Cost is the biggest barrier to scale in the hotel industry. It takes on average 2-3 years to build a hotel. The upfront cost for design, permits, and construction can range from $30M to $130M, depending on location and category. These estimates don’t even include the cost of the land. Since these numbers are publicly shared by nearly every hotel giant, it’s no secret how cost prohibitive it is to grow market share in the hotel industry.
Airbnb’s innovation is on the supply side. Anyone can list and monetize their room, apartment, or house with a few steps on Airbnb. The company’s business value is to serve as a trusted platform between travelers and hosts. Discovery, communication, and transactions between both parties all occur on Airbnb. Hosts set their own prices for their listings, provide service, and accept travelers in whatever way they see fit.
So why aren’t hotel executives scared of Airbnb? Are Hilton, Marriott, Hyatt executives all just pretending not to care publicly but freaking out privately in boardrooms? Are the hotel giants just too stubborn to evolve?
0:00 Intro
1:22 Hotel Operating Model
2:19 Seasonal Business
3:11 Main Hotel Categories
3:38 Hilton (Overview, Portfolio, Performance)
4:55 Marriott (Overview, Portfolio, Performance)
5:44 IHG (Overview, Portfolio, Performance)
6:14 Hyatt (Overview, Portfolio, Performance)
7:01 Wyndham (Overview, Portfolio, Performance)
7:50 Rise of Airbnb & Industry Response
13:02 Supply-side Innovation
15:09 Outperforming at Scale
16:38 Why Hotels Don’t Fear Airbnb
17:12 The Traditional Owner-Operated Model
19:52 Misconceptions & Historical Tradition
22:46 Relic of the Past
24:24 The Platforms of Future Past
25:09 Quantity is not Quality
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0:00 Intro
1:22 Hotel Operating Model
2:19 Seasonal Business
3:11 Main Hotel Categories
3:38 Hilton (Overview, Portfolio, Performance)
4:55 Marriott (Overview, Portfolio, Performance)
5:44 IHG (Overview, Portfolio, Performance)
6:14 Hyatt (Overview, Portfolio, Performance)
7:01 Wyndham (Overview, Portfolio, Performance)
7:50 Rise of Airbnb & Industry Response
13:02 Supply-side Innovation
15:09 Outperforming at Scale
16:38 Why Hotels Don't Fear Airbnb
17:12 The Traditional Owner-Operated Model
19:52 Misconceptions & Historical Tradition
22:46 Relic of the Past
24:24 The Platforms of Future Past
25:09 Quantity is not Quality
My experiences with Airbnb last summer: the host (some days after CONFIRMING the reservation) decided to increase price, and asked me if I agree. I did not obiously, as it has been a done deal in my head, and they just canceleed. Airbnb support: we have no power over hosts, we can only fine them… I used to work in a hostel (not even hotel) and if for some reason we could not host someone we had to provide them with nearest accomodation (with no extra charge) in the same or better standard + taxi to move them there…
Beware of the cleaning fee scam thru AirBNB.
Hotels generally won't let you check in until the afternoon which is crap! I'd rather go the Airbnb route after my early morning flights.
You said it yourself, in the end service will be the competitive advantage. It is rare when a big lazy top down managed company’s service is better than the service a small business owner/entrepreneur can provide. Airbnb has all the innovative small business owners. Looks like wyndham is following in the right direction.
Airbnb is about staying in an apartment or house and feel like 'a local'. Hotels are the complete opposite experience and understandably still most people prefer the comfort and worry free experience of a hotel. There are pros and cons for both experiences.
It's such a different way of travelling and there's room for both.
I love airbnb…most my airbnb host are great,i get an excellent price n they have a full kitchen and very homely feel to it.I love to cook using local groceries n its save budget for us..
Love the video but let’s be real… no one wants to be in Miami in the summer.
ABSOLUTELY NO REFERENCES FOR THE "FACTS" BEING CLAIMED.
I love Hyatt!
Here in Brazil is common get people saying “ now NASA comes ( in practice to say that NASA are coming tu study us bcuz of determined way of act)” here the hotels are kinda hosting some rooms on Airbnb so they stay multiplatform on Ads and etc
Honestly I see Airbnbs as a great alternative to low cost motels or co-ops. They also work wonderfully in small areas where the local inns or hotels aren't well maintained. Just having it be an option is great in itself. The main issue I have with Airbnbs is usually in big cities or destinations the insane amount of rules hosts can impose on you are ridiculous and it truly ends up feeling like you're an unwelcome guest there instead of someone who's paying actual freaking money to be there. It's worth to spend an extra 100 bucks on a hotel room to actually feel comfortable being there instead of being on edge all the time.
Most of ya don’t know or were not around when Airbnb launched….. the reason Airbnb was popular….. was because you can get entire homes or full finished basements with private entrances for half the price of a day staying at your cheapest motel… now a days…. Airbnb is no longer useful for that. Hotels have better prices now
you make the most explaining videos I have seen in the past year
I definitely prefer hotels to Airbnb’s. The price is essentially the same and I prefer to have accommodations, room service, housekeeping, etc. Who wants to cook, do dishes and take out trash on vacation??
Airbnb is not cheap, whenever I am going on vacation I don't even think about airbnb lol
Airbnb is still way cheaper than a hotel in Europe. I don‘t know about the U.S. but in Europe it’s still half the price.
I loved this video & the McD video. As an MBA candidate with Hospitality as my concentration I’d love to see more about Casinos, Airfare, Cruising, Table Service, Theme Park, etc business operations.
This is awesome! I wonder if the same is true for Turo vs Hertz, Dollar, etc
Excellent video. Complete, insightful, without and flasy clickbaits
Great video, I learned so much about hotels. I thought that most companies owned and there were some franchises, but I didn't realize how much. Thanks for the vid!
Miami during summer is not its nicest season. Have you been to Miami in the summer? Summer is the slow season in south Florida
Airbnb is much more expensive than what it used to be. I wonder how they will fair in the next few years
the hotel room can cost up to 300 per night and you only can fit 4 people and share one bath, a home can have up to 8 people several bath, free parking , pool, garage, gym and still cost less
One question I have is that since franchising doesn't make the hotels individually any more profitable but they make far more money in franchise fees, it's just a series of suckers who are going to lose their asses to debt right
The thing killing Airbnb is raising rates and local taxes. An airbnb should be cheaper then a hotel.
Just by talking about giving "personal service and assistance" to the guest it makes a big difference between Hotel and Airbnb concept.
Great analysis — the true disruptor of hotels will be Sonder: https://youtu.be/E72SBNoaBgg
Hotels' switchover to the franchise model makes hotels more resistant to Airbnb's competition. BUT, the franchise model presents an opportunity for disruption that Sonder is taking.
Great video! Really nailed some of the key points.
AirBnB is just creepy af, I dont trust hotels but I trust a stranger inviting me into their home less, how long until some pervy engineer makes a toilet cam thats invisible unless you know to look?!?!
Nice job putting this together, thanks.
Next video on Tesla business strategy?
Air bnbs are cheaper and I get a whole apt cheaper than a hotel room. Hotels have high taxes and add one. They close up rooms so they can charge more on remaining rooms. Hotel brands are not the same since they are individually owned. Lack of enough staff means workers are overworked and low paid so rooms less clean.
After May, is our off season in Miami!
Love your videos, very interesting stuff. If you’re consistent this channel will blow up
In a way arbnb has existed for a long time as people would sometimes rent a room to a traveler. But Airbnb is being disruptive, but with housing supply, not the hotel industry.
Great video, can't wait for more
As someone with experience being an AirBNB host on a large single family property, I have some insight and counterarguments for the people who often complain about fees and rules.
People complain that the rules are annoying – you wouldn't believe what the wrong type of people (half the population) thinks it can get away with if there are no hotel employees sitting at the front desk (entrance of your single family home). Those front desk employees serve as moderators as well as greeters… you need sophisticated technology to monitor your home to ensure there are no wild house parties occurring where a hotel would know immediately and kick you out and/or call the police.
People complain that the cleaning fees are excessive – AirBNB will NEVER win on this due to economies of scale, a hotel can have numerous cleaning staff that are efficient at changing over the exact same 1-2 types of rooms and same bedding/linens over and over. Of course cleaning costs are going to be lower. People complain about being asked to throw their garbage out or run the dishwasher before leaving – clearly these people don't clean their own homes ever, or maybe annually at max. When 14 people stay at your home for 3 days and don't take any care to clean up after themselves, it is literally cleaning an entire single family home and could take 10-12 hours of hard labor… not a 350sq ft hotel room. There have been people who used 3 entire garbage cans for 2 nights of stay and left leaking garbage/food bags on pristine hardwood floors, totally outrageous. They wouldn't be able to walk up to the hotel guest services and ask to throw out 8 entire bags of trash.
That all being said, for people who prefer a large home/group AirBNB stay and can treat the property respectfully, I truly appreciate them. As many others have commented, you truly can't compare AirBNB and Marriott… some guests would leave a Marriott room totally destroyed and wouldn't care because it is an enormous corporation, where their actions on an AirBNB could cost the mom and pop owners thousands or tens of thousands of dollars in lost income from cancelling future bookings to fix stuff they broke. Also, imagine if someone stayed in a home you worked 10 years to buy and outfit like a pigstye – you'd be irate, and rightfully so.
My two cents for now!
I used to only stay at Airbnb’s. Now I’ve exclusively been staying at hotels. I always did feel like a burden to the landlord and didn’t like feeling that way.
As usual government regulations and taxes are really what killed Airbnb as a competitor to the Hotel Industry. The major players pushed for years to enact high fees to level the playing field for hotel franchises. Now between crazy high "cleaning" costs, taxes and other add on fees it's actually cheaper in major cities to rent a hotel for a night through an app like Hotel tonight. You actually get better service, faster and reliable communication. There's really no benefit to an airbnb unless you want to pay premium for a large rental home for a vacation.