Marriott Thinks They Can Out-Airbnb Airbnb Even Though Their CEO’s Never Tried One

Arne Sorenson thinks Marriott can out-Airbnb Airbnb by offering consistency, products, and service.

As some of these platforms have grown into millions and millions of units, there is an almost paralyzing array of choices and a lack of branding, and the lack of real attributes of quality around service and product, makes this an area where we think we can bring our brands, we can bring our service and product focus, and deliver something which is simply a better product and much out there

He suggests that the increasingly clear legal rules for homesharing makes this an appropriate time for Marriott to enter the fray, which it is doing in a test in London by extending the Starwood Tribute Portfolio unbrand to this market, “We have now figured out that we can run this business in a way that does fully comply with law.”

Expect to see Marriott lobby for more laws even as they expand their involvement in the sector. A core capability for Marriott will be regulatory compliance, so the more regulations the bigger the advantage they’ll have over individuals renting out their homes.

Back in December Marriott’s CEO told the New York Times‘ Ron Lieber this daughter has tried Airbnb and she told him it’s nothing to worry about,

Mr. Sorenson, Marriott’s chief executive, said he had never used Airbnb to book lodging, but his daughter has. She told him he had nothing to worry about.

But does he really think she’s right? “They were the toughest competition when they were offering a true sharing-economy product,” he said, describing the company’s origins in renting out an air mattress or a room. “The more they get to offering dedicated units, which they’ve done as they’ve grown, the more they look like the competition we’ve faced for decades.”

It’s true that Airbnb has largely served a different market, that Airbnb hasn’t drawn business travelers away from traditional lodging. They don’t offer the full suite of services that hotels do and aren’t as convenient for check-in and out so may not make as much sense on short stays for time-pressed managers.

However,

  • Money is made and lost at the margin, it draws away some guests and that effect may grow.
  • It brings more rooms onto the market, and though Marriott may be used to competing against “dedicated units” Airbnb means there are more dedicated units. Supply grows without a concomitant increase in demand, that could push down for existing hotels.

If this is a growing piece of the market, Marriott needs to be in it. And they think that they can leverage their loyalty program to make it more attractive to customers. Airbnb has been slow developing its own loyalty offering, focusing first on property owners. Eventually Airbnb should even have a co-brand credit card.

Hyatt has rolled out a loyalty program partnership for home sharing stays but its own partner there has a limited footprint, it’s not really delivering a better guest experience to elites, and redemptions are modest value at best. The bar here for Marriott isn’t high.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The number of managers and leaders in business today that don’t try competing products (and even their own) is just flabbergasting. This is how you end up with terrible decisions. Do you think the AA Max-8 bathroom debacle would have happened if their leadership spent some time actually using them? SMH

  2. I wish the airlines and hotels good luck. As they gutted their loyalty programs and reduced the value of affiliated credit cards we started gutting our usage by moving into AirBnB units, discounted seasonal car rentals, discounted cruises, discounted lodging cards and discounted timeshare trial memberships. So far our recent trips to Palm Beach, Wellington, Washington DC, Williamsburg, Bilbao, and Boca Raton and my son’s trip to Disneyworld were sans the hotels and airlines with those clueless executives. My advice to these executives is to flap their hands and see if they can fly as their customers’ boots reach their rear and they are launched toward the curb.

  3. True, although AirBnb and others are facing an array of legal challenges in most touristy cities in the world, and they’re only going to get worse. The next few years will be interesting.

  4. I’ll take lack of consistent branding and loyalty and save myself 50+% off the cost of accommodation. It’s outrageous how overpriced chain hotels are. In pretty much every case I’ve seen much lower prices from local off-brand properties. Not to mention Airbnb is cheaper by a wide margin and usually offers amenities like kitchen and laundry, which would cost an arm and a leg at a hotel.

  5. Airbnb or VRBO is no brainer for family travel: an apartment, a condo or even a house with large space, a kitchen and laundry. Or more often than not, it’s cheaper than “big name” hotels. We go to Caribbean islands every Dec. Hotels (SPG, Marriott) charge over $1K per room per night, ridiculous!

  6. It’s easy to complain about the hotel chains, but the reality is that Airbnb will always be a niche product. Comparing Marriott to Airbnb is like comparing Amazon to Ebay. Where do you do most of your shopping? Airbnb is certainly a good idea, as it’s basically a sophisticated vacation rental business. While some travelers enjoy vacation rentals, most travelers prefer traditional hotels and motels for the vast majority of their stays. And these travelers aren’t stupid: in most cases, they’re better off in a hotel or motel for many reasons (comfort, safety, convenience, privacy, etc). And I don’t think this is any different for “sophisticated” travelers. I know that I only look into Airbnb rentals when “traditional” accommodations aren’t suitable (generally, because they’re too expensive, poor quality or not available). FWIW, I don’t think Marriott should or will get into the home rental game; it’s not their business. And their existing business isn’t going to suffer much even if airbnb or other home rental services expand.

  7. The home sharing thing is more competition for timeshares. If I were the CEO of the timeshare company Marriot spun off a few years ago i’d be sitting down with the legal team.

    And I completely disagree that the CEO needs to stay in an AirBnb to understand it. It’s like saying he can’t possibly understand millennials because he isn’t 30. I’m not the target demographic of what I do professionally (and I’m pretty good) but the difference is I listen to people that are the target demo which IS what a good business leader does while also factoring in profitability.

  8. @chopsticks – you can define a “niche” (or segment) however you see fit, but the one you mention – that comprised of markets where chain hotels don’t exist or are twice as expensive – is pretty large, and darn pretty important.

    The other thing with Airbnb is that the people who don’t use it are seemingly unaware of how sophisticated successful hosts are these days. Many of them have very legitimate hospitality or property management experience, and are providing experiences and amenities in line with chain hotels (e.g. partnering with local restaurants to arrange for breakfast, providing car transfers, etc.).

    I’m by no means an Airbnb diehard – I’m a Hilton and SPG/Marriott guy – but every time I’m forced to turn to Airbnb for the reasons mentioned, I’m increasingly more and more impressed. I’m not of the mindset that it’s going to displace the big chains tomorrow, but I’m sure that Sears and Circuit City weren’t afraid of an online bookstore either.

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