Traditional hoteliers need not fear the disruption that the rise of alternative accommodation providers pose, as long as they change with the times.
Jia En Teo, co-founder and chief operating officer of holiday rentals platform Roomarama, told last week’s Travel Distribution Summit that takes a lot of money to be a disrupter.
She said that the fast-growing alternative accommodation sector is disruptive because it was opening up new possibilities for consumers. But while it is relative easy and cheap to enter a market when you are a pure play online platform, asset-owners like hotel operators have a significant advantage.
“As a platform it’s much easier to disrupt because you can scale your inventory much faster for very little incremental cost.“When you don’t own the asset the barriers to entry are very low. The reason we are considered as disruptors is because we are challenging the status quo.
“It’s very expensive to do that. You have to fight the norm, have to change the way people think. That requires marketing dollars and money to fight regulatory issues.
“Being a disruptor means moving mountains really.
“Hotels have been much slower to react and they have reacted in a way where they are fighting vacation rentals but we are starting to see that change.
“Hotels that can embrace that change have a lot of value to add. Hotels have a chance to engage with customers in a way vacation rental owners cannot.
“In a hotel you are surrounded by staff all the time. Hotels need to use this to their advantage.
“They can also be more flexible in their offer in ways that vacation rentals can’t, for example by offering early check-in or leaving luggage for free.
“Focus on creating unique experiences because you have the economies of scale. Instead of fighting the change hotels should embrace the change.”
An example of how hotels are embracing the alternative accommodation sector is the recent purchase of One Fine Stay by Accor Group.
Carl Michel, chief executive of Veeve London-based upmarket apartment rentals site, said many hotel operators are having “execution problems” with many of their sub-brands.
“Customers are completely confused. There is a lot of blurring of boundaries,” he said.
Michel added that brands like Veeve and Airbnb all face time and cost of marketing issues, but that the important thing was to be nimble.
He said location was key in rentals businesses which are like operating hundreds of micro-hotels. “No PMS (Property Management System) can cope with that complexity.
“Every location is different and you can move capacity around cleverly to reflect the way demand shifts. There is this large pool of home owners looking to monetise their assets.
“Many homeowners want to show off their stuff, want to validate their style. They want total strangers to write glowing reviews about their decor.”
He said the world was moving on this direction and it was a case of “if you can’t beat them join them” for incumbents in the hospitality sector.
“Sharing homes has become acceptable and okay. Hotels may see operators like Veeve as brand extensions.
“Accor may cluster One Fine Stay homes around hotels so they can provide them with services. It’s the consumer who will decide.
“We are driven entirely by changing tastes and changing awareness.”
Michel said there is a finite supply of good quality homes to rent so first mover advantage in the sector is significant.
He said the $170 million Accor paid for One Fine Stay “seemed like a not unreasonable price” but added it was “a bet in the way it effects your hotel economics.”