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The Sharing Economy is an Important and Integral Part of the Global Lodging Industry.
By Joseph Fischer ~ Exclusive for 4Hoteliers.com
Wednesday, 24th June 2015
 

Exclusive Feature: Two years ago, while attending an important lodging conference in London, I listened to a panel of global lodging companies CEOs discussing the 'phenomena of AIRBNB'; 

Some of these leading CEOs didn't consider the sharing economy as a whole as a treat to their own hotel brands. Others said that the sharing economy is a supplementary to the existing lodging alternatives.

While global hotel chains were focusing on new concepts:  'Millennial brands', 'Collections', 'Soft Brands'. Moving from 'Asset light' strategy to 'Asset Right' and engaging in a fight against the growing dominances of OTA's and Rate Parity.

Well, Ladies and Gentlemen, sorry to tell you, but I think that you have got some of your priorities wrong.  

In a most recent report in "Bloomberg" it was written that AIRBNB is in talks to raise financing at a valuation of $24 billion. AIRBNB is projecting 2015 revenue of $ 900 million, up from $ 250 million in 2013.

In 2014 AIRBNB market cap/valuation was $ 10Billion.

Currently AIRBNB has more than 1.2 million listings in 190 countries.

One of the key reasons for which global hotel brands didn't consider AIRBNB and similar concepts as competitors was that business was growing and in many cases growing well.

The global economy is recovering and in many areas occupancy and RevPar levels reached pre-crisis levels. Development pipeline is growing better and faster than ever before so, "we shouldn't be worried from the sharing economy.

Nowadays, many experts and learned scholars will find many explanations for the phenomenal success of AIRBNB, but let's keep in mind that AIRBNB started in San Francisco in August 2008 just seven years ago during the peak of the Economic crisis. Back then it was a way for home owners to sublet rooms or rent apartments in order to earn extra revenue during very difficult times.

In the time span of seven years, AIRBNB won the hearts, minds and pockets of many millions of global travelers.  

Contrary to what many hoteliers think, AIRBNB isn't only attracting the Millenials but also older generations - different customers: FITs, Corporate travelers and families.

Back in May 2014 I wrote an article for 4Hoteliers.com titled: 'The Millennial Generation and Their Consumer Buying Behavior'.

To those of you who haven’t read it, you can do it now.

Friends, I am sorry to be the one saying this, but you've got it all wrong and you are still not seeing what huge changes we are about to witness and face in the near future.

AIRBNB has changed the way people visit cities. Beyond the original starting point allowing apartment owners to make a few bucks, people are now looking for experience "led travel.

Experience is now the going currency for people to recount a trip.

AIRBNB offers 76% of its listings outside of main hotel districts.

Many hotels now look to offer a "local experience" offering local foods, recommending local businesses and transforming the lobbies into 'meeting spaces' or lounges-but at what price? Are you truly competitive? are you truly answering your customer needs? 

On the other hand, some hotels are moving to technology in order to reduce operational costs and at the same time smoothen and make the guest experience better: Keyless entry to the rooms using smart phones, taking out the mini-bars offering vending machines for cold and hot drinks as well as snacks and knick-knacks, changing the room-service waiter to a robot and using a computerized concierge.   

Well, it is almost sure that you will get the direct labor costs down but aren’t you taking away some of the guest interaction with your staff?

The bottom line is: Don’t try fighting AIRBNB and its likes.

This big battle is lost and the war is over. 

$ 24 Billion valuation will tell you what you did not see and didn't want to see before. 

Try to learn what the public wants and appreciates:

For example, how about offering these 'hosts' your own marketing platform?

Some big players already take non-managed hotels to their system so take it another step further. I know, It is a big step, but it is a necessary one.

Use the strength of your own global brands to market apartments offering your standards: Cleanliness, Toiletries, Safety & Security, small maintenance works. Your hotel could handle the Housekeeping and collect the fees, pay the taxes. You have the know-how, expertise and the marketing power. Your companies could benefit from the sharing economy.  

There are already start-ups offering parts of these services to home owners. Companies such as: Guesty, Fletbook, Onefinestay and Proprly are offering services ranging from: greeting guests with keys, fitting the apartment with quality linens and not your regular household, cleaning services, and checking the apartment upon departure of the guests.

In a most recent article in the 'New York Times' written by Michelle Higgins and titled "Tanking the Work out of Short-Term Rentals", she explains how simple and easy short-term rentals have become.

Ladies and Gentlemen, Dear Friends, It is doable; you just need to think "Outside the box" and jump on the sharing-economy wagon and the sooner- the better.

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Joseph - Yossi - Fischer the CEO of Vision Hospitality & Travel - international lodging & Travel Solutions

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