Airbnb is out, new disruptors are in

From left to right: Betty Liu, anchor, Bloomberg Television, founder and CEO of Radiate; Sebastien Bazin, chairman and CEO of AccorHotels; Jim Murren, chairman and CEO of MGM Resorts; Christopher Nassetta, president and CEO of Hilton; and Arne Sorenson, president and CEO of Marriott International.

NEW YORK — Amid positive trends in tax reform and optimism around positive hotel performance metrics, the specter of a new disruptor looms over the hospitality industry. The NYU Hospitality Conference, held at the New York Marriott Marquis, began with a panel of CEOs who lead the industry’s largest hospitality companies and their take on the opportunities and challenges for the year to come. While these leaders are optimistic about the coming year, they are also apprehensive about rising competition from industry outsiders looking to make their name in the hospitality space.

“We are in an absolute war for who owns the customer,” Arne Sorenson, president and CEO of Marriott International, said during the panel. “This is a long-term war. We, at this panel, have been in competition for decades, and we will continue to compete on products, service and the human experience. But we have disruptors that are without a doubt trying to take ownership of our customers.”

At first blush, it may seem that Sorenson was calling out the likes of Airbnb, a common target blamed for poaching travelers seeking hotels. However, this is not the case. Instead, Sorenson said it is the likes of Google, Facebook, Amazon and Alibaba that have captured his attention.

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“These are digital empires that own all of us in some respects,” he said. “They are all trying to have a profile for every customer, so how do we use that to make sure we are monetizing as much of that relationship as we can? What are the tools we can use to fight back? For us it is loyalty, what we do with the data we have on folks and how we deliver value to our customers. This is a battle we are going to be fighting for some time, a war of fundamentals.”

Given the amount of press that Airbnb garners on the topic of disruption, as well as the legal actions taken against the company, it’s a surprise to see the home-sharing company usurped as the hotel industry’s boogeyman, at least in the eyes of hotel company CEOs. Christopher Nassetta, president and CEO of Hilton, said Airbnb succeeded because it was able to establish its dominance before state and local regulators were able to grasp the concept behind the company and throw a leash around it. However, Nassetta doesn’t think that’s the entire story.

“At least in my belief, [Airbnb is] a fundamentally different business,” Nassetta said. “We do compete at some level, but we’re trying to be the premium proposition. We want to create a high-quality, consistent product and the reality is that people do pay a premium for it. Airbnb is a good business, but it’s a value proposition.”

Google is just one of the tech giants dipping its toes into the world of hospitality. Photo credit: Getty Images/Prykhodov

If companies such as Google, Amazon or Facebook make a push into the hospitality business, there is no doubt that the level of disruption on the current business environment would be staggering. After all, these are multibillion-dollar companies with more data on consumers than any other entity in the world.

However, they do have a weakness. As stated by Sebastien Bazin, CEO of AccorHotels, none of these supposed disruptors have ever met their guests.

“Our contact with guests gives us very different data, and that is experiential,” Bazin said. “We have to take advantage of that enormous advantage. All of a sudden I know something about you, and if I’m smart I’ll help you resolve a problem or give you a better experience.”

Getting to know your customers and what they value is something that Amazon, Google and Facebook have mastered. After all, these companies are the most effective advertising machines on the planet simply because they know their users better than anyone. Jim Murren, chairman and CEO of MGM Resorts, said that travelers want to book rooms with companies that share the same values as they do, which is why using data to understand your customer base is more important than it ever has been.

“Increasingly, convention customers are booking with companies that share their core values,” he said. “And we are open to working with these companies going forward. We approach this holistically. We want to build bridges, and not look at them as competitors.”

Toward the end of the discussion, Sorenson admitted that Airbnb remains a substantial competitor for the hotel space. This is particularly true for companies like Marriott and AccorHotels as they make inroads into the sharing economy.

“They are a digital company first… but they spent a huge portion of their revenue on looking for places to drive customers to their site,” he said. “Their challenges are a lot like ours. We think we can win with service because we offer a different kind of product. I don’t think they are disappearing from the conversation, but they are becoming like the other competition that we have. These powerful digital empires are of interest here. We all do business with them, but we have to figure out when do we partner, and when do we build our own ecosystems.”

According to Nassetta, hotels and hotel operators are masters of their environments. If they fail to capture guest attention, it is no one’s fault but their own.

“They sleep with us, eat with us, shower with us, and we already have a lot of data on them, Nassetta said. “In a sense, shame on us if we can’t own the customer.”