Hotel-Online recently spoke with Gary Isenberg, President of LWHA Asset & Property Management Services following the ALIS Conference to discuss his predictions for the industry in 2017 including methods to work collaboratively with Airbnb as well as where there is potential for growth in the short and long term:
You recently shared that you believe there are four major trends in hospitality for 2017. You explain that three of these four trends are not new. Why do you believe these trends are still relevant and will have a bigger impact now than in previous years?
The three trends I’m referring to are: consolidation, booking direct rather than through OTAs, and a term I’d like to call ‘market disruptors.’ Because major mergers in our industry occurred last year, 2017 is the year we will see the effects of this consolidation. Now that changes have been made on the business side, the next step is to introduce these changes to the market. Market disruptors such as Airbnb are now omni and ever present, and watch as we will see them become more accepted because the industry is realizing that they are not going away.
Regarding hotels’ recent efforts to encourage guests to book direct the number of people using OTAs is still increasing. For example, NASDAQ shows Expedia’s revenue grew 24.9% between September 2015 and September 2016. To use Expedia as an example again, certain OTAs have introduced their own loyalty programs, further encouraging guests to book through them, not through brand.com websites. Although brand.com still books more nights than OTAs, the loyalty programs are going to increase OTA users. The industry is going to have to monitor their bookings closely and work more with OTAs than against them to increase their bookings overall. 2017 will see acceptance and partnerships causing major changes and, hopefully, successes for the hospitality industry.
Gary, I’ve heard you use the expression ” predictable unpredictability.” What are you referring to?
The new United States presidency will bring numerous changes, and as we’ve seen so far, these changes are likely to be sudden, sweeping and even controversial. The first two weeks of the new administration should prepare us as an industry for the unexpected, and at any time. Our charge is to learn how to roll with the punches, ride the waves and manage unanticipated change, perhaps even more rapidly than we might want. If we are resilient and flexible, we may even be able to use change to our advantage. If we embrace change and maintain an optimistic out-look, there will be success and progress in 2017.
Is it true that you refer to Airbnb as the industry frenemy alongside other outside forces?
Airbnb actually has potential to be tremendously helpful to the lodging industry. I share an example of a recent road trip my family and I enjoyed, to see a college football game. It was peak season and the hotel rates were at a premium. We found a house on Airbnb at a much lower price point and had a full backyard to use for tailgating. Staying in an Airbnb that weekend does not deter me from staying at a hotel the next year, it will depend on cost and availability. This is where Airbnb helps the hotel industry. During times of peak occupancy in a market, Airbnb accommodates guests who otherwise wouldn’t be able to find a room. This means that the market does not need more hotels. Airbnb provides the extra rooms at the right times, without adding permanent rooms that could potentially take business away from the hotels during low periods of demand.
How do you think laws pertaining to Airbnb will impact its growth and existing ‘independent contractors’?
States have been trying to implement laws to limit Airbnb since the company first started. The laws will level the playing field, but I don’t think it will hinder Airbnb’s growth as a business at all. Airbnb continues to become increasingly more popular as it provides guests with (at times) affordable options for their stay. However, I do think that new laws will help restructure how Airbnb is used in certain states and cities, such as New York City. There are going to be difficulties introducing laws, but it will be even more challenging to enforce them. I don’t think that Airbnb’s ‘independent contractors’ will see a huge change in how they provide service.
Where do you see positive growth and optimism for the hospitality industry as we move further into 2017?
The potential opportunities resulting from the mergers and acquisitions that the industry has seen recently, will be notable. These mega-corporations are going to change the landscape of the hotel industry with their sheer size and influence. There are opportunities to partner with OTAs and Airbnb to find successes, and the industry is ready for these working relationships. There is optimism surrounding the industry as the world becomes more global in general, with people traveling everywhere, all the time. I know that 2017 will be an interesting year and I’m eager to see how the industry reacts to whatever gets thrown our way.