While the world moves forward with alternative accommodation options, many hotel chains seem to be stubbornly rooted in the past. Instead of evolving, they’re using their power and profits to stifle innovation.
By: Brad Greiner, CEO of Open Air Homes and OpenAiRE Brokerage
This is a four-part series on the crackdown of Airbnbs in NYC. The first delves into the hotel lobby’s efforts to curtail affordable options for guests visiting the city. The second urges the hotel lobby and industry to look inward about how they can create experiences that guests truly want, instead of spending their lobbying dollars to influence politicians to create draconian regulations. The third will explore if Los Angeles could be next on the hotel lobby’s list, as they attempt to shepherd travelers back into traditional hotels. The fourth, our recommendation for choosing the path of medium term, or Month+ rentals, for NYC residents, as we have done in Los Angeles successfully.
This post was inspired by the great NY Times podcast, Hard Fork. We highly recommend listening to the first segment of this podcast to hear Kevin Roose and Casey Newton’s take on the crackdown. And yes, we are purposely linking to their Threads instead of Twitter. The lesser of two evils.
The Great Profit Illusion – Reaping Rewards but Missing the Message
Both Marriott and Hilton have registered stellar profits – $5.125B and $8.660B respectively, for the year ending June 30, 2023. These figures are not just impressive but reflect a massive 35.58% and 29.7% YoY growth for the two giants. Yet, while the coffers are overflowing, a discerning look reveals a glaring disconnect. These chains, despite their booming profits, are pointing fingers at the burgeoning short-term rental sector for their occupancy issues. But is the enemy really outside, or have they become their own worst foes?
Ignoring Guest Desires – Where Hotels Went Wrong
The modern traveler’s desires have evolved. It’s no longer just about a place to sleep but an experience:
- Healthy Living: Guests increasingly prefer home-cooked meals over often low-quality hotel food.
- Avoiding Hidden Charges: Outrageous minibar costs and undisclosed “resort fees” and “parking fees” are outdated practices that deter modern guests.
- Community Connection: A sense of belonging, experiencing local culture, and interacting with the community are now integral to travel.
- Unique Experiences: Homogeneity is out. Every city, and every hotel should tell a different story.
- Extended Stays: Longer stays necessitate amenities like kitchens and communal spaces.
- Authentic Local Experiences: Travelers today want to explore on bikes and savor local cafes, not just the hotel’s in-house restaurant.
For many, the shift towards these desires was evident, yet large hotel chains chose to ignore these changes in consumer behavior.
The Game of Blame – Hotels vs. Short-Term Rentals
With a refusal to introspect and innovate, these hotel chains have chosen an easier path: to vilify short-term rentals through regulation. Using our growing affordable housing shortage as the leverage. This is without even going too deep into the fact that hotels, on average, pay their cleaners such a low rate that they cannot even afford the affordable housing (at Open Air Homes, all of our cleaners earn a fair and livable wage, and many have been with us for 8+ years).
Instead of focusing on enhancing guest experiences, a significant portion of their resources is channeled into lobbying for restrictive regulations. Their aim? To limit the growth of short-term rentals and steer guests back to hotels. This strategy, while might seem effective in the short run, is hardly a sustainable solution now that guests have voted for alternative housing options with their wallets.
Not All Hotels Have Lost the Plot
However, not all hope is lost. Some gems in the industry, like the Public in NYC or the Proper Hotel chain, herald what the future of hospitality can be. Ian Schrager’s Public Hotel serves as an inspiration, indicating that it’s possible to blend luxury with authentic experiences that resonate with modern travelers.
We have even blogged in the past about our love of hotels, especially for shorter stays. We love a great hotel stay, and many are doing great work. We are also inspired by many hotels doing great work, and are always looking to take the best parts of what they offer and incorporate them into our operations,
Innovation Over Intimidation – The Way Forward for Hotels
The time for change is now. With vast resources at their disposal, hotel chains can redefine the hospitality landscape. But this requires a paradigm shift – from seeing short-term rentals as threats to viewing them as a sign of changing times. The real challenge is not external competition but internal stagnation.
We Urge Hotels To Choose Progress, Not Stagnation
The writing on the wall is clear. The booming short-term rental market is not just a trend but a testament to changing traveler desires. For hotel chains to stay relevant, they must align with these evolving preferences. Investing in lobbying might offer temporary relief, but genuine long-term success will come only through innovation and adaptation.
