The sheisty moves hotels are pulling to combat the success of Airbnb

The sheisty moves hotels are pulling to combat the success of Airbnb

CultureOctober 25, 2017 By Will Brendza

There’s something both brutal and exciting about watching new technology give old and stagnant industries a run for their money. Sure, it’s sad when beloved brands like Blockbuster, RadioShack and One Hour Photo slip over the edge and into a fail bucket, but that’s the way of things. Adapt, or die.

Instead of making changes to combat a growing Airbnb, the hotel industry has started hurling fat stacks of cash at politicians and lobbyists in Washington, Boston, New York City, Los Angeles and San Francisco to change the rules in their favor. And, so far, it’s been effective.

Hotels have been around since forever, and have certainly revamped along with history, making changes to meet wavering expectations. But with the rise of Airbnb and other short-term rental services, the playing field has quickly shifted. Tech-savvy travelers now have cheap and culturally entrenched alternatives to brand name towers and sketchy roadside motels.

It’s competition that has the American Hotel and Lodging Association (AHLA) frantically scheming.

For the past few years, hotel executives have downplayed the threat Airbnb posed to their $1.1 trillion lodging empire. Recently, though, that cool non-concern has given way to anxious brooding as the app is forcing prices down in areas worldwide, and has made it hard to rely on price gouging customers during peak travel times — a previously used trick of the trade.

Similarly, college towns like Boulder, Cambridge and Evanston have all begun passing regulations and restrictions to reign in the short-term rental market. Events like graduations and big games draw huge crowds of visitors, which allows for hotels to jack up prices. Airbnb has effectively made it harder to do that.

The effects are substantial. The Hotel Association in New York City produced a study that claims Airbnb had cost them $451 million in direct revenue just in 2015.

That’s not chump change. So the hotel industry’s response has had to be swift and aggressive, This year, the AHLA put together a “Short-Term Rental Strategy” to address the Airbnb problem — with a rather explicit objective:

Build on the success of 2016 efforts to ensure comprehensive legislation in key markets around the country and … launch a wave of strong bills at the state level while advancing a national narrative that furthers the focus on reigning in commercial operators and the need for commonsense regulations on short-term rentals.

Last summer, in San Francisco, the Federal Trade Commission (pressured by senators) began an investigation into how resources like Airbnb affect housing prices in local neighborhoods. Then in October of this year, New York Governor Andrew M. Cuomo signed a bill imposing costly fines on Airbnb hosts who break local housing regulations.

The American Hotel and Lodging Association called both of those actions, “notable accomplishments” in a presentation in November.

Usually, this kind of free-market competition is good for the customer. Buyers are the real MVPs when businesses try and outdo each other to win our hard-earned dollars. But this is an unusual case. Because instead of changing approaches and upping their game to compete with Airbnb and other apps like it, the hotel industry is trying to twist the rules in their favor — essentially paying off officials to force competitors into a tight spot.

Which, while it’s a legitimate business play, doesn’t do much for travelers.

What else could we expect? It’s not like hotels will start offering up the local’s rooms or adopting the ‘home-share’ model of business. Fundamentally, the two resources offer different services — Airbnb is a cheap, easy way to immerse into the local community (or to earn some easy side cash if you’ve got an extra room); hotels are a reliable, more risk averted and professional lodging business. You know what to expect at a hotel … less so with an Airbnb.

Perhaps there is some customer crossover between the two, but generally, the people using Airbnb aren’t necessarily the same people filling hotel rooms.

So, perhaps the hotel industry is safe … for now. That’s good news, but it doesn’t mean their political crusade against Airbnb and other short-term rental businesses is anywhere close to over. In fact, it’s more likely that the marketplace struggle between these two lodging businesses has only just begun.