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Learning From Your Sharing Economy Enemy

Hotels Have Plenty Of Benefits That Should Be Marketed Aggressively To Guests

Monday, June 04, 2018
Mr. Larry Mogelonsky - P. Eng.
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Despite whatever short-term rental laws are put in place in your municipality, customers’ eyes have already been opened and the sharing economy is here to stay. Whether enforcement is able to level the playing field or not, rather than wait for a governmental deus ex machina, it would be far wiser to take action to make your hotel more appealing to customers.

The sharing economy offers many stark lessons for the traditional hospitality industry, which to be frank has invited this aberrant competition by not innovating the guest experience fast enough to meet the ever-evolving traveler mindset. Indeed, the sharing economy’s most successful accommodations provider—Airbnb—boasts numerous key advantages that its hosts offer over traditional lodgings, many of which are inimitable.

Instead of groveling, though, let’s breakdown some of these benefits to see where hotels can improve, because ultimately there are enough guests to go around and it’s more a matter of learning from your competition than waiting for it to dissolve itself.

1. More character than a hotel.
While it may be true that Airbnb listings each bring their own unique charm accrued through years or decades of hosts living in their units and populating them with all manner of eclectic furnishings and artwork, it is nevertheless quite calming entering a guestroom where you are already guaranteed that everything will be in its right place. This is especially true for bathroom amenities and towel services, two features that I rarely see hotels emphasizing.

That said, hotels can and should improve the individuality of their guestrooms so that we can better emulate the success that alternate lodging providers have derived from this primary feature. While every initiative you take to make your rooms distinctive will require some form of CapEx, something nevertheless has to be done in this regard, lest you get labeled as ‘just another boring hotel.’

2. Listings are embedded in cool neighborhoods.
No hotel is built on a whim. Unlike an Airbnb rental, every new construction must first be justified through some form of market assessment which all inevitably steer properties towards high traffic areas and not necessarily the ‘cool’ parts of town. But dare I suggest that these high traffic areas became just that because they were already cool in some way, shape or form? In more ways than one, this point is a marketing ploy by alternate lodging provider advocates to cover up the fact that many listings are not all that convenient for newcomers to a given municipality.

Hence, one key advantage of hotels that can be leveraged is the fact that many of them are in fact very centrally located in the ‘coolest’ parts of town. The apt word to embrace here is ‘hyperlocal’ whereby you must all become experts in everything happening within a three-block radius around your property, and then advertise accordingly along with any local partnerships you can stir up.

3. Access to kitchens and laundry.
Alas, traditional guestrooms are not built like apartments. Instead of dropping millions to transform your property into a long-term residence with short-term rentals, hotels can compete by better promoting their in-house laundry services as well as their culinary excellence. After all, what’s better than doing laundry? Having it done for you! What’s better than making your own meals? Having a professional chef cook for you while you enjoy the ambiance of a great restaurant with even better service. Of course, there is a stark difference in terms of cost to the consumer, so it’s up to you to find a pricing strategy that convinces guests to prefer your amenities over doing it all themselves.

4. The modern traveler wants a new kind of experience.
They sure do, and the sharing economy is giving them just that! It’s up to every hotelier—and not just the general managers—to come up with interesting activities, events, partnerships and all other manner of experiences to get our guests excited about staying with us. Again, the onus is on us to adapt to the times. Unlike individual hosts, though, hotels have a full team of experts capable of brainstorming great concepts as well as executing them to perfection. As a senior executive, it’s your job to vet ideas and delegate so your team is accountable and so projects actually get done.

5. Airbnb supports the everyday homeowner who is only trying to earn a few extra bucks.
There are indeed a fair number of listings on these alternate accommodations websites that are spare rooms or basement suites, but one quick look will reveal that most rentals are whole apartments or houses entirely separate from the host’s primary residence. These aren’t the sob stories you hear about people with no pensions using sites like Airbnb just to scrape by. These are full-fledged landlords without the proper commercial licenses (and often without the proper tax payments) to do so. On this front, your first account must be to get more involved in your local hotel association as such organizations will fight on your behalf by, for instance, accruing stats that prove the sheer volume of revenue generated from these ‘pop up hotels’ versus the ‘mom and pop shops.’

6. Only circumstantial evidence to support claims of disruption to rental and real estate markets.
Yes, we’re going on the defensive here, but it is worth stating nonetheless. Put aside the latest statistical findings for a minute and just think in terms of rational economic incentives. If sharing economy accommodations didn’t exist, what would all these homeowners do with their surplus residences? Leaving them vacant is a poor use of capital, so they would most likely throw them back into the long-term rental market or put them up for sale in order to benefit from the greatest financial gain.

Nowadays, however, homeowners have collectively realized that they can earn more money by utilizing sharing economies website rather than going the traditional route, thereby reducing the overall pool of units in both the rental and the real estate markets. This is bad news for everyone as it inexorably leads to less neighborhood renewal with a decreasing number of new homeowners who decide to renovate, fewer contributions to municipal property taxes, and skyrocketing prices for both buyers and renters as the stunted supply can’t keep pace with demand.
Larry Mogelonsky P. Eng.    Mr. Larry Mogelonsky - P. Eng.
Managing Partner, Hotel Mogel Consulting Limited
Owners, Principals, or Partners
LMA Communications Inc.

Bio: One of the world’s most published writer in hospitality, Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also on several boards for companies focused on hotel technology. His work includes five books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), ...
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