Expert’s Voice: What hotel chains are learning from industry disruptors – and you can too
When it comes to industry disruptors, the solution is to reimagine your business and keep going, says Dean Minnet, Hotel Consultant at Minett Consulting
Part of the problem with disrupting the hospitality industry (or any industry, for that matter) is that if you are successful, others will emulate. The changes sparked by Airbnb and online travel agent (OTAs) like Expedia cannot entirely be patented or trademarked – if they could, an army of lawyers would slap down any encroachment on its business model. As it stands, all they’ve done (aside from creating billion dollar brands) is open the door. They’ve shown the world that hotels and hospitality can be reimagined.
It should come as no surprise that some of the biggest and most innovative hotel groups are doing a whole lot of emulating or re-imagining themselves. Call it what you will: The swelling coffers of online travel agents, the dynamic disruption created by Airbnb, and the massive growth of the global travel industry have caused some major pieces on the chessboard to move.
Marriott’s AUD 17.9b acquisition of Starwood Hotels & Resorts is the biggest move yet. The company’s CEO, Arne Sorenson, describes a difficult deal with Expedia as the inspiration for the merger. He realised that in order to avoid being shoehorned by OTAs, his company would need to work on a “far larger scale.” Indeed, the scale of Marriot’s post-merger (one in 14 hotel rooms worldwide) and expanding (one in 4 hotel rooms under construction) portfolio is staggering; it suggests a complete unwillingness to let Airbnb and OTAs steer the industry toward its own ends.
Equally interesting is how and where the company intends to focus its growth. Two of the Starwood brands now controlled by Marriott, Element and Aloft, are described as “lifestyle brands” with highly individualised and socially-focused designs – such as four private rooms centred around a communal lounge. Some of the properties will also feature a central bar designed to draw locals, and other social areas to create the feeling of a local experience. Marriott is expected to double the number of hotels under those two brands by around 2020. The bottom line is that a search on the company’s web site could soon resemble a search on Expedia or Airbnb – except, of course, for the fact that Marriott owns the booking process.
Accor Group is also making moves. First, there was the company’s acquisition of OneFineStay for AUD 233m in 2016. This is the high-end competitor to Airbnb, offering private luxury homes that are professionally curated and serviced by the company. So far, OneFineStay operates fewer than 3,000 properties worldwide, and its listings do not appear on OTAs or other Accor booking engines. The acquisition does, however, illustrate the movement of hotel giants into Airbnb/OTA territory.
There was also the launch of Accor’s new Jo&Joe brand, which blends hotel and hostel features into a millennial-friendly accommodation format. Here are a few of the principles and concepts espoused by the brand:
- City centre locations with strong public transport links
- Spacious and vibrant communal areas designed to draw locals and travellers
- Choice of contemporary hostel-style sleeping areas or private rooms
- Shared kitchens and living spaces
- Pop-up formats (yurt, hammock, caravan, etc.) at some locations
- Co-designed by Penson, the UK firm responsible for innovative corporate campuses, and they;
- Expected to have 50 properties open for business by 2020.
The most suitable tactics
Many other brands are investing in these concepts – Canopy by Hilton and Red Planet, to name a pair. These ideas aren’t new; in fact, one might say they’ve acquired the unflattering air of predictability. But if brands like Jo&Joe prove successful, they will demonstrate how individual hotel groups can diversify their portfolios and develop stronger armour against OTAs, Airbnb, and even competing hotel groups.
How will the pieces on the board be arranged by 2020, 2025, or 2030? Will OTAs falter as hospitality brands diversify their portfolios and evolve their own booking ecosystems? Will Airbnb continue its push into flight and restaurant bookings to compensate for a static or declining market share in accommodations? Will OTAs respond by slimming down and lowering fees?
Massive wagers have already been made. Further disruptions are coming. All we know for certain is that as long as CEOs (and their markets) have imagination, the game is far from over.
This article originally appeared on www.minettconsulting.com.au
ABOUT THE AUTHOR
Hotel Consultant, Minett Consulting
With over 35 years experience in senior management and consultancy in hospitality and tourism, David specializes in developing general operations of hotels and serviced apartments and counts with a wide network of contacts that allows him to identify and connect people for their respective benefit.
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