Pillow Talk

Pillow Talk#8 – Distribution addiction, the long stay, the inevitability of failure and the problem with hoteliers

I’m on a train to London right now. It’s the calm before the storm. I’m at the Independent Hotel Show today, the ShortTermRentalz Summit tomorrow, VRMA International in Orlando next week, followed by OpTech in Las Vegas the week after.

It’s hard to stop and think but it’s important we do. As we enter more deeply into conference season, what themes and stories are the most interesting for the lodging sectors? It’s a tricky one. A great deal is going on, but almost everything feels supercilious in comparison to the horror and devastation that is going on around us on the world stage.

Learning, planning and the inevitability of failure

In Abode’s latest board meeting, we did a PESTLE analysis. We attempted a review of the Political, Economic, Sociological, Technological, Legal, and Environmental factors that could impact businesses in the multifamily, hotel, living and short-term rental sectors — our clients.

It was almost a depressing exercise with so many possible impacts (more war, more risk of recession, more failure to handle inflation, more regulation). But ultimately, it was a worthwhile one. As Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.”

Back at the beginning of the summer, Casai founder and CEO Nico Barawid thought long and hard about what he could have done better in the time leading up to the company’s failure. Bravely, Nico shared his learnings and regrets openly, acknowledging that, despite a belief the brand could not fail, mistakes and missteps were made.

I imagine many startup founders eagerly read and internalized the lessons from Casai. Watching others tread a path before us often means we can take different steps to avoid the crevices.

Addicted to external distribution

Max Starkov is an interesting man to follow. He recently posted on LinkedIn a question about how much the hotel industry would spend on the ‘middlemen’ of the OTAs, bed banks, and other distributors this year. He estimated about $50 billion.

Skift ran with the story, getting the might of its research team behind the theme. They came up with $75B (you can see the working out here). Whichever is accurate — both are a lot of money. To be a shareholder of an OTA would be a desirable place to be.

Max went on to explain the problem with this reliance on distributors. He told Skift, “Back in 1995, 75% of room nights came from the direct channel, making hoteliers one of the best direct sellers in the economy!” That’s a heady proposition today, so what happened?

Starkov believes that independent hoteliers (and I’d add most of the STR sector) have been brainwashed by the OTA propaganda and have given up on their own direct channel efforts, believing they cannot compete with the marketing and tech investment.

A full-on brand and direct strategy is still likely unrealistic but he goes on to say;. “But they (independent hotels) can significantly lower their over-dependency on the OTAs by investing adequately in CRM technology and marketing.”

Changemakers and the root of the trouble with hotels

Still on the theme of hotels, Michael Levie, hospitality changemaker and co-founder of CitizenM, wrote a thought piece for Hospitality Technology on the trouble with hotels and why they find it so painful to take onboard the technological changes that will make their lives easier, better and more profitable.

Michael says that “the complication lies in the untangling of years of workarounds and patches trying to solve legacy systems obstructions”. Hoteliers are “stuck in their way of working. Unwilling to adapt to new possibilities and to support transformation and change”.

However, the pendulum is swinging. Change is afoot. We see a future where every boutique, independent, lodge-style, or apart-hotel will embrace and thrive on technology to benefit customers, staff, partners and shareholders.

More long-term anyone?

More news from Airbnb. The platform has let us know that it is moving towards long-term rentals in its bid to own every part ofhow we live, beyond travel. ShortTermRentalz tells us, “Chesky has repeatedly said that long-term rentals [of 30 days or more] represent the largest growing segment of Airbnb bookings, largely spurred on by the rise in flexible/remote working patterns and the threat of incoming regulations in the short-term rental market. The co-founder believes that long-term rentals could be “a huge opportunity” to realize his company’s potential, both in travel and also “beyond travel experiences”.

I agree. The multifamily and living sectors are some of the most dynamically attractive real estate sectors right now with massive potential for growth and transformation.

It’s why I’m so excited about the industry and why we recently published our Abode Worldwide Multifamily Tech Index Report, which covered over 100 tech solutions powering the space. Feel free to download it.

My train is pulling into Paddington. I’m set to see if these independent hotels are waking up to their OTA dependence (addiction)…

If you are at VRMA International next week and would like to book a meeting with me, you can use this link to find a suitable time. The same goes for OpTech here. Hope to see you there!

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. If not, there’s an unsubscribe button at the bottom.

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