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Make no mistake: boutique hotel CEOs don’t believe Airbnb will ever take away the lion’s share of their business, but they’re still watching inquisitively and playing catch-up.
The $20 billion home-share company dominated conversation at a Boutique Lifestyle and Lodging Association conference panel this week in New York City. The association is comprised of lifestyle and boutique hotels wanting to unify as a single voice, which emphatically said big box brands should be more concerned about Airbnb than the boutiques who boast about their experience-focused models.
Here are some thoughts from six boutique hotel CEOs and executives on how they’re embracing the sharing economy’s competition, their thoughts on its growth and how boutique hotels must improve their experiential promises.
Glenn Wasserman, CFO of Denihan Hospitality:
On proving boutique hotels’ worth to investors: “How do we tell the institutional world why it’s better to be us in certain markets? That’s become the question. When you’re targeting institutional investors many of them know the value that boutique hotels offer so it’s just continuous communication with them. I think many of the hotel investors domestically and certainly internationally are spending more time analyzing the performance of these hotels.”
“There are public companies who have dedicated investments towards boutique hotels and there are insurance companies and other private institutions that are focusing in on it. Certainly it’s a testament to the segment’s growth when you have the large brands all starting up boutique segments and how they’re focusing on those segments more than their big box branded hotels.”
Mark Woodworth, president of PKF Hospitality Research:
On segmenting hotel growth data: “I don’t really see a reason to distinguish them and over time the differences between us and the large brands will continue to dissipate. We’re spending a lot more time on Airbnb now and are our boutique hotels more vulnerable to encroachment from companies like Airbnb?”
Niki Leondakis, CEO of Commune Hotels + Resorts:
On vulnerability to Airbnb: “I think big box hotels have the most vulnerability. What Airbnb points to is two things: 1) technology as a platform because first and foremost it’s a technology company and 2) it’s all about experiences and original, right? People are staying in someone’s home and getting an original, authentic experience and getting a value and it speaks to the elusive millennial particularly.”
“That said, I think we better be eyes wide open about Airbnb and it’s reminiscent of 2001, 2002, 2003 when we were all watching the OTAs and going ‘holy crap these guys are going to chew up our business.’ And [Airbnb] is going to take a chunk and they are going to take a piece of the pie and be part of our lives. We have to recognize that and we have to be nimble and respond to that which I think our segment has a better ability to do.”
On using Airbnb for experience vs. price: “Travelers go for both. Otherwise they’d stay at a limited stay hotel. For the price value, they’re getting an experience and they could always go to a cheaper hotel. And as we’ve seen in past economic downturns, people ran to safety. Does Airbnb represent safety? It will be interesting to see what happens at the end of this cycle. I’m also wondering when will independent hotels start selling their room inventory on the Airbnb platform?”
On booking on Airbnb vs. boutique hotel: “We should have been where Uber and Airbnb are now with booking three years ago and [boutique hotels] are slow to the table.”
Jan Freitag, senior vice president of Smith Travel Research (STR):
On boutique hotels becoming more like Airbnb: “Hyatt just made an investment in Onefinestay so that really shook a lot of the big brands up and that’s really the first time one of the big six said ‘hey, maybe we do like it and maybe we have to figure this out.'”
“I think we will see more of that and I would be shocked if Airbnb doesn’t come up with a limited stay program and a program that targets specifically business travelers and procurement managers. They should say ‘hey, we’re secure, you can book us on Concur and use your Amex card and you business travelers stay with us.'”
“I’m also not sure we’ll see another player with Airbnb like you have Uber/Lyft. You Google something, you Uber something and you Airbnb something. That verb has been established and I think [Airbnb] has it and I think we will see a lot more of Airbnb grabbing this [boutique hotel segment]. We also analyzed hotel performance this year at South by Southwest in Austin and supposedly there was a huge influx of Airbnb guests but we didn’t see an impact on hotels and hotels did quite well.”
On tracking Airbnb accomodation spend: “That won’t happen with us tomorrow but it’s obviously on the agenda to track the total accommodation spend of everything which includes what we call RBO or ‘rental by owner.'”
Paul Ruffino, senior vice president of Nola Hospitality
On New York City hotel rates: “New York is like no where else. People call me for rooms in New York and they never ask me what the hotel looks like, where it is, if it’s a great place. All they care about is the price because it’s a commodity market mostly. I think people still use Airbnb because it’s kind of a commodity market by market so when they go to New York they go to Airbnb, right, maybe?”
Eric Danziger, president and CEO of Hampshire Hotels Management, LLC + Debut Hotel Group:
On knowing the guest: “Why is lifestyle only for the higher end? Why shouldn’t a traveler in any segment have a different and unique experience? I really don’t think a lifestyle customer is staying with us because they can get 500 more points on their United card. I think that first of all the original intent of loyalty programs was to create loyalty but most customers have every card in their wallet. They have their SPG, their Hilton and they’re going to get the points where they choose to stay.”
“Can you imagine showing up at a hotel and being asked ‘Welcome Ms. so and so have you been with us before?’ Why don’t you know that? Why don’t you thank me for staying with you before and ask if I want the same room as last time or a new one? Lifestyle is not just design, it’s execution.”