If you can’t beat them, buy them. That may be part of a new strategy for the hotel industry, which has seen the sharing economy and room-sharing sites such as Airbnb take away market share and emerge as established competitors instead of temporary trends.
A study by Morgan Stanley last year underlined the long-term threat of the sharing economy: 25 percent of leisure travelers and 23 percent of business travelers will have used Airbnb by the end of 2017, with 49 percent of Airbnb users reporting having used the service as a substitute for a standard hotel.
In August, Hyatt Hotels announced its investment in Oasis, an international room-sharing service that offers private member’s clubs and a network of local employees available to guests 24/7, a bid to offer a more upscale Airbnb alternative. Founded in 2009 in Buenos Aires, the service, initially imagined as a “deconstructed hotel,” now has more than 2,000 properties in 22 cities worldwide. Oasis properties can now be found on the Hyatt website as of last week, as part of the company’s Unbound Collection (itself a hip, boutique hotel brand with ambitions to attract millennial travelers).
Parker Stanberry, the founder and CEO of Oasis, sees the investment—exact figures of the private deal were undisclosed, but it’s a “significant minority investment”—as a boon for both sides. Both Hyatt and Oasis are able to respond to the needs of their respective client bases, and better serve corporate clients. Consider a Hyatt customer, a business traveler, who now has the ability to rent a three-room apartment for a long stay with his or her family, or can find an apartment instead of a hotel room for a long-term project in another city.
Stanberry also sees the alliance with Hyatt opening up room-sharing to traditional Hyatt customers who haven’t tried it before. Next year, when Oasis is integrated into the Hyatt loyalty program, it’ll become even more attractive to corporate clients (who already make up half of Oasis’ business).
“Why have only 20 percent of adults used room-sharing services?” he says. “Many aren’t thrilled with DIY aspect of property rental. This investment lets us showcase what we can do for a new universe of travelers.”
In addition to helping Hyatt focus on upscale customers around the world, the deal also marks what Stanberry has described as a “convergence” between both aspects of the lodging industry. Large hotel chains, by offering a fuller range of services, and adopting the nimbleness of room-sharing competitors, can grow quicker and attract new customers.
Others see the deal, and similar actions by others chains, as a sign hotel companies aren’t looking to reinvent as much as do research. As part of the extensive discussion within the industry of how to adapt to the Airbnb juggernaut, whether it Marriott’s move to introduce apps, personalized services, and conciergerie robots or being more experiential and catering to more informed and sophisticated customers, expansion and experimentation seem to be a good idea.
According to Bjorn Hanson, a New York University professor who studies the hotel and hospitality industry, the idea of the hotel industry collaborating with the room-sharing/Airbnb world isn’t something that’s going to happen: it’s an established fact. Alliances, partnerships, and investments, such as Wyndham’s investments in Unique Ventures, show how these two business models are working together, though not crossing over.
“We’re not talking about what may happen, we’re watching it happen, and seeing how it evolves,” he says. “For many of the hotel companies, it’s about an investment in not missing out on an opportunity, and seeing if these companies can grow into a newer, stronger form of competition.”
Hanson doesn’t see hotels adding or copying the operational models of Airbnb and their ilk. It’s more testing the water, an investment in the future (think of Pepsi and Coke investing in healthy juice companies and bottled water). Hyatt already pursued this strategy with a previous, temporary investment in onefinestay in 2015, which a company spokesperson described as an example of the company’s “flexibility to be nimble, to learn by experimenting and collaborating.”
When similar companies such as Homelike target the business market, it makes sense for hotel companies to test the waters and learn about their competition.
“I think there will be more of these deals to come,” says Stanberry. “It’s a true strategic partnership.”