By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
While it is crystal clear to me and many other hoteliers that the sharing economy and all its resident internet-based service firms (IBSFs) have severely changed how customers perceive hotels, many outside of hospitality tout their successes and grander benefits for the community.
Regardless of whether or not they are ultimately ‘good’, the rapid proliferation of all these sharing economy accommodations should not be mere doom and gloom for hotels, however, but an opportunity for you to improve your own product. As Airbnb is by far the largest among these IBSFs, I will use it as a proxy for all alternate lodging companies.
So, rather than selfishly framing this ongoing issue through the lens of our own plight, another way to argue our point of view is to look at the top purported advantages of Airbnb then see how you can counter these ideas or make incremental upgrades to your property to help close the gap.
1. More character than a hotel. While it may be true that Airbnb listings each bring their own unique charm accrued through years or decades of hosts living in their units and populating them with all manner of eclectic furnishings and artwork, it is nevertheless quite calming about entering a guestroom where you are already guaranteed that everything will be in its right place. This is especially true for bathroom amenities and towel services, two features that I rarely see hotels emphasizing.
That said, hotels can and should improve the individuality of their guestrooms so that we can better emulate the success that Airbnb has derived from this primary feature. While every initiative you take to make your rooms distinctive will require some form of capex, something nevertheless has to be done in this regard, lest you get labeled as ‘just another boring hotel’.
2. Listings are embedded in cool neighborhoods. No hotel is built on a whim. Unlike an Airbnb rental, every new construction must first be justified through some form of market assessment which all inevitably steer properties towards high traffic areas and not necessarily the ‘cool’ parts of town. But dare I suggest that these high traffic areas became just that because they were already cool in some way, shape or form? In more ways than one, this point is a marketing ploy by alternate lodging provider advocates to cover up the fact that many listings are not all that convenient for newcomers to a given municipality.
Hence, one key advantage of hotels that can be leveraged is the fact that many of them are in fact very centrally located in the ‘coolest’ parts of town. The apt word to embrace here is ‘hyperlocal’ whereby you must all become experts in everything happening within a three-block radius around your property, and then advertise accordingly along with any local partnerships you can stir up.
3. Access to kitchens and laundry. Alas, traditional guestrooms are not built like apartments. Instead of dropping millions to transform your property into a long-term residence with short-term rentals, hotels can compete by better promoting their in-house laundry services as well as their culinary excellence. After all, what’s better than doing laundry? Having it done for you! What’s better than making your own meals? Having a professional chef cook for you while you enjoy the ambiance of a great restaurant with even better service. Of course, there is a stark difference in terms of cost to the consumer, so it’s up to you to find a pricing strategy that convinces guests to prefer your amenities over doing it all themselves.
4. The modern traveler wants a new kind of experience. They sure do, and Airbnb is giving them just that! It’s up to every hotelier – and not just the general managers – to come up with interesting activities, events, partnerships and all other manner of experiences to get our guests excited about staying with us. Again, the onus is on us to adapt to the times. Unlike individual hosts, though, hotels a full team of experts capable of brainstorming great concepts as well as executing them to perfection. As a senior executive, it’s your job to vet ideas and delegate so your team is accountable and so projects actually get done.
5. Airbnb supports the everyday homeowner who is only trying to earn a few extra bucks. There are indeed a fair number of listings that are spare rooms or basement suites, but one quick look at the website will reveal that most rentals are whole apartments or houses entirely separate from the host’s primary residence. Then there are the ‘pop-up hotels’. These aren’t the sob stories you hear about people with no pensions using Airbnb just to scrape by. These are full-fledged landlords without the proper commercial licenses (and often without the proper tax payments) to do so.
What can you do? For one, hotels support a diverse array of talented individuals, and this also happens to be our greatest strength. Your team is your family, and the more you do to encourage a passionate dedication to service amongst your associates and managers, the better off your hotel will be.
6. Only circumstantial evidence to support claims of disruption to rental and real estate markets. Yes, we’re going on the defensive here, but you must understand this point because it will likely have the biggest influence on changing laws in hotels’ favor. Put aside the latest statistical findings for a minute and just think in terms of rational economic incentives. If sharing economy accommodations didn’t exist, what would all these homeowners do with their surplus residences? Leaving them vacant is a poor use of capital, so they would most likely throw them back into the long-term rental market or put them up for sale in order to benefit from the greatest financial gain.
Nowadays, however, because such popular entities as Airbnb do exist, homeowners have collectively realized that they can earn more money by utilizing this website rather than going the traditional route, thereby reducing the overall pool of units in both the long-term rental and the real estate markets. This is bad news for everyone as it inexorably leads to less neighborhood renewal due to a decreasing number of new homeowners who decide to renovate, fewer contributions to municipal property taxes, and increasing prices for both buyers and renters as the stunted supply can’t keep pace with demand.
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Editor’s note: To discuss business challenges or speaking engagements please contact Larry directly.
