In Newsletter #33: Boutique is not the differentiator | Why don't hotels get as much feedback as Airbnb? | Is Airbnb the odd platform out?
“Millennial are not anti corporate, they are anti-phony” stated Arne Sorenson, CEO of Marriott, at the Skift Global Forum last week. While Dmitry (ALICE’s co-founder and CTO) was at Skift, I was over at the Lodging Conference, sitting on a panel about what guests actually want, specifically millennials. Head of UX Research at Zappos (the $1Bn+ online shoe giant), Alex Genov, highlighted how demographics are not so telling. To understand a customer you must understand their emotion drives more than their demographic. Remember, the term “millennial” covers an 18-year age span. There are millennial children and then they are millennials with children... and both travel very differently!
Niki Leondakis gave a great talk on how boutiques are all starting to look the same, and it is a fair point; everyone now has a “boutique” brand, but is that enough to differentiate yourself? No. At the end of the day, it’s how you make a guest feel and only your staff can truly deliver this type of hospitality… if you will let them.
On the subject of differentiation, a topic we have not covered today is that of West Elm starting a hotel chain. Interesting idea, but one questions whether you really need to stay at a hotel to judge your furniture purchases. It will be worth keeping an eye on, as other retailers are surely asking if they should follow suit to sell their goods. Personally, I would first prefer to see shared-workspace hotels that I can rent a desk at during the stay instead of having to buy one after it. Either way, at the end of the day, hospitality will still need to be delivered no matter how decorated a hotel is (although the stunning Ferragamo styled Portrait Firenze in Florence can perhaps be the exception).
The two other pieces we are highlighting this week are comments from Airbnb’s Chip Conley on the lessons Airbnb and hotels can learn from one another, and a Harvard Business Review article that positions Airbnb as an anomaly when it comes to platforms - but we see things differently.
- Alex Shashou
P.S. You can find the full recap of the Skift Global Forum here.
HIGHLIGHTS FROM THE WEEK'S NEWS...
Warning! Beauty is not boutique.
Skift | Disruption From Inside Out is Key to Hospitality Innovation
Why it matters: Last week, our Newsletter 32 headline was “Ballet for the Back of House,” which was adapted from JW Marriott’s new “Take care of your employees and they’ll take care of your customers” ad campaign. Following this story line, it is refreshing listening to the brilliant insights of Niki Leondakis, CEO of Commune Hotels + Resorts (which recently changed its name to Two Roads Hospitality following its merger with Destination Hotels), as to how hospitality needs the human element to differentiate itself.
Niki was speaking on stage at the Skift Global Forum about how “disruption comes from the inside out.” It’s a viewpoint that boutique hotels are all looking too similar today and that the real differentiator is that of real genuine hospitality and customer service. We couldn’t agree more. We often profess at ALICE that, at the end of the day, our software is just software. How you use it is the differentiator. This is no different with your SOP. How you break it might be just as important to building a relationship as how you adhere to it. You don’t need to just train your staff in how to be hospitable. You also have to give them the complete autonomy and trust of the organization for them to foster genuine human connections with your guests. This means, as Niki’s example goes, that if a guest is thirsty, but your bar does not open for another 15 minutes, go make them a drink.
Competition is increasing from everywhere. For hotels to compete and stand out, your staff need to be allowed to make the difference. Airbnb does not have staff to achieve the same feat. So, as Niki says, bring back the human element.
This doesn’t mean you should remove your technology. Instead, you should empower your staff to be exceptional with hospitality-driven technology. Hello Alfred CEO, Marcela Sapone, wrote about this back in January. “Up until this point, technology’s central design principle was to take humans out of the picture. Yet of course, this is fundamentally at odds with the concept of hospitality, which is wholly concerned with where it can harness the power of human touch.... The future of technology in hospitality would still utilize powerful data, but place it in the hands of well-trained, empathetic people who can anticipate, be flexible, and help steward a cohesive experience.”
Why don't hotels get as much feedback as Airbnb?
Skift | This is What Hotels Can Learn from Airbnb and Vice Versa
Why it matters:
“As reluctant both the hotel industry and Airbnb might be to acknowledge each other’s similarities, their shared roots in hospitality can’t be denied.”
For anyone in the hotel industry still skeptical about Airbnb’s designs on becoming a hospitality company, Chip Conley’s talk at last week’s Skift Forum should have been an eye-opener.
Conley, Airbnb’s Head of Global Hospitality and Strategy, joined the company three and a half years ago to figure out what hospitality means for Airbnb and what lessons from hotels can be best applied and adapted to the homeshare model.
Conley is the founder and former CEO of Joie De Vivre Hospitality, and still owns 14 hotels, and he spoke at the forum about how, “as a boutique hotelier” himself, he considers Airbnb “a logical global extension of ... the boutique hotel.”
We’ve made this observation ourselves, most recently in “What if Airbnb Built a Hotel?.” In this particular thought experiment, we identified characteristics of a hypothetical “Airbnb hotel.” Conley touched on many of these ideas in his talk, which centered on what Airbnb can learn from hotels and vice versa.
One clear way in which Airbnb has a clear advantage over hotels in delivering hospitality is in the feedback loop. “Generally speaking, our hotel guests, they don’t give us direct feedback. Maybe only 2 to 10 percent give us feedback and that goes to general headquarters and maybe the staff sees it, but it’s never personalized. How does the front desk hotel clerk know what impact they have on the guests?” By contrast, Conley explained, 70 to 75 percent of Airbnb hosts and guests review one another within 14 days and the Airbnb guest satisfaction survey, based on a net promoter score used by the hotel industry, is 50 percent higher than the hotel industry. “It’s almost like instantaneous feedback so the person who can make the difference knows,” he said. “That’s part of the reason why Airbnb continues to grow.” In fact, if you don’t give feedback you are not able to book again (similar to Uber). When’s the last time a hotel stopped you from booking again?
But in other areas, Conley conceded, Airbnb still has a lot to learn. We touched on some of these themes briefly when we mused about whether Airbnb would hire post-merger Starwood executives, now freshly out of a job.
Indeed, hotels excel in the consistently reliable delivery of service at scale. Conley says Airbnb has a ways to go in this regard.
But can hotels and Airbnb not just learn from one another but learn to work together? Conley thinks the future for the homeshare giant and industry incumbents could be more amicable. “Maybe, over time, there can be a time for Airbnb to collaborate more with hotels.” Just as timeshares and boutique hotels disrupted the hotel industry when they emerged, so too has Airbnb.
“These were all typically started by someone outside of the industry by a pioneer or series of pioneers,” he said. “At first, the industry ignored it, ridiculed it, or sometimes fought it. Over time, when people realized there was an unmet need that disruption was addressing, all of a sudden, the big brands jumped on the bandwagon … It’s a long-term trend that meets an unmet need.”
Is Airbnb the odd platform out?
Harvard Business Review | The Businesses that Platforms are Actually Disrupting
Why it matters: Businesses most threatened by the rise of platforms are businesses, the authors conclude, that most resemble traditional marketplaces. These “traditional matchmaker businesses,” which connect different groups of customers and/or suppliers, already operate as de facto platforms. The reason why these businesses are most vulnerable, platform experts David Evans and Richard Schmalensee explain, is because they have “already identified situations in which a platform can create value by helping to connect members of different groups that could benefit from getting together.” They face disruption from startups embracing the platform approach, because the latter use technologies to operate more powerful, more efficient, and more scalable platforms.
Evans and Schmalensee state that of today’s 13 most dominant platforms - including Uber, Amazon and WeWork - 12 have disrupted existing platform or marketplace industries. The one exception they note is Airbnb. Airbnb, they assert, has mainly disrupted the hotel chains, which are not platforms, they write. But the company may well disrupt online booking sites, they posit, which are platforms.
This is interesting for us on a couple of different levels. One intriguing idea is that of Airbnb as a disruptor to the OTAs. Indeed, we’ve speculated before about what happens to the OTA landscape if Airbnb starts to take on hotel listings.
What’s more interesting though is the authors’ dismissal of hotel chains as platforms themselves. Although hotels aren't platforms in a strict marketplace sense, they do bring together different stakeholders and services into a single guest experience, with communication flowing in all directions (staff to staff, guest to staff, department to department). We argue, therefore, they share many similarities with traditional platforms and are well-suited for the technology platform approach.
This platform approach means big names, from Amazon in retail to Uber in transportation, use platform technology to deliver services in more convenient, faster and more transparent ways. As platforms, these companies are able to receive, dispatch, monitor and analyze service requests with exceptional precision, optimizing their operations, while engaging directly with and owning their consumers. They have used technology to unify their end-to-end operations. By operating more effectively, they’ve made room to create more customer delight (hospitality) and come to dominate their respective industries. Indeed, when you think about some of the core differences between Airbnb and traditional hotels it’s along these lines. Both are in the business of delivering hospitality and providing guests with a good night’s sleep, yet Airbnb has reaped these platform efficiencies and is more valuable than Hilton and Marriott combined.
While Evans and Schmalensee might have overlooked the idea of hotels as platforms, their conclusions still ring true for hotels. “Any business….that is not harnessing and keeping pace with relevant technology, does, however have a target on its back. That includes all the successful online platforms that dominate the market cap listings and headlines today. The technologies that have been behind the recent wave of matchmakers aren’t standing still. They continue to improve at an amazing pace and to spread around the globe.” They continue, “The inertia of existing platforms creates opportunities for entrepreneurs to one-up the last generation of online platforms. Rapid technological change has compressed the time between when a new platform is established and when it faces a threat from an even newer platform.” The platform approach thus presents as a threat to hotels, but also as a massive opportunity for those to leverage its dynamics in their technical setup.
(Download the new free report from ALICE and Skift to learn about how can hotels harness the power of platforms to seamlessly unify their operation and realize huge gains in revenue, efficiency, and guest satisfaction in the process.)
- Are Hotels Lagging Behind Travelers' Tech Needs TravelPulse
- Hotels Must Implement Time-Sensitive Technology to Revive the Guest Experience Hotel Online
- Will Anyone Want to Stay in a West Elm Hotel? Bloomberg
- Travel Tech Sees Record Exits This Year CB Insights
- Shake Shack Founder Danny Meyer Explains the Biggest Mistake He's Made With the Restaurant Business Insider
- A Persnickety Spy for Luxury Hotels The New Yorker