Expedia takeaway: Hotels should learn from sharing economy

Expedia Group CEO Mark D. Okerstrom makes a point during Explore '18. Photo credit: Katherine Doggrell

LAS VEGAS—Hotel owners, brands and operators are missing out on the “incredible opportunity” created by the sharing economy, Expedia Group CEO Mark D. Okerstrom told attendees of the group’s two-day Explore ’18 event held here this week.

Thousands of delegates who gathered at the Aria Resort & Casino, including representatives of lodging, air, car rental, cruises and similar travel disciplines, were told to use the data available to them to offer greater variety and to use more-sophisticated revenue-management techniques to compete with the sharing economy on a more-level playing field. 

Okerstrom told the travel-partner conference attendees that owners, brands and operators “have let an incredible opportunity go by…if they could wake up and use the data that they already have they could have an incredible opportunity. There’s a lot that hotel operators and brands and owners could learn from the sharing economy, but they choose not to.

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“We've got a ton of respect for Airbnb, they solved a need to get this rental offering online,” he continued. “They've got a great brand and a great reputation. Airbnb is sharing a 3 percent commission and then charging the customer sometimes uncapped fees; we are looking very closely at how we are pricing our services.” 
Okerstrom added Airbnb has “raised a fair bit of money from the capital markets and one of the concerns we hear from our lodging partners is that you can sometimes get customers to choose something they might not otherwise choose [in the sharing economy] based on price. It's sometimes been subsidized by the capital markets.”

The way to battle this, Okerstrom said, is to use the data which Expedia Group has gathered. “I think that gives us an opportunity. We can use information from our flights and lodging stack to make pricing appropriate for hotels and we can get a more-equal playing field with Airbnb.”

Cyril Ranque, president, lodging partner services, Expedia Group, added: “When it's priced right, when it's not subsidized, the case for booking a vacation rental is more about where people are looking for accommodations for a group of four or more, which doesn't really impact hotel partners as long as we can organize search results in the right way. 

“We have to push more what the customer wants. More alternative accommodations in the rankings doesn't mean less customers for the hotels,” Ranque added.

When asked about Airbnb’s move into listing hotels, Okerstrom said: “If you want to have a scale marketplace, you have to have choice, so it makes sense to me that Airbnb is adding this inventory. It's a question as to whether the customer will want it.”

As for Expedia Group’s own appetite for the sharing economy, where it has the HomeAway brand and VRBO, Okerstrom said, “Airbnb has created an industry which is much bigger than we had anticipated. We think alternative accommodation is incredibly important but it’s only part of our strategy; you are not going to stay in alternative accommodation every time you go away. We need to have everyone. Our strategy is to be customer-centric. Alternative accommodations is just one small piece of a larger strategy.”

Expedia Group also is looking to give the sharing economy greater legitimacy. “We are working in the U.S. to suggest ways for working with the sharing platforms, suggesting things to government which have worked in other jurisdictions,” said Okerstrom.

For the hotel sector, the sharing economy is seen as somewhere it has to fight like with like, as Hilton’s recent launch of Motto has shown. According to Okerstrom, hotels already have the tools, they just need to deploy them. 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors