Hotel CEOs Discuss Impact of Airbnb on Traditional Hotel Business
Los Angeles, CA, February 4, 2020-Hotel Interactive reports that several veteran CEOs came together at the Americas Lodging Investment Summit conference during a panel to discuss the impact of disruptor companies like AirBNB and HomeAway.
“David Kong, president and CEO, Best Western Hotels & Resorts, framed the discussion by pointing out that alternative lodging accounted for more than 10% of total U.S. lodging supply last year, according to STR, and he added that number is projected to grow to 12% this year.
“’If you think about that even if they ran 50 percent occupancy that’s six points off our occupancy. If you think about the city-wide conventions or compressed periods of time, the compression rate has been greatly affected because of this new supply. Any way you think about it, I think alternative lodging has had a negative impact on our RevPAR, and worse still if it impacts our RevPAR it impacts our NOI [net operating income] and it affects our asset values,’ he said.
“Kong also called attention to other emerging forms of apartment-style alternative lodging models like Sonder and Stay Alfred, which he described as ‘even more worrisome.’
“Tyler Morse, CEO, MCR, believes the impact of home sharing, particularly in the long term, is far less of a concern for traditional hotel companies.
“’I’m not terrificly worried about alternative accommodations for a couple of different reasons. About 70 percent of the profits of our industry are from business travelers and the alternative accommodations are almost all wildly price sensitive. They’re [people] looking for a better deal. They’re leisure travelers that have low profit margins in the first place so the 10 percent that is being sucked out of the industry is not the good business, it’s the lousy business,’ he asserted.”
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