The Hotel Industry’s Lost Generation
Hotels are still magical places for leisure travelers. They are an escape from everyday responsibilities like shopping and cleaning. They are the only place where someone is there 24 hours to see to your needs. The rest of your life you are on your own — but not at a hotel. Because they typically are unstaffed, at their best, vacation rentals aspire to be hotel-like.
It’s not the larger problems like hidden cameras and gentrification with vacation rentals that will drive people away. It’s the little ones like inconvenient locations, maintenance issues, and inconsistent check-in experiences.
I think travelers are coming to this realization now and are looking to come back to hotels. But the booking experience for hotels is still nowhere near as good as Airbnb. Airbnb has a massive advantage over hotels in that their hosts use the same software as the guests. Nothing is lost in the translation. You provide your payment information once — and never think about it again. At a hotel, you provide your payment information when booking and, again, upon checking in. No one wants to start their vacation thinking about how much it costs.
Say you wanted to book a suite for you and your spouse with a connecting hotel room for the kids. Those are technically two different room types. Calling the hotel to make a reservation for two different room types next to each other won’t work either, because their reservations departments use the same online booking platforms as the online travel agencies (OTAs), and they’re not set up to determine room locations within the hotel. Unless you book through Suiteness, the front desk staff determines exactly which rooms you’ll be in and if they will connect — and that happens when you arrive at check-in.
Hotels need to greet these vacationers who have become accustomed to easy booking but are again looking for reliability with open arms. If they don’t, I think the window will close on a generation of travelers.
OTAs won’t help because they are focused on vacation rentals
While Booking and Expedia are focused on adding vacation rentals, Airbnb has been focusing on adding hotels. It may seem like they will meet in the middle, but it doesn’t work like that with platforms.
Where you start affects every decision you make. Say you’re traveling with two other couples and want to stay together. You would probably care most about the number of private bedrooms, bathrooms and other basic amenities you need for a comfortable stay. The search results page of Airbnb shows everything at the room level — which is what groups of friends and families traveling together care most about. The search results pages of Expedia and Booking have hotels on the same footing with individual vacation rental listings.
Next generation hotels are getting traction
Sonder and Guild are an amazing hybrid of a staffed hotel and a vacation rental. This is not a bad thing for bookers. They will be able to provide the experience that customers expect from hotels much more efficiently than hotels can. Even with Blitzscaling, it will be awhile before either company becomes as large as a Hilton or Marriott but it will happen faster than the industry anticipates.
What about hotels?
While all of this is happening not much has changed at hotels. True, they’ve started looking at adding mobile check-in and other small technical changes. But these changes are small and only deal with the symptoms of the problem. The software platforms that hotels operate on haven’t changed since the 90s.
The focus on direct bookings has been a distraction. Hotels are now realizing that and are looking for ways they can be useful to customers. But the pace of change is very slow and it might be too late once it happens.
What can be done?
For now, I expect to see the next generation of hotels do well and vacation rentals to continue to grow, albeit at a slower pace than before with regulatory and social pressures. At Suiteness, we will keep connecting travelers with rooms that the hotels aren’t setup to sell themselves like their suites and connecting rooms.
