retail news in context, analysis with attitude

by Kevin Coupe

The Wall Street Journal reports this morning that Marriott, apparently not satisfied with the fact that it owns its eponymous hotel banner as well as Sheraton, W Hotels, and Ritz-Carlton (and two dozen others), now is getting into Airbnb’s business.

The company, according to the story, “is starting a new home-rental business, aiming to take on Airbnb Inc. and other home-sharing companies in one of the lodging industry’s hottest segments … starting next week it will offer accommodations in about 2,000 high-end homes throughout 100 markets across the U.S., Europe and Latin America.”

In other words, Marriott wants to disrupt the disruptor.

The Journal makes the point that while Marriott already is the world’s biggest hotel operator with about 1.3 million guest rooms globally,” the fact remains that “Airbnb's platform now offers more rooms than the largest hotel operators.” Airbnb also has been targeting business and corporate customers, which really hits the hotel business where it lives; there’s no question that the home sharing model is eating away at hotel revenues and profits in the same way that Uber and Lyft have affected traditional taxi and car rental businesses.

Marriott has some experience with this side of the business, having run a pilot in Europe…But now, its ambitions are global. (Not to suggest that this is an easy transition. The home sharing business has an entirely different infrastructure than the hotel business, with an entirely different set of risks, not to mention that it puts a company like Marriott - and others getting into this space - at risk of diminished brand equity because of circumstances it cannot control.)

I found all of this Eye-Opening enough … and then I got to this passage in the Journal story:

“At the same time, Airbnb has been moving aggressively into the traditional hospitality business. Airbnb said last month it was acquiring Hotel Tonight Inc., a company that culls inventory from hotels and offers discounted rooms. It also recently invested in the Indian hotel-booking company Oyo Hotels & Homes.”

This sort of sounded to me like what happened when Amazon disrupted so many bricks-and-mortar businesses by operating an online store, and then circled back to itself get into the bricks-and-mortar business. For Amazon, it is less about satisfying consumers with one kind of venue or another than it is about just satisfying customers in ways that are relevant and resonant to them.

Which is what seems to be happening in the hospitality space - the disruptor disrupts a traditional business model by offering a clear alternative, which forces a traditional player to find a way to compete on that turf, even as the disruptor decides to play not just on the turf that it has created, but also at the game originally engineered by the legacy business.

Whew.

The Eye-Opening lesson is that competition can from from anywhere at anytime, and that even as a business works to maintain and sustain its competitive and differential advantages, it also has to be seeking ways to extend them … because there always is going to be someone out there who is gunning for you.
KC's View: