodging Association should listen very carefully when I say this: There is only one way for hotels to compete with Airbnb. And that's to stop fighting with Airbnb and start working with Airbnb.

Airbnb is not the enemy of hotels any more than any travel agents are the enemy of hotels. Airbnb wants one thing more than anything else: More rooms on its platform.

Hotels have one thing more than anything else: Rooms.

At times of high demand – conferences, festivals, holidays – customers want just one thing: Rooms.

Right now, younger travelers (and a growing number of business travelers) go straight to Aibnb to find those rooms. They'll see cottages and lofts and condos and even teepees but, generally speaking, they don't see hotel rooms from major chains. (Boutique hotels are a different story. They get it.)

The hotel industry should be spending all its lobbying money trying to change that. Trying to convince Airbnb to integrate major hotel chain inventory with its platform.

As a user I should be able to visit Airbnb and see the price of a condo in New York right next to that of a Hilton in New York. Those two options should be competitive on price and, nine times of of ten, the Hilton (or W, or Westin...) should win. After all, hotels have the flexibility and technology to lower prices for available inventory. They have economies of scale on cleaning and maintenance and administration.

As a customer, my life gets a whole lot easier. On my next trip to London, I have only one platform to search when looking for a room – any room.

The one time out of ten that hotels can't be competative on pricing, they should at least be able to crush home letters on service and comfort. After all, isn't that the industry's whole selling point: Hotels are better and more comfortable and safer than some dude's spare room?

If that's really true then hotel chains should thrive in an Airbnb world. All they need is visibility on the platform. If it's not true then, well, the members of the Hotel and Lodging Association have some work to do.

But doesn't that make hotels entirely reliant on Airbnb – subject to the company's every whim and demand, like publishers are with Amazon? Sure. Kinda. But not really.

If hotels are generally so great (I think they are) then having a bunch of millennials get their first exposure to that fact through Airbnb should be a no-brainer. Once you've got them into the funnel, it should be a piece of cake to entice them to return time and time again. That's what Starwood Points are for.

Again, the only way that plan doesn't work is if hotels aren't really that great, or if standards of comfort and service have dropped dramatically in recent years. Which surely isn't the case -- right American Hotel and Lodging Association? Because if hotels really aren't so great any more then fixing that problem would be a way better use of cash than bribing lawmakers to handicap the opposition.

So, assuming hotels are are good as they claim, the only people who should need selling on a “let's work together” plan are those at Airbnb. Right now they're killing the hotel industry slowly but steadily. In a decade, the victory will be meaningfully complete. It's hard to see why they'd spend time and effort reworking their site and building relationships with hoteliers when they can just sit back and win anyway. Especially when those hoteliers are spending millions of dollars to kill them.

But therein lies the answer. Hoteliers are spending millions of dollars. Those millions could be easily re-channeled into building systems that integrate with Airbnb, or subsidies room rates to remain competitive with short term letters. Imagine how much easier Brian Chesky's life gets – how much more powerful his business becomes – if the hotel lobby ceases fire.