Leveling the Playing Field to Attract the Airbnb Customer

By Dana Kravetz Firm Managing Partner, Michelman & Robinson, LLP | July 29, 2018

This year marks Airbnb's 10th anniversary. That's right, for a decade now, the hospitality industry maverick has been eating away at something that hoteliers hold dear – market share of lodging worldwide. And it has done so with abandon, finding a seat at the table amongst hotels and resorts in a space that was clearly ripe for disruption in the age of the sharing economy.

Since Airbnb's arrival on the scene, headlines have suggested real trouble for traditional hospitality players, big and small – couching the company as a significant threat and maybe even spelling doom for the hotel business. For those hoteliers who may have drank the "sky is falling" Kool-Aid, breathe easy.

Unlike the taxi industry, which has been devastated by the likes of Uber and Lyft, hotels and resorts continue to flourish – this despite Airbnb nipping at their heels. The proof: 2017 was yet another record-breaking year for the hotel industry here in the U.S., with the key performance metrics – occupancy, average daily rate (ADR), and revenue per available room (RevPAR) – higher than ever before measured by STR, the leading provider of information services to the hospitality segment.

The upshot: as Airbnb embarks on its second decade, the conversation amongst hoteliers should shift, and instead of overstated concern and worry, the emphasis must be on leveling the playing field by way of ongoing governmental regulation and proactive innovation by hotels and resorts to better attract the Airbnb customer.

A Booming Economy and Recession, All at the Same Time

You read that right; the economy is humming along, which is great news across sectors, including hospitality. With unemployment numbers at historic lows and given the uptick in household after-tax earnings, tourism and a resulting demand for hotel rooms are expected to rise well into next year.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.