Airb&b; War Against Hotel Industry?

 

You might still be treated to a vague blankness in response to asking the average baby boomer if they checked Airbnb before booking their week in the sun, but the tech giant that former school buddies Brian Chesky and Joe Gebbia founded with a rentable air-bed is continuing its brisk march to the top of the travel industry; valued at over $30 billion, it was recently revealed that the brand’s total number of listings is higher than the top five major hotel brands.

 

By Elmira Soltani

 

That is more rooms than Marriott, Hilton, InterContinental, Wyndham and AccorHotels. Combined. Allowing hosts to cut out the reservation request, Airbnb’s ‘Instant Book’ hotel-style system now sees more than 1.9 million listings bookable with just a few clicks; 5 August 2017 saw more than 2.5 million ‘guests’ tucked up in strangers’ sheets. It’s easy to see why the hotel industry is getting dirty in its feud with the largely unregulated platform. Having made an unprecedented impact on travel habits, this is a fight brimming on all-out war.

“Airbnb is operating a lodging industry, but it is not playing by the same rules”, barked Troy Flanagan, the American Hotel and Lodging Association’s vice president for state and local government affairs, recently. “We are trying to showcase and bust the myth that Airbnb supports mom and pop and helps them make extra money. Home-sharing is not what this is about.” And just last month, Bloomberg reported that Share Better, a collaboration between hotel union and industry leaders, were using sting operations to expose what they deem as illegal Airbnb activity, leading the brand to bite back …

“The hotel industry and its lobbyists using Share Better to spy on New Yorkers and delivering that information to city agents is a disturbing violation of basic privacy”, argued Airbnb’s head of New York public policy, Josh Meltzer. “The city should reject these second-rate KGB spy tactics and work with Airbnb to sensibly regulate home-sharing.” But it’s not just New York, nor the United States, where red tape is piling up. This summer, Barcelona doubled its team of inspectors who pound the streets in search of illegal rentals from 20 to 40; a ruling prohibiting the use of a Dublin city apartment as an Airbnb letting without planning permission was upheld by quasi-judicial body An Bord Pleanála; and a new regulation just passed in Paris will make it harder for those renting out property to exceed the 120-days-a-year legal rental limit for a main residence, making it easier for authorities to track which properties are rented out, and allowing for them to collect local taxes — this on the back of 50 French cities beginning to collect tourist tax from Airbnb guests, following another legislation passed in 2015.

Is the hotel industry an ageing heavyweight guilty of underestimating its youthful opponent in the build up to this big fight, though?

“We’ve not seen [Airbnb] really making headway in the corporate environment, which is really our bread-and-butter business”, stated Marriott International’s senior vice president of investor relations, Laura Paugh, in December last year. Just nine months have passed, and it’s been reported that the San Francisco-based brand have increased the number of companies travelling with them from 250 to more than 250,000 in just two years. With $296 billion spent on corporate travel in the U.S. alone, this is headway sure to trouble Paugh, her employers, and her industry at large.

Airbnb Business“For some reason the hotel industry in general is in denial about Airbnb”, Ian Schrager, the hotelier behind a major movement of his own, told design publication Dezeen in June. “I think the only way is to come back with a stronger idea.” Headline-grabbing bravado on the launch of his latest hotel project? Maybe. But the Studio 54 man is no mug. Airbnb have placed their competition in a dangerous position — go all guns a-blazin’ and get laughed off as an outmoded fossil; target the millennial market with that ‘hip new brand’ (you know who you are) and come off as the moneyed old lech chasing girls his daughter’s age — and so any fight need be cleverly fought.

Tactics against Airb&b

Schrager’s tactic? To give travellers what Airbnb cannot: “There’s been an arms race in the hotel world with the offering of amenities and services, and we kind of took a step back and said, ‘What’s really important to people?’ So we cut out things that we thought were irrelevant, that didn’t make sense anymore.” This includes a front desk, bellboys (“because everybody has suitcases on wheels”), and room service; “we cut out all those costs, and pass them onto the customer. But we’re not dumbing down or cutting down the level of sophistication. We’re just cutting out the things that people don’t care about. Gold buttons, gold epaulettes, fine bone china.”

It’s a simple philosophy: identify what Airbnb lacks and that hasn’t put off its 150 million users, cut it out; identify what hotels like his offer that Airbnb can’t, keep it.

For the the debut outing of the hotel brand Ian Schrager sees as his Airbnb-slayer, Public, the man who gave us the boutique hotel brought in esteemed architects Herzog & de Meuron — Tate Modern; Beijing National Stadium (the Bird’s Nest); Miami’s 1111 Lincoln Road car park; the Allianz Arena, Munich — and three Michelin-starred chef Jean-Georges Vongerichten to head up the hotel’s restaurant. This is no hip-hostel bite-back; instead it’s what Schrager calls ‘accessible luxury’. Another tagline the hotelier is keen on is ‘tough luxe’ — concrete and plywood lending an urban appeal to Public’s aesthetic, whilst importantly keeping build costs way below those of traditional ‘luxury’.

“We’re trying to approach luxury as a process almost of subtraction, rather than addition”, Schrager continues. It’s an interesting proposition — if a beautiful hotel that delivers the luxuries you crave and denounces those you couldn’t care less about cost the same as a night in an Airbnb home, would you still choose the Airbnb? “[They] are already indicating their ambitions to open more hotels, and offer more and more services. The thing to do is those things that Airbnb won’t be able to do, which is communal and social aspects of staying in a hotel, and all the other exciting entertainment that we can offer that they can’t. They don’t offer social experiences.” It’s understandable that Ian Schrager is excited about Public’s communal spaces — its hip bars and restaurants; its events and innovative retail concept; its cultural programming and ‘Public Arts’ (what the website calls ‘the first new idea since Studio 54 forty years ago, a nighttime renaissance, and a cultural, social, event and party machine … a cutting-edge, progressive and avant-garde multi-media performance space like no other’); but is there a sense of delusion in his comment that “[Airbnb] don’t offer social experiences”?

“While these three people were living with us”, explains Brian Chesky of Airbnb’s very first guests, “we had realised that the normal arc of a friendship, that takes years to build, took a few days when people were living with you in your home.”

The hotel industry may be up in arms because of their exponential growth, the Instant Book service, and the fact that they are snowballing through the entire travel sector, but to understand your enemy you need to understand how they became what they are, their roots and how they inspired the loyal army that stands defiant behind them. It is worth noting that in 2005, Airbnb’s Global Head of Community, Douglas Atkin, wrote a breakthrough study of contemporary business, The Culting of Brands: Turn Your Customers into True Believers.

Drawing parallels between brands like Apple and Nike, and organisations like the Hell’s Angels and the Unification Church, Atkin’s book offers key insight into a phenomenon that has transformed the marketing industry; Chesky’s evangelical tale of accelerated friendship is a fitting example of the sort of techniques that have created devoted followers for companies like theirs. Airbnb’s recent move into the experiences sector, with their Trips platform, is the brand taking the hotel industry blow for blow. What your Airbnb rental lacks in communal space can be made up for by real-world community. What could be a greater social experience than your host taking you for coffee at their favourite local joint, or spending an afternoon in the company of a local artist? If Public is to be the Airbnb-killer the iconic hotelier expects it to be, it’s vital that he doesn’t fall at a familiar hurdle: to have underestimated his enemy. Ian Schrager’s is not a one-man-mission to transition Airbnb’s customers back into the hotel rooms they’d abandoned, though. Chip Conley is the founder of Joie de Vivre Hospitality and also former head of global hospitality and strategy for Airbnb; the three young founders bringing in the experienced head at the peak of their growth. Serving as the ‘lead ownership partner’ of his hotel brand’s revived Laurel Inn in San Francisco, Conley is looking to readdress the balance by presenting a solution for Airbnb travellers who crave the things only hotels can offer. A handsome 1950s hotel in the city’s Presidio Heights neighbourhood, the Laurel has had its midcentury charm updated but far from white-washed, the design team respecting a long-standing heritage by simply adding a contemporary upgrade to its retro aesthetic. Conley’s vision for the hotel, though, is resolutely 21st century; digital nomads and Airbnb users are targeted via a residential feel and a non-invasive service mantra. Larger rooms, many with kitchenettes, super-fast WiFi, housekeeping and concierge services… An amalgam of what the entrepreneur sees as the ‘best of both worlds’. “Many millennials are less focused on being upwardly-mobile than being outwardly mobile”, Conley explains. “Which means, quite often, their lodging while travelling may be their home-instead-of-home (as opposed to home-away-from-home). The Laurel Inn is the perfect solution for global nomads who want to feel at home while working on the road.” For all the pursuit of magic millennial formula through Hilton’s Canopy and Tru; Marriott’s Moxy; Hyatt’s Centric; Radisson’s Red; or Best Western’s Vib, could it be as simple as somewhere to make a sandwich and not being woken by the familiar cry of “housekeeeeeeping”? A recent survey of people who have used Airbnb or its competitors suggested that unique accommodations (58%) and kitchen availability (53%) were among top reasons for using home-sharing platforms. Minibars are universally held in contempt, and not far behind are paid (and bad) WiFi; cookie-cutter design; intrusive service; and out-of-touch (practically useless) concierge services. There’s a feeling that the hotel industry’s arrogance in resistance to change is a slow suicide — how hard it can it be to change the things that everyone hates? Less simply, but more pertinent is Airbnb’s original USP: to live like a local. According to that same survey, 75% of Americans who have never tried home-sharing but would consider it, said they would do so for the opportunity of experiencing local culture alone.

Zoku Amsterdam

As is the case with Public and The Laurel Inn, countless copywriters are busy penning press releases packed tight with almost identical words and phrases: ‘likeminded locals/travellers’; ‘work and play’; ‘evolutions and revolutions’; ‘authentic’ this and ‘authentic’ that; ‘cultural programme’; ‘co-work and co-live’; ‘neighbourhood’ blah, ‘local’ blah… blah blah. Press releases are press releases, though; what you live and die by is the experience that cannot be scribed. The hosts who’ll take you to their favourite underground art gallery might be in decline and the insta-book hotel replacements on the rise, but Airbnb’s is a cult already built and savvy Mr Schrager’s use of language should be noted; ‘accessible luxury’ is not a term used lightly – scan any of the stories written about his new venture if you don’t believe me.