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Onefinestay, the London-based alternative accommodations provider that specializes in high-end homestays, is on a roll lately. Fresh off its $168 million acquisition by AccorHotels, the seven-year-old company has major plans for growth, recently opening in Rome and planning to expand further in Europe, the Americas, and Asia-Pacific .
Earlier this month, Skift caught up with onefinestay co-founder and CEO Greg Marsh in New York City, where Marsh was on his way to a speaking engagement at the Revenue Strategy Summit in Washington, D.C.
Marsh was open and candid about his thoughts on the state of hospitality and where it’s headed, sharing some strong opinions on the future of the full-service hotel, loyalty programs, personalizing the hotel experience, utilitarian hotel rooms that could double as CSI sets, and what it’s been like to work with AccorHotels.
Note: This interview has been edited for length.
Skift: So, what will you be speaking about at the conference?
Marsh: Actually, I’ll introduce the folks who don’t know a little bit to onefinestay, and then I wanted to say a couple of more provocative things about how I think that there’s a lot of real fundamental product change coming to the hotel sector. I think onefinestay is one piece of that, but it’s not the only piece of that.
My metaphor is: the tide is rising. The way I put it, it’s very simple. I kind of always expected this, even though we launched the business in 2010. I kind of expected this was going to happen, but you just don’t know how long it’s going to take. It already feels like it’s happening.
For instance, on my phone right now, I have all the apps that enable me basically to buy hotel services without being in a hotel. If I want to get takeout, I can order takeout with the touch of a button. If I want to get a car to transfer me across town, I can do that. The only way you could access these services, before, if you were in a foreign city, was by the hotel telephone, or the concierge, or the service bundle. I don’t value any of that anymore, because the services I can buy through my device exceed the quality of the services that almost any hotel can deliver me.
Basically, you’ve taken the package of full-service benefits that hotels used to bring together under one roof, and you’ve offered a better option for every single one of those packages. I’m used to it, and it’s in my pocket, and I’ve been trained in how to use it because I use it when I’m at home.
I think that fundamentally changes how we should think about full-service hotels. I find myself asking, “What is a full-service hotel?” Why would I arbitrarily commit to buying a set of perks and services from one particular vendor when I’m in town? I think for urban travel, in particular, for any of these, whether it’s Uber, or whether it’s a concierge platform, or whether it’s OpenTable, I think basically it’s out. The genie is out of the bottle, and hotels are going to have to completely rethink what their product offering is.
Skift: How do you think they should try to do that?
Marsh: I think the full-service hotel is dead. I think, in urban centers, it’s dead, and you’ve got to go one of two ways. You’ve got to get out of the middle. You cannot operate a mid-price, full-service hotel profitably in city centers over the next 10 years, I’m convinced. You’ve got to go one of two ways. You’ve got to kill that, and you’ve got to act fast to kill it. Then, you’ve either got to go and become a cost leader, so you’ve got be that Southwest [Airlines] of hotels. You’ve got to have the cheapest way of delivering a room and a bed, and that’s what I’ll pay for.
Skift: So, super select service?
Marsh: Ridiculously select. As in, you should charge me to clean my room. You should charge me for water. You should charge me for everything, because I will buy it somewhere else if I don’t want to buy it from you. That’s cost leadership.
Or, you’re going to go the complete opposite direction, and you’ve got to have something which is truly differentiated. Where in one-dimension, or the one feature center of the hotel, is taking something which I cannot buy somewhere else, and they’re packaging that. Maybe it’s access to an unbelievable spa, maybe it’s access to an incredible chef, or maybe it’s access to a truly incredible interior space or an architect-designed building. They’re saying, “You want access to this, which is a real feature, you’ve got to pay, because this is how we monetize the investment that we’ve made or the beautiful asset that we have.” That I think can succeed.
Skift: Do you think the hotel industry can or will do that?
Marsh: I don’t think the hotel industry has grabbed that yet. I think you look at things like the combination of Marriott and Starwood, it’s a reaction to the unbelievable, intense, and rising competitive pressure from the distributors, because these guys are frantically trying to play Booking.com at its own game. I don’t see how they can succeed. Booking.com is just a behemoth. They’re so much better at what they do than any of the hotel majors.
Skift: I hear so many hoteliers say they think personalization is the key to winning guests over and succeeding in this business. Is this really achievable?
Marsh: It comes back to where you’re trying to compete. Southwest is a great airline. It’s very profitable and it’s a successful business; JetBlue as well. There’s nothing personalized about my Southwest experience. It’s just that they’re delivering well at a low price what I want, which gets me from A to B. On the other hand, if you’re at the other end of the market, if you’re looking for differentiation, yeah, personalization is one way of providing that. You don’t have to personalize the experience. You just have to make sure it’s exceptional. You have to make sure it’s memorable. You have to make sure people want to talk about it.
I’m not personally of the view and I don’t particularly subscribe to the view that what customers want is personalized experiences. I think that is one way to make things special and unique, but there are other ways to make things special and unique. If you have a unique property, if you have a unique experience, if you have the best chef in the world, that’s special and unique. People will pay for that. They’ve always wanted to pay for that, because that’s something they can’t get everywhere.
I think personalization, in and of itself, is vastly overrated. What I do think is very important is convenience. The problem is those two concepts often get combined. Uber is not personalized. It’s a bit personalized, because it knows where my home is, but it’s just very, very convenient. You could say it’s a personalized service, but it’s not really, it’s just a very convenient service. That’s, I think, the secret to success.
Skift: Do you think hotel loyalty programs are working to get more guests to book direct?
Marsh: The loyalty program is basically just bribery. You’re participating in a loyalty scheme if you genuinely get value out of it, but it’s basically just bribery. I think the loyalty schemes in airlines operate in a very different way from loyalty schemes in hotels. I have a loyalty points program on British Airways because they hub out of Heathrow. I’m going to end up flying them anyway most of the time, and therefore there’s real value in having points with that program for me. When I’m traveling for leisure, as least I already have that. I’m going to have to hop out at Heathrow anyway. But I’m very skeptical that you get the same value out of any hotel loyalty points program. Even if you’re a road warrior, I just think you’re basically just being bribed to attend to a brand. You have no real brand. There’s no actual product difference.
Skift: What do you think the hotels could be doing better to improve loyalty?
Marsh: I don’t know. We’ve thought about it a lot, within onefinestay. We’re not launching a product yet, but what we have spent a lot of time thinking about it because we have a lot of homeowners within our community who travel regularly, and they have these beautiful places, and when they’re not using them, they’re staying somewhere. What are they doing? They’re probably paying to stay in a hotel, they’re paying to stay in a vacation rental, an apartment, or they’re staying at a second home.
The way I think about this, well, if onefinestay were present in both locations, why wouldn’t we give them points for the value of their home, and we’re clear on redeeming points when they stayed, which is a whole lot more tax efficient for them. It’s also just a way more compelling way for them to have benefits within the onefinestay community. We’ve done a lot of thinking about that, but we haven’t yet launched that scheme.
Skift: Will you still be implementing Accor’s loyalty program into yours, or working more strategically with Accor to rely on their skills and distribution channels?
Marsh: We will be working very closely with them over the next several months to figure out what the right channels and distribution types are. We haven’t committed to a specific launch schedule for any of those programs yet, but we have begun to introduce onefinestay to some of Accor’s corporate customers and premium customers and some of the larger businesses who work with them. The reception’s been very positive, so we think that’s a great conversation to happen.
Skift: Do you think that those travelers are open to Onefinestay because you’re more upscale and luxury than other short-term rentals?
Marsh: That’s right. There’s a couple of things we keep hearing. The first is, as you say, that it is a home space. The second is it’s a curated property. I think if you’re traveling for business … for example, I was just complaining over coffee this morning with Meredith [Bell, onefinestay’s head of public relations and communications] that I’m staying in this unbelievably miserable hotel in Midtown. I mean, it’s a truly grim hotel. I don’t know how on Earth we ended up booking it.
Skift: There are a lot of those in the city.
Marsh: I said it’s like a “CSI” [Crime Scene Investigation] set. This place is just awful. It’s just, it’s really bad, but you know what, the shower works, the Wi-Fi works. It’s OK.
Skift: It’s very utilitarian, right?
Marsh: It does not raise my spirit, you know? It does not make my soul soar. But it’s fine. But, what you take for granted, even in a mediocre hotel, you take for granted that it’s basically that the quality is assured, someone’s cleaning up the room, the sheets are going to be fresh, the shower’s going to be good. Actually, that’s what matters. If you’re at that mid-tip point, that’s when it’s about the adequacy. I think that if you’re buying accommodation for business travel, you’ve got to have that.
You look at vacation rentals, and pretty much no vendor in the market, apart from us, offers that, that absolute guarantee. We do it at various price points, because we do it at some nice places, but it’s an absolute, cast-iron guarantee it’s going to be great. You’re going to have the great Wi-Fi, it’s going to be properly cleaned, there’s going to be nice sheets on the beds, there’s going to be good towels. That promise about the consistency and the assurance, the guarantee of quality. If you’re there for business, if you’re coming with your family, what we call a high-stakes trip, or high-stakes travel, that’s really important.
If it’s your own time, and you’re kind of buying around or you’re backpacking, it doesn’t matter so much. You can roll the dice. If you have a not-so-good experience, never mind, you can go somewhere else the next night. But if you’re in town for work and you’ve got to be up at 6am, and you’ve got to have a meeting at 7, you’ve just got to be on, and you’ve got to know things are right. I think that’s a lot of why our product resonates very strongly.
The other has to do with the booking process, that we can confirm instantly because all of our relationships are exclusive relationships. You don’t need to go back and forward, where there’s a long conversation. It’s available, you click ‘book,’ you put your card down, and it’s done.
Skift: So you don’t have that same problem other short-term rental platforms like Airbnb are having in terms of issues with discrimination on the part of hosts and guests.
Marsh: Oh, and there’s that.
Skift: When the AccorHotels deal was announced, did you feel like some people were a bit worried that that would fundamentally change how onefinestay operates or would change the character of the company? Or the way that you want to expand or grow or deliver your services, because now you’re part of this much larger company?
Marsh: In one respect, I hope it does change the profile of the company because we have a lot of money in the bank, and we can now go scale up faster. That’s exciting. I think what you’re really asking is, “You run a big company, you’re a small entrepreneur of that company. Does the big company behavior crush the life out of a small entrepreneurial business?”
Two things to say. The first is, Accor made a very bold decision as part of this whole discussion. One of the reasons why it was an attractive deal, from my perspective is because we didn’t go out in January or February and try and do a deal like this. We were trying to do a strategic distribution deal, and then quite quickly, it turned out there was a very different conversation they wanted to have. It moved to a different place as a conversation. The first thing I’d say is that they made a very bold decision, which is to say, “You’re in charge.” Not just “you guys” in general, but you, specifically, the founders run this business. I’m still the chairman of the board. Not only am I the Chairman of the onefinestay board, but I have the casting vote on that board. Ultimately, within any reasonable extent, we are still masters of our own destiny. You can think about onefinestay today as an independent company that just happens to have a large shareholder, a majority shareholder, who is a hotel group.
The second thing to say is that rather than the thesis being “We’re going to find this business, and then we’re going to integrate all the services,” they’re the opposite thesis, which is, “We’re going to buy this business, we’re going to leave them alone, but what we’re going to do is offer these guys a menu from which they can select the things that help them grow faster.” It’s kind of the other way around. It’s a very bold, very entrepreneurial way of thinking about a deal like this. There’s a couple other companies who I’ve looked at in other industries who have a lot of success pursuing that approach. So far, touch wood, it’s been a good story.
I think it comes down to the personalities at the helm within Accor. Sebastien Bazin, the CEO there, is a very forward-thinking, progressive-thinking guy. He’s not the sort of old-school hotel guy. He’s an investor and private equity guy, of that background. He’s willing to take some risks. He’s willing to shake it up.
He wants his industry to change. He wants his company to change because he sees, I think, as I was saying at the start of the conversation, he sees what I certainly see, which is that the place that the major established hotel chains are today is not a sustainable place. Change doesn’t happen overnight. It’s not like the first digital camera appeared and Kodak went out of business overnight, but it happened. By the time everyone really saw the writing on the wall, it was too late.
You have to act early, and you have to take some risks. You have to be bold. You have to be willing to let entrepreneurs have control. You have to be willing to let them take some risks and do some bold things.
Skift: What should hoteliers really be thinking about more of in terms of staying ahead of the curve instead of falling behind it?
Marsh: There’s always a balance, whether you fight innovation or whether you just assume it already happened. I think about what the world is going to look like after this. I used the expression, right at the start, “the genie’s out of the bottle.” Maybe it’s because, in my former life, I was a venture capitalist. I used to invest in other people’s startups.
The way I always used to think about it was once the technology has been invented, the moment that’s happened, the moment you know that it works, the question is not whether, it’s when and who. It’s only a matter of time. The moment someone invented, to pick an example, voice over IP, the fact that Skype won that game versus Vonage or some other business, whatever, that was when bets were off. You couldn’t really call that for a while, and it turned out that Skype’s model was the better model, and they executed well, and that became the de facto solution for free telephony. The right answer to Skype being invented, if you’re an existing telephony company, is get the heck out of the way. You cannot compete with free. You cannot compete with someone who has a structural cost advantage.
I think the same thing about the hospitality business. Certain things have been invented. I mentioned having hotel services in my pocket. I have Uber in my pocket. I don’t need a concierge to order me a car. I just don’t need it anymore. It’s not that some older customers aren’t used to it, a few people are, but that will die out pretty quickly. People get really used to using the cab in their pocket. That becomes the way they expect to operate. You’ve got to react, you’ve got to be ahead of that.
I think there’s something about just accepting the innovation, embracing it, and then looking at what the world looks like after the innovation and being willing to, as they say in Hollywood, kill your babies. Throw the things away that no longer make sense and be the first to jump on the new boat. Recognize sometimes you’ll get it wrong, and that’s going to hurt. The market’s going to punish you because they’re going to think you took some risks, but the market’s going to punish you a whole lot more if you didn’t take those risks. In 10 years, you’ll be out of business.