‘Alternative’ lodging just seems to struggle.
It has a hard time being understood, getting recognition, being respected. It’s the perennial underdog. It has to work twice as hard, accomplish twice as much, and spend double the time just to be viewed as an equal.
But maybe that’s just the way it is. Building anything that goes against the grain of a legacy model is often an uphill and sometimes unfair battle. At least for a while.
Airbnb *should* be a sleeper hit
Take Airbnb’s latest earnings call. Despite expectations for gross bookings to grow nearly 11% this year (compared with the 4% to 6% range seen for Expedia and Booking and Hilton’s projected growth of 5% to 8% of annual revenue), Airbnb shares are down 10% over the past 12 months. This makes it the only stock on the S&P 500 Hotels, Resorts, and Cruise Lines sub group to be in the red for that period.
In Dan Gallagher’s article “Airbnb Should Be a Sleeper Hit” for the Wall Street Journal, he puts this down to two factors. Its unique position (is it an OTA, a gig economy player, or a hospitality brand?) and its ‘newness.’ The stock market hasn’t yet had time to ‘know it’, which makes it harder to build a depository of trust, understanding, and long-term confidence.
A marriage or rescue package?
It looks like Sonder, another ‘alternative lodging’ provider, is about to benefit from the establishment’s legacy. With Marriott International announcing a long-term licensing agreement with the brand, this could be a win-win situation for both parties. Marriott opens up a pipeline of over 10,500 units and rooms and gets to add more ‘rentals’ to its growing portfolio of traditional hotel stock and vacation rentals.
David Eisen, Editor-in-Chief of HOTELS magazine, suggested that Sonder will benefit from the sense of credibility and trust that the bigger, more established brand brings. The agreement will help Sonder move out of ‘the fringe.’ He also remarked, a little unfairly I thought, that “the more outside traditional lodging that companies get, the more they need to make sure that these products that they are now hawking are, in fact, reliable”.
Is adding a kitchen, a bit of living space, and a more digitized customer journey really that risky and fringe? It seems so.
Do we need education on dynamic pricing? Definitely, maybe
You’d have to be living under a rock to avoid the ‘hoo-ha’ around the recent Oasis comeback news. They definitely won’t be another Taylor Swift, but maybe they have still impacted lodging and hospitality by shining a light on dynamic pricing for the rest of the world.
My 18-year-old son was one of the many who waited online for tickets, only to be told that the ‘value’ of a ticket was now three times what someone else earlier had paid. My son quite sensibly decided ‘no thanks’. There’s been a bit of debate about the ethics of ‘dynamic pricing’ off the back of this.
However, my colleague Neil Millard rightly points out that Ticketmaster has not used dynamic pricing — at least not in the hospitality form. What they’ve done is more of an ‘auction’ where ultra-high demand on the platform results in higher prices. He reminds us that we need to tread carefully and make sure we understand the mechanics of how computers set prices in the modern world. It’s that fine line between charging what the market should pay, and interfering with the natural relationship between supply and demand.
It’s all in the percentage points
The thing with underdogs is that they can definitely, maybe, secure victory. Be it through unwavering determination, greater effort, or just being more strategic than their competitors. Incremental percentage rises can mean the difference between success and failure.
Back to the Airbnb earnings call. Brian Chesky doesn’t see a limit to Airbnb’s growth. He said that about nine people book a hotel room for every one person who books an Airbnb. “And so if we can get just one of those guests to book on Airbnb that’s currently booking at a hotel platform, we would go from nearly 0.5 billion nights a year to 1 billion nights a year.” Imagine the impact for the STR industry if just one percent of hotel guests shifted to ‘alternative’ lodging.
Hotel Tech Index 2024
The Abode Worldwide team is launching its first Hotel Tech Index next week. We previously released one for the Multifamily sector and Short Term Rentals. You can get a sneak peek preview of the new hotel index, where we’ve collated almost 400 tech vendors across the hotel sector into one resource.
Urban, Vacation, London and Porto
If you’re in London on September 26th and interested in the STR space, then come along to this informal meet-up that I’m co-hosting with Oliver from Wheelhouse and Leo from Superhog. We’re squeezing into a Soho pub and we’ve got a super mix of vendors and operators with over 40 people from 30 companies signed up so far. If you’re interested in joining us, please sign up on the link.
I’ll also be moderating a tech panel at the Urban Living Festival next week and I’m busy prepping for panel discussions at the Vacation Rental World Summit, where I’ll speak with execs from Booking, Expedia, Marriott, TravelStaytion, and Airbnb. I can’t wait!
Best,
Jessica
About me – I’m the CEO, and founder of Abode Worldwide, a public relations agency focused on raising the profile of technology solutions and operators, transforming the global lodging, hospitality and living sectors. We work across STR, hotels, multifamily, coliving, senior living and PBSA.
Pillow Talk is my ‘newsletter’ sharing musings, learnings, and insights about the pioneering lodging technology brands and operators transforming how we work, rest, and play. I hope you find this interesting.
