Hoteliers, you have more to offer than sharing economy
Hoteliers, you have more to offer than sharing economy
25 MARCH 2016 7:07 AM

Taking my first Uber ride last week, and thus dipping my big toe into the sharing-economy space, got me to thinking why I’d rather book a hotel room that costs five times more than an Airbnb unit.

I took my first solo Uber ride last week.

I’m a bit of an anomaly when it comes to how the hotel industry describes millennials. They say we love the sharing economy because of the price point or the unique experiences it offers. But I’m a baby boomer at heart, I suppose, and the reason I’ve been hesitant to try it out is because it doesn’t feel safe to me.

But there I was, stuck at work with bronchitis and no way to get home. My husband had dropped me off at the office because I was supposed to catch a ride to the airport before the Hunter Hotel Investment Conference. I wasn’t doing well, but I was trying to tough it out and make it to my flight. The only place I made it to was an urgent care center. Then, I returned to the office where I was stranded.

A co-worker told me to “Uber it.” Two hours later, (partly due to the fact that my co-workers looked as if they wanted to wrap themselves in hazmat suits) I downloaded the app to my phone, entered my credit card information and requested a car. A car was there within five minutes, and I was off on my 35-minute commute home in no time. When I saw the email with the bill later that day, it set me back a whole $9.

The price was nice, but even better, my Uber driver, Daniel, was a true delight to talk with—I’ve never had such a pleasant ride with a stranger. (Someday I’ll tell you about the time I got into an unmarked van in Chinatown. It wasn’t as pleasant as Uber.) I’d use Uber again.

But Airbnb? I’m not so sure. I don’t trust it. I don’t trust staying in a place where some stranger also has a key to my room.

But then again, I didn’t trust Uber—also known as riding in cars with strangers—until last week. Though, when you really think about it, every taxi driver is a stranger. And as my co-worker mentioned to me, a lot more strangers have access to my hotel key (housekeepers, front-desk staff).

So I got to thinking: Why do I trust taxi drivers and not Uber drivers? Why do I trust hotels and not Airbnb hosts?

The answer: brands. I trust brands. (See how baby boomer I am?)

Brands are tried-and-true. You know exactly what you’re getting. And there are security measures in place. (Well, for the most part.) Even after the Erin Andrews fiasco, I’d still book at a hotel over Airbnb (particularly after reading this story). The perception of safety goes hand in hand with a brand.

Then, I came across PwC’s report, “What’s driving customer loyalty for today’s hotel brands?” This excerpt caught my eye toward the end of the report:

“For both business and leisure travelers, the option of staying at a sharing-economy property becomes more feasible when it is combined with a recognizable hotel brand.”

The report poses the following questions about the feasibility of hotel-branded sharing-economy accommodations:

  • What guarantees would customers have for service, quality and cleanliness?
  • How would properties be regulated and managed?
  • What standards would be used to measure compliance?
  • How would companies keep track of all the properties?
  • What requirements/criteria would a sharing-economy property need to fulfill to gain access to a hotel brand name?
  • Would a new brand name be created to communicate joint features/benefits?
  • Would there still be personal interaction between property owner and renter for access to the property?
  • Would lack of accountability and compliance damage the hotel brand’s value?

I’ll add one more to go along with that last question: What would hoteliers get out of it? You might win over some people, but you would lose pricing power.

Consider this:

According to the report, some travelers believe hotel-branded sharing-economy accommodations would simply be an overextension of the hotel brand. In my opinion, that would cause more people like myself to actually consider alternative accommodations (but at that point they wouldn’t be so alternative).

As it stands now, I’m hesitant to book the $55-per-night apartment in Nashville for my friend’s birthday celebration (because WHY is it so cheap?), but she doesn’t want to book a hotel room at five times the price no matter how many times I tell her that we could wake up to a serial killer.

But put a hotel brand behind that $55-per-night apartment, and I’d book for sure—even if nothing changed about the unit, the perception is there that it’s now safe. In fact, I’d probably never book a hotel room ever again.

So now I’ve booked the branded accommodation at $55 per night versus the hotel room from the same brand at $275. It’s good for me, but not for you.

It seems hoteliers are now looking to the sharing economy as a possible place to join forces. Choice Hotels International CEO Steve Joyce talked about plans to possibly enter the sharing-economy space, growing from its vacation-rental platform. And then, this week Marriott International CEO Arne Sorenson said during a conference call about the new proposed Starwood Hotels & Resorts Worldwide deal that the Element brand could be repositioned to operate as a competitor for sharing-economy platforms like Airbnb and HomeAway. (HNN’s Jeff Higley lists out more examples.)

I applaud efforts to respond to sharing-economy competition. But remember, the sharing economy is a price play. Are hoteliers willing to play in that space? And if so, how will it affect your pricing power? Do you diminish the value of your brand by joining forces?

After all, people like me are booking your rooms at five times the price for a reason. And you can’t sell that fact short.

Email Alicia Hoisington or find her on Twitter.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

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