JMA Ventures LLC | Shattering Normalcy & Embracing Ingenuity: The Hospitality Industry’s Adaptation to Airbnb
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Shattering Normalcy & Embracing Ingenuity: The Hospitality Industry’s Adaptation to Airbnb

By: Tomi Kapoor

How Americans became comfortable with predictability

In the 1950’s, as the automobile was becoming common place, highways were built across the country, interconnecting big and small cities alike. McDonald’s emerged in 1952 and by 1960 had over 200 chains across the country. As an industry pioneer McDonald’s captured the desires of Americans by giving them a consistent meal whether they were in California or New York. No longer would they have to worry about the quality of the scanty local diner because McDonald’s gave them something they could expect and feel comfortable with. This trend continued globally beyond McDonald’s and into industries like hospitality.

In 1952 the first Holiday Inn opened with a similar mission as McDonalds; to provide dependable, quality service. Benefitting from the same highway expansion as your happy meal, Holiday Inn originated because Kemmons Wilson was unsatisfied with inconsistent service after a poor stay with his family and children at a roadside motel. Wilson wanted to make a hotel chain that would provide clean, unfailing service close to the high way. Like McDonalds, Holiday Inn was able to grow at rapid pace because of its replicable cookie cutter model. Fast forward 60 years, over 3,300 Holiday Inns later, and today’s consumer is sick and tired of the homogeneity across the world, chain after chain with no personality or character.

How Airbnb is disrupting the status quo

According to Bjorn Hanson, clinical professor of the Jonathan M. Tisch Center for Hospitality and Tourism at New York University, “ten years ago at a hotel in Honolulu and in New York, the art and decoration might be identical. We’ve seen brands recognize guests want a more local experience and a place that’s more reflective of local culture.” In 2008, Airbnb, a hospitality service that allows locals to lease their home for short term periods, disrupted the market by giving the modern consumer a new taste of culture and travel with a more intimate experience. Because of its nature, Airbnb gives its clientele the opportunity to deep dive into the cities culture and explore the neighborhood like a local. A level of exposure the uniform, wall-papered walls of a hotel can’t quite match, possibly for good reason.

After a few short years, Airbnb is now in over 190 countries and is valued at 31 billion dollars. Many would expect that with such a strong foothold in the industry that hotels would be taking a hit. Hoteliers are not. It has actually been an incredibly strong time for hotels as occupancy and rates broke records in 2015 according to data from STR. Regardless, hoteliers are still concerned how Airbnb will impact them and as a result, hotel chains are adapting.

Hotels are fighting back

Technology is how hotels will stay competitive. Many will play to their strengths, using their ability to provide room service, extra towels, toiletries and a concierge all at the touch of a finger. Many hotels also have gyms, spas and pools. Business travelers and families may want a certain degree of these amenities and services they cannot get with Airbnb. A place to stay that has a guarantee of all the necessities and comfort but breaks from the mold Bjorn spoke of.

Kimpton Hotels, a trailblazer in the boutique market, is doing an excellent job of adapting to this modern climate. Their CEO, Mike DeFrino’s principle for success is to “not fight change but embrace it.” Kimpton Hotels, recently acquired by InterContinental Hotels Group, is the first and award-winning boutique hotel company that is embracing the future of travel with a much more personal and homey stay. As such they are known for their ability to connect technology with lodging. Their rewards program, Kimpton Karma goes above and beyond the normal rewards program as it will honor members for attending things like wine hour, dining at the hotel restaurant, or recognizing Kimpton properties on social media. The boutique hotel group even has its own blog to connect with tech-savvy travelers. Many of the groups hotels have even begun embracing shared space such as game rooms and lounges to appeal to millennials. Several locations even offer complimentary public bikes for their guests.

While the hotel industry is busy trying to mimic Airbnb, Airbnb is busy fighting off government regulations all over the world. In 2016, Airbnb was fined 600,000 (€) by Barcelona’s city council for offering unlicensed accommodation. In New York, legislation was introduced allowing the state to fine hosts for listing properties for terms less than 30 days if a permanent resident is not present. When the state of California tried to pass legislation against the company, every state senator received almost 20,000 emails from users according to Airbnb. More recently, the company settled a lawsuit with the city of San Francisco, home to Airbnb’s headquarters, where hosts must create a registration system to be eligible to list their home. These are a few of the many regulations Airbnb is facing across the world that are softening the potential blow to hotels.

The world has evolved in such a way that you can experience the same restaurant, hotel room, and practically breathe the same air in many cities across the world. Years ago, when the world was less connected, people wanted something predictable. Now they want something new and unique. Airbnb tapped into this demographic by giving travelers a place they can “belong anywhere.” Hotels have stepped up to the plate, and are modernizing. Like any other competitive industry, those that don’t adapt will die out. However, regardless of regulation, with millennials spending more on travel, leisure and experiences who knows if Airbnb will ever hurt hoteliers. It may very well be helping to meet the higher demands of today’s travelers.

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