Surface Magazine just republished this 2016 interview with Arne Sorenson. Sorenson was CEO of Marriott, but sadly passed away this week after a battle with pancreatic cancer.
One of the questions he was asked in the interview was about the rise of Airbnb. This is how he responded:
“It’s fascinating. I hope we’re not as exposed to this as the taxi industry is right now. Taxis in many cities are awful and hard to find. So here comes Uber with a better product. In the hotel business, I still think we can deliver better service, so we don’t have quite the same risk. Airbnb is fascinating. Increasingly, it’s less personal, and there are more dedicated units. The more they get into that space, they become a competitor. The story isn’t over, but we’re set up to compete well.“
Taxis were awful and that business model is done for good. But how do Sorenson’s comments about Airbnb hold up today?
Marriott ended up launching its own home sharing platform in 2019, but it’s comparatively small as I understand it. There are also no shortage of bull cases for Airbnb (and just look at its market cap).
But there are also headwinds. Barcelona, for example, is looking to permanently ban people from renting out private rooms on a short-term basis (< 30 days). This is even if the rest of the home remains owner occupied.
So what use cases remain? Only extended stays?
If I look at my own pre-pandemic travel record, I am largely in the hotel camp. I like the consistency and I like certain brands. But maybe that’s just me getting older. What do you all think? Leave a comment below.
I’ve had some wonderful Airbnb stays (Seattle, Santa Fe, Tucson, Grand Marais, Mn)—artistic, quirky and homey, offering something you could never get in a hotel. On the other hand, I’ve had some that were pleasant but bland (La Quinta, also Seattle), which were OK but not as convenient as a hotel. The trend is definitely toward the impersonal, however.
I liked Airbnb when it was relatively small, niche – a step up from couchsurfing, expecting to stay in someone’s place, and have some interactions with them. It offered an authentic experience to the traveler and extra income to owner, and possibly cultural / social exchange to both. Now it’s no longer that, just an alternative to a hotel – trading concierge for own kitchen at comparable price. In ideal world, all three options would be available to travellers – without messing up the local housing supply. TBD
I think Airbnb would beat hotels
I think some inner cities are going to continue to transform into semi-permanent tourist only areas: Times Square is a nice(?) place to visit but most people don’t want to live there even if they could afford it. Zoning too, makes it almost impossible, unless you’re rich enough to pay hotel prices year round. Few people are.
Central cities in “Old Europe” are already becoming tourist only areas, and cities like Barcelona won’t be able to stop this with just market restrictions. The rents will just continue to climb until only the ultra-wealthy can afford to live there.
The real issue is transportation, and I don’t mean the car. Even robo-taxis – Uber will lose most of its drivers in 10 years – still take street space. They don’t have to park, which is better, but they won’t be cheaper than mass transit, done right, ever. What is mass transit done right? It comes back to property values and real estate. Most countries, but not the U.S., collect some sort of site fee and put it toward mass transit and even road upkeep. This is only fair. Subways and good roads enable the development of downtown. The beneficiaries of that should pay back for this municipal advantage.
The key is keeping commutes to <35 minutes. Historically, that is what people are willing to put up with before they either A) get a job closer to home or, B) move closer to their jobs. This means that subways and some buses on bus lanes, light rail, even ferries, have to reach out to the outer boroughs, burbs, outskirts of cities. The central area is always well-served. It's the outer areas, where middle and working class workers have to live, that need more support. Cities have to understand they cannot have a healthy downtown without workers who can realistically commute to them from more livable neighborhoods.
Airbnd and other homesharing companies are not going away. Hotels will have to value-add, which, as the former president Marriott says, they are capable of doing. Competition isn't going away either.
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