07 Sep 2016

Why hotels will brand our homes to compete with Airbnb

As accommodation demand outstrips supply, agents should prepare for the next wave of hybrid hotels, argues Nakul Sharma, chief executive at property management company Hostmaker, as hotels start to ‘brand’ our homes to compete with Airbnb

Hotel home illustration.jpg

The idea that a technology platform could allow travellers to book other people’s homes as holiday destinations or business stop-offs once seemed far-fetched. Airbnb has of course put paid to that. And in April, AccorHotels announced the acquisition of Airbnb rival onefinestay for €148 million.


Onefinestay is not a one-off. In the next few years, more hoteliers will move into the lounges, dining rooms and bathrooms of ordinary homeowners as the fabric of the hospitality industry changes.


Why will your house become a hotel? Thanks to economics. Simply put, there are not enough hotel rooms to go round. In 2015 in Europe, demand for hotel rooms increased by 3.1% while supply grew only 0.8%, according to PwC. And this trend is set to continue, with large cities such as London, Moscow and Berlin worst affected.


This disconnect means hotel room rates are getting pushed up and up, pricing many would-be travellers out of bothering. Why not build more hotels? Because many hotel operators are not in a position to do so. During the hospitality boom of the 1950s and 1960s, hotels flourished as the operators owned the land they built on and the bricks they built with – they built a new hotel and profited.


In the past couple of decades, however, hoteliers have been decoupled from their ability to build anew, relying more on real estate developers to make the first move. During the financial crisis, those developers couldn’t raise the funds to build new hotels. Now, although travel demand has returned to pre-2008 levels, there are now insufficient rooms available.


Homes will expand the available inventory to meet the demand. Airbnb has proved a willingness to consider the idea, and now we will see this scaled up. That means offering homes alongside hotels as a normalised class of accommodation.


Authentic local culture

If you think adding this new class will be difficult, think again. Hotel groups now have many sub-brands, from luxury to basic. Hilton could easily find room for a “Homes by Hilton” brand alongside DoubleTree, Conrad, Canopy and others.


And in the globalised age, connected, well-travelled customers want to indulge in the unique local culture around them. That’s the trend being tapped by Intercontinental’s Indigo brand – and it’s one that can be realised by domestic stays.


Despite this growing distaste for big-brand hotel mega-complexes, customers still trust reputable names. That is why the big chains are in a better position than the likes of Airbnb or onefinestay to bring this plan to reality. They will, however, need to insert brand touches, just as they have always done. For instance, Westin’s “Heavenly” bed, introduced in the 1990s and still sold – both as a room feature and as a separate retail item – is a perfect example.


W’s Bliss spa chain is another way the operator has given itself a non-room-related brand to leverage. By inserting such features, operators will be able to introduce consistent and repeatable signals that tell customers they can rely on big-brand reputation, despite staying outside the familiar threshold of the hotel lobby.


So if your customers want to stay in the hotel of the future, tell them to make themselves feel at home.

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