PHOENIX—Competition is key for capitalism, but not all competitors are made equal.
Speakers at this year’s Lodging Conference addressed the recent disruptors that have thrown hoteliers for a loop in recent years. From Airbnb to online travel agencies, hotel companies, owners and managers continue to figure out the best courses of action to level the playing field.
Best frenemies?
Airbnb is here to stay, said Liam Brown, president of U.S. & Canada select-service & extended-stay lodging and owner & franchise services for Marriott International. The business model has existed since post-World War II, he said, when teachers in France would swap houses with teachers in the United States. Today, it’s all about hoteliers learning from Airbnb how to embrace the experience angle of a trip, he said.
Jay Patel, chairman of the Asian American Hotel Owners Association, had similar sentiments. Airbnb is focused on millennials who don’t want the cookie-cutter experience, he said.
“We have to provide a unique experience to make sure we don’t lose that market share to Airbnb,” he said.
When asked whether any of the panelists had tried to talk with Airbnb about some sort of partnership, Brown and Patel said they had.
Brown said Marriott has had many conversations with Airbnb, and it’s about keeping friends close and enemies closer, echoing an earlier question he posed earlier about whether the company is an “enemy, friend or a frenemy.”
“It’s intelligence-gathering, and they’re intelligence-gathering us,” Brown said.
Patel said his company, Jai Amba Maa Hospitality, attempted to contact Airbnb, but it did not receive a response.
A watchful eye
When Airbnb came on the scene, people dismissed it, said Simon Turner, president of global development for Starwood Hotels & Resorts Worldwide, during the first day’s general session. They did the same with OTAs.
“You can’t let the moss grow under your feet,” Turner said. “One thing we try to do is look out a year or two. That may not feel like a threat or an impact on business today, but think about TripAdvisor. It was reviews; now it’s a distribution channel.”
PKF Hospitality Research gave a presentation about Airbnb during the general session on Day Three of the conference. Airbnb is a serious threat, said Joel Ross, principal at Citadel Realty Advisors, referencing the presentation.
“It smells to me like when Uber came to New York City,” he said. “The taxis said it’s no big deal. Now their medallions are worth less than they were.”
He also cautioned the audience about competitors to Airbnb starting up.
Hotels, owners and vendors can push to make sure Airbnb plays by the same rules they do, Brown said. Ireland’s equivalent of the Internal Revenue Service has Airbnb submit information about all the hosts and money paid to them, and Uber is facing the same. In the United States, Airbnb should be subject to the Americans with Disabilities Act as well as fire, life and safety standards and insurance, he suggested.
Similarly, Patel encouraged hoteliers to push back on OTAs and their commissions. His company doesn’t have contracts with OTAs, and he said others should consider eliminating some contracts. The OTAs were originally there to sell excess inventory, he said, but occupancy has improved.
“OTAs are impacting the bottom line,” he said. “In Europe, it seems rate parity is going away. It would be great to consider not giving OTAs last-room availability.”
There is competition coming for OTAs, according to some speakers. David Pepper, chief development officer for Choice Hotels International, said on Day Two he believes Google’s and Amazon’s entrances into booking channels could both tame the current OTA model and suck up their profits. Amazon has since announced it would no longer book hotel reservations through its Amazon Destinations.
“They see the threat of Google,” Pepper said. “That’s why they are consolidating. (Google) can really eat the OTAs’ lunch.”
Beware the rogue sites
Rogue sites are trying to hijack the process, said Jim Amorosia, president and CEO of G6 Hospitality, referring to online travel sites that imitate a legitimate hotel booking site. The biggest challenge is there’s no clear expectation on who is going to control that, he said, and it’s a brand responsibility to warn the public.
“The loser is the consumer,” he said. “We have to figure out how to solve their problem even though we didn’t create it.”
Katherine Lugar, president and CEO of the American Hotel & Lodging Association, said the association’s warnings about rogue sites have received 300 million media impressions over the past few weeks. All of the warnings focused on the importance of booking directly with a hotel, she said.
Rogue sites aren’t a new problem, she said, but there’s been an uptick of “less scrupulous online travel agencies that believe they need to trick the consumers.”
“It’s not only the media that’s taken an active in this, the Better Business Bureau has,” she said. “The FTC has issued scam alerts because of our awareness campaign. Key members of Congress are speaking out to make sure consumers are protected. A lot of consumer watchdog groups are on our side.”