With constant exposure due to its continued growth, design innovations, and frequent tussles with city regulators around the world, it would be a fair assumption that Airbnb is gradually taking over the hotel and lodging industry. Any business that makes $900 million a year, with expectations of raking in roughly $10 billion by 2020, would appear to be a dominant player. Yet for the global hotel and lodging industry, forecast to make $550 billion worldwide this year, that’s a relatively small market share.
"I think the primary lesson from the rise of Airbnb is that today’s consumer values have evolved," says Randall Cook, the CEO and co-founder of ROOST, a Philadelphia-based brand of extended-stay apartment hotels. "I love what Airbnb is doing, and think they actually help our business by giving more and more people a different type of stay experience, whether it’s for a short- or long-term stay."
While Airbnb has made an outsize impact on how many of us think about travel—staying in more intimate neighborhood locations with more freedom and less formality—it’s only part of a bigger shift in how the hospitality industry views itself and its customers. As much as Airbnb’s success comes from savvy marketing and designing a popular platform, it’s also a result of larger forces at play, such as mobile technology, increasingly mobile jobs, social media, and a trend favoring authentic design and experiences. Even as studies show the revenue for the service in major markets slowing down and maturing, the company's cultural impact is reshaping how other startups and established brands view the future of lodging.
Between two very divergent places on the spectrum of hospitality experiences—a night in a massive, multi-story downtown hotel and crashing in a spare bedroom on Airbnb—lies a huge middle ground where many believe the future of the industry lies. The room-sharing startup popularized the idea that any space could, at least temporarily, be a guest room. So why not remove the uncertainty around the guest experience in these spaces and professionalize the entire stay?
Parker Stanberry saw the shift toward a more decentralized hotel experience during the late 2000s, when he was an expat living in Buenos Aires, Argentina. The Texan considered opening a boutique hotel to capitalize on the boom in tourism and, as he tried to figure out funding, landed on the concept he calls a "deconstructed hotel," basically a boutique hotel experience without the hotel.
The eventual concept, Oasis Collections, links together a number of apartment and properties across the city into one unified, upscale service. Like Airbnb, users book a single space and stay in one of a number of apartments or condos spread out amid the city. Every stay at an Oasis property includes available 24/7 assistance and a visit from a concierge, who crafts your stay and experience based on the results on an online survey completed by every guest. After opening in Buenos Aires in 2009, the service, which now has 1,500 properties worldwide, plans to expand to 50 cities by the end of 2017. Mega-brand AccorHotels just acquired a 30 percent stake in the company.
"The idea was, let’s put together a portfolio of these spots, hotel standard and alike in one sense, but unique and spread around the city," he says. "It’s all the advantages of an Airbnb concept—diversity, creativity, units everywhere—but you also get the quality control and uniformity of a hotel."
The key, says Stanberry, is adding services and amenities to a decentralized stay, a gap he believes Oasis, and numerous concepts and chains, can fill. Bringing together those elements offers a purely individualized experience that a single hotel just can’t match; the infrastructure just isn’t conducive, since the sheer nature of the product, the need for some form of standardization, makes it hard to be fresh or different. How can a hotel in Midtown Manhattan compete with, say, a great stay in the West Village, where instead of a drab gym and hotel restaurant, you can checkout SoulCycle down the street and eat at some hot new dining destination a block away?
These types of services work particularly well for extended stays or business travelers, says Cook. The ROOST brand, which bills itself as an apartment hotel, specifically targets those seeking longer stays, especially the mobile class of workers bouncing between gigs in different cities. He believes the real selling point is amenities, which is why ROOST, which currently operates two locations in Philadelphia, focuses on design, hiring Morris Adjmi Architects to design "aspirational" spaces that resemble polished showrooms for hip furniture stores.
"We believe we have a clear advantage over traditional hotels, due to the size and feel of our units and the feeling of home, as well as over Airbnb units, since we offer a 24/7 on-site team and brand standards," he says. "The internet has had a great democratizing effect on smaller brands like ours, allowing us to compete with larger hotel chains with infinitely larger marketing budgets."
Like many of the brands working in this space, ROOST creates a mixture of old-fashioned aesthetics and digital conveniences. Rustic and authentic furniture form the backdrop of a guest experience informed by digital ease, with custom apps (such as myROOST) functioning as an in-the-know concierge. That’s another point of difference many of these companies push; while big chains are monolithic and the room-shares can be impersonal or random, they can hit the sweet spot in the middle, coming across as professional yet hip. The Oasis Collection app features local recommendations as well as discounts at local bars and spas.
A younger creative class, often referred to as digital nomads, untethered and apt to bounce between big cities, needs certainty when booking longer-term stays, and these companies are happy to help. According to Robin Chadha, the CMO for citizenM, which, as its name suggests, seeks to attract the new mobile citizen, sees these types of business travelers favoring a new definition of luxury when they’re on the road.
"The new luxury is about efficiency and emotion, about speed and convenience," he says. "The phrase ‘a home away from home’ sounds cliched, but if we can make you feel like you’re at home, that’s what matters."
With that in mind, citizenM, which started in 2008 and now operates 8 properties in Europe and New York, pushes a more holistic, social experience, with large common areas and check-in kiosks meant to make the experience more seamless and social (and reduce the need for additional staff). Different location are experimenting with additions since as SocietyM (business lounges) and CanteenM (coffee bars) to transform the often sterile lobby and common area into something more active. It sounds a bit like the philosophy behind co-working spaces, giving a group of like-minded people a communal space to interact, and making those interactions a key part of the attraction.
There’s cache and currency in reflecting the true spirit of the neighborhood, a mantra of Airbnb that others in the industry have turned into their rallying cry. Generator Hostels, a new chain with locations in Europe and North America, combines single rooms and multi-bed hostels in a concept described as a "design-led hotel." According to Frederik Korallus, CEO of Generator, the company focuses on providing a high-end experience at an affordable price point to the younger traveler; consumers are looking for a lifestyle and social vibe associated with higher end brands but at an affordable price point. The firm has hired millennial media company VICE to help develop Parallel, a publication and tour guide geared to these travelers, with article such as "A Skater’s Guide to Hidden Rome" serving as a "digital expression" of the brand, a conversation starter, and a tour guide.
"Our building, social spaces, and extreme focus on design offer a plethora of Instagrammable moments," says Korallus. "This, combined with highly activated social spaces, provides a backdrop for social media creativity."
Korallus sees a sort of social feedback loop as a key part of the Generator marketing message; the social web, filled with content generated by loyal guests and brand advocates, taking pictures at Generator spaces, becomes the chain’s biggest marketing tool.
Of course, the bigger brands and chains aren’t blind to a changing market. Many are looking to downsize and create smaller, niche brands that can offer more curated experiences. Hyatt’s new Unbound Collection, a collection of a half-dozen properties in hip locations such as Austin and Miami that sound like the hippest restaurants on the block; The Confidante, the Driskill, Royal Palms. They "give guests the freedom to be extraordinary," focusing as much on the experiences and location as the room and amenities.
According to Erica Garvey, Senior Program Director at Wolff Olins, a brand consultancy that helped create the concept, the brand captures the new luxury of a holistic experience.
"It’s not just about the physical property, but about the experience both within and surrounding the property," she says. "The Unbound Collection includes unique properties around the world that provide guests extraordinary opportunities such as wine tasting and horseback riding in the country-side of Uruguay, or rich, cultural experiences offered by staying in the heart of Paris."
What makes this shift more interesting is the way Airbnb, in many ways, seems to be maturing and growing as well. In addition to its highly publicized foray into urban planning this week, the company has previously made moves to promote itself as a great option for business conferences, as well as streamline and improve guest services. As the service continues to mature, working with more and more municipalities on tax collection and improving service to meet widespread complaints (such as the #Airbnbwhileblack campaign), it'll be interesting to see if any increased shift toward standardization begins to move the room-sharing service toward the middle ground many others are staking out.