Remember when Airbnb was poster boy for the disruption of traditional industries? The latest corporate personification of the American dream, formed literally as AirBed & Breakfast when its co-founders were looking to pay the rent during a tech conference, was going to shake up the complacent hotels sector.
Now listen to its global head of hospitality, Chip Conley explain how the upstart lodgings company, the world’s largest hotel operator by the number of rooms, is viewing its traditional tower block rivals.
“We want to work with hotels,” he says. “I’m one of those people who says that hotels and homes are not in the same game. I think there’s room in the accommodation industry for both.”
Work with hotels? Isn’t Airbnb supposed to be competing against them? Instead, Conley has been speaking to hoteliers at a London hotels investment conference. He‘s even suggesting that Airbnb could one day partner with some of them.
Going soft?
So is Airbnb going soft at a time that its sharing economy peer, taxis upstart Uber seems to be becoming even more antagonistic to traditional capitalism and regulators?
Conley, who joined Airbnb two and a half years ago and advises the group on strategy, though he is not on the main board, is certainly a hotelier, rather than a dotcom whizzkid.
The 54-year-old has spent his career in the hotels industry, setting up boutique hotels group Joie de Vivre Hospitality in San Francisco 28 years ago at the age of 26.
Now Joie de Vivre lists 26 US boutique hotels on its website and Conley sold the company five years ago to John Pritzker’s private equity firm Geolo Capital, which merged it with Thompson Hotels to create Commune Hotels & Resorts.
Conley, who has made other investments in hotels, was recognised for his achievements in 2012 by being awarded the International Society of Hospitality Consultants’ Pioneer Award, one of the highest accolades in the US hotels industry.
“What’s unusual about me relative to the rest of the company is that I’m the only hotelier in the company,” he says.
“So when it comes to the question of what’s our relationship like with the hotel industry and how Airbnb and hotels can complement each other, I think that Airbnb and hotels can have a symbiotic relationship potentially.
“I don’t think that Airbnb, either before I arrived or since I have been there, has ever had a perspective of wanting to be adversarial to the hotel industry.
“We really have not said that hotels are a bad lodging choice. We’ve tried to be as collaborative as possible.
“I do think over time we’ve got more collaborative but we had senior executives of the six largest hotel companies in the world, including InterContinental Hotels, at the London conference.
“Four of the six have sent representatives to our headquarter, sometimes for two days where their chief technology officers and senior executives have sat down with our executives and we have literally talked about what we can learn from each other, how we can market destinations together.
“While we’re a hospitality company, the heart of what we do is very technology-focused. So these meetings are about how we can help the rest of the hotel industry understand that and how can we, as a hospitality company learn from some of the great hotel companies in the world. They’re about how we can learn from each other. There’s a collaborative spirit.”
Unintentional disruptors
Indeed, Conley points to Hyatt investment in Onefinestay, a homesharing company based in London and New York, and other recent convergence between traditional hotel companies and some of the new sharing economy disrupters.
“What you see all the time {in the hotels industry} is someone is called a disruptor,” he says, “but you don’t call yourself a disrupter. I didn’t get into the business to be a disruptor. It’s just what’s happened.
“What happens over time is that the global hotel chains learn something from a disrupter and then sometimes try to create their own version of it or build a relationship with the leader in the field.
“You saw it with timesharing in Britain in the 1960s and the US in the 1970s, and you saw it with boutique hotels, where the largest boutique hotels company in the world, Kimpton Hotels and Restaurants Group, is now owned by InterContinenal and Ian Schrager, the guy who virtually invented the term boutique hotels, now works with Marriott, creating Edition hotels.
“So I think that what happens is that innovation happens outside traditional sectors. Established companies see how to be better and either figure it out themselves or form a strategic relationship with an innovator.
“We don’t have any strategic relationships to announce yet but I can tell you quite candidly that the conversations that we have with hotel groups are perfectly civil and that we can learn from each other.
“Over time I think we can see how we could help improve the overall marketplace for travel and work together in some ways.”
A symbiotic relationship?
According to Airbnb’s research, between 30-40 per cent of the company’s travellers would not have made their trip or stayed in a hotel if Airbnb did not exist.
Furthermore, in some major cities, almost 20 per cent of Airbnb’s business is from people staying for 30 days or longer, so are effectively in the short-term apartment-rental market, rather than looking for a hotel.
“When you start to look at that, you realise that it’s frankly less than half the overall business that’s likely to be competitive with hotels,“ says Conley.
“Staying with a host is a very different experience from staying in a traditional hotel. It’s not for everyone but for some people it’s their primary choice. It’s what they prefer over a hotel.”
As Airbnb prepares to float on the stock market, these sort of figures will be pored over by analysts and the issue of which industry category Airbnb fits into may become clearer.
But if Airbnb can cozy up to hotels, will Uber end up as best buddies with London’s black cabs or the incumbent taxi operators it has upset elsewhere?
It’s certainly possible. A lesson from the last dotcom boom is that so-called disintermediation is not as comprehensive as once feared.
Anyone with an internet connection can now book their holidays online but we still have high street travel agents. Online estate agencies proliferate but the vast majority of house vendors still contact an estate agent to sell their house, rather than going online and marketing directly to peers. And the rise of car-sharing services has not made much of a dent in new car sales.
One could call it “adapt or die” or simply credit capitalism’s unerring ability to seek out better prices, lower costs and higher returns.
Is that going soft or becoming hardened? Do let me know your views.
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