How to compete with Airbnb by thinking like a tech company

By Margaret Ady - Co-founder of Apaleo

14 January 2019
  • How to compete with Airbnb by thinking like a tech company


Here's a terrifying fun fact: some insects have superpowers. Take scorpions, for example. They can flatten their bodies to the size of a small coin, which allows them to get through small crevices, cracks, doorjambs...anything really. This crazy power means that scorpions can invade virtually any area that they want to invade. Yikes. Glad you live in the city now, right?

Airbnb is the scorpion of accommodations. There's one, actually more like five, in that downtown condominium complex right around the corner from your hotel. These accommodations have snuck into your hotel's turf are hiding in plain sight with low operating costs and a cozy kitchen where guests can make their own breakfast that's better than the cereal at your free breakfast buffet.

Back in 2016, Brian Younge of Colliers International Hospitality and Leisure Group noted that Airbnb not only has an impact on hotel demand but that impact will be felt most by limited service hotels. Airbnb supply "siphons demand from a lot of the limited-service properties in core markets and high tourist areas," said Younge (BisNow). Makes sense. Luxury travelers still want the services that Airbnb doesn't provide so the upscale market just won't see the same hit.

This isn't the only way that the Airbnb scorpion stings limited service hotels. Pair this with a reduction in compression nights, when hotels would normally fill rooms at a much higher rate during big events, and limited-service hotels are in a tight squeeze. Compression nights have been on the decline, and it's mostly because of the likes of Airbnb and HomeAway. Dina Gerdeman writes for Forbes, "That's bad news for hotels, which have traditionally earned their biggest margins when rooms were scarce and customers were forced to pay higher rates."

The (potentially) fatal blow: limited-service hotels are seeing the most growth, with 407,000 rooms coming online in 2018-2019 in the U.S. alone, which means not only competition from private rentals, but also stiffer competition from your hotel peers.

What's a hotel, particularly a limited-service hotel, to do? Get in the head of the scorpion. Strip Airbnb down to its core. Peel back the hospitality mask that it wears and under the surface, you'll find a technology company (As is Uber. As is Expedia.). Each is built on savvy core technology where budgets and innovation go toward creating a better user experience. Limited-service hotels don't have this luxury, since, you know, they're saddled with an actual product on real estate with investors and owners. However, the chief way this hotel segment will compete against the scorpions of the hospitality world is to think like a technology company. Invest in user experience (in other words, the guest journey) wherever possible. Create administrative efficiencies via technology. Use technology to help you grow and generate more revenue.

To do this, hotels must break out of legacy software that doesn't connect. In fact, it's not just legacy software that's problematic—even some tech that was released just yesterday doesn't integrate. This is where you must dig deepest when committing to new technology. You must ensure that you have open access and the ability to bring on new innovations that will change the way you do business. Opening up the possibilities of trying out new technologies that work seamlessly with core systems is the only affordable and viable path for hotels to slyly transform themselves into technology companies.

So little is about the room anymore when it comes to hotels and so much is about the guest's experience of being able to choose how he or she wants to engage (i.e., automated check-in/out, texting for housekeeping, etc.). The technology for this category likely stays in the background because most midscale and economy properties aren't going to be adding tech bells and whistles to the rooms without taking a chunk out of already tight room margins. 2019 will be this behind-the-scenes technological innovation gives urban hotels competitive superpowers, becoming the scorpions that nobody saw squeeze through the door.

PS: If you want to start thinking like a technology company, but don't know where to start, here's a tip - update your core system so that it can adapt to any new technology that you throw its way. This buyer's guide is a good starting reference.

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Margaret Ady

Margaret Ady is a co-founder of apaleo, responsible for the company’s brand positioning, marketing, and strategic growth. Prior to apaleo, she led marketing for Berlin-based SnapShot, and prior to that, for TrustYou. In 2016, she was awarded HSMAI Europe’s Top 20 Extraordinary Minds in Sales, Marketing and Technology. Before joining the hospitality technology scene, Margaret held key leadership roles at The Walt Disney Company and The Oprah Winfrey Network. Margaret has also provided research, branding and marketing consulting services to many companies, including 20th Television (Fox), Nielsen and Red Bull. Margaret graduated from the University of Southern California with degrees in Economics and Psychology and a focus in business. During her studies, she was awarded the USC Annenberg Communications Critical Pathway Grant for her research in new technology and its impact on healthcare decision- making.

Margaret Ady