Now Marriott is advertising private homes for holiday rental, does it signal the death of disruptors like Airbnb?

Business giants are striking back. By blurring distinctions between themselves and thriving fringe operations, smaller companies may have finally reached their peak

Hamish McRae
Tuesday 07 May 2019 16:49 EDT
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A sign marks the location of a Fairfield Inn & Suites Marriott hotel on November 30, 2018 in Chicago
A sign marks the location of a Fairfield Inn & Suites Marriott hotel on November 30, 2018 in Chicago (Getty)

Marriott is going into home rentals and Airbnb is going to run a hotel. That, in a nutshell, sums up the convergence that seems to be starting in the hospitality/accommodation business.

But how far will it go, and are there implications for other areas which have been disrupted by the new technologies?

Viewed in isolation, the Marriott initiative makes a lot of sense. It is the biggest hotel group in the world, with brands ranging from the Ritz-Carlton, Sheraton, Westin, Meridien and so on. But despite being so huge there are sizeable cities where it does not have any hotels, for example in Bordeaux in France.

Offering homes on its platform gets into new markets. Further, there is a big segment of the market that would prefer to rent a home rather than stay in a hotel room. Marriott can now attract those people too.

As for Airbnb, it is planning to convert 10 floors in Rockefeller Plaza in New York into 200 luxury suites to offer on its platform. The idea is push Airbnb upmarket, giving guests a “curated, authentic NYC experience and sense of community typically reserved for locals”, it said.

This is interesting in that it is seeking to provide high-end consistency – or rather the consistency that upmarket guests demand – but with the added element of making visitors feel more like locals.

If both ventures work, expect other hotel groups to offer homes on their platforms, and Airbnb to develop other top-end properties. The challenge for both will be to ensure the quality of the product, always tricky in the hospitality business, but particularly so the higher the room rates. Expensive people have expensive notions.

We’ll have to see how this develops, but it certainly heralds a fightback by the established hotel groups against incursions by Airbnb. At some stage Airbnb plans to go public, and it needs to show it can continue to gain market share if it is to float at a decent rating. But this is not just a business story, for it has implication for other platforms.

By coincidence Uber has just announced that it would start putting real-time data on London’s public transport onto its system. So if you want to travel across London, you will have a variety of options, ranging from an Uber car through to the Tube.

North Londoners will doubtless find this helpful when they go on safari south of the river – and vice versa. From Uber’s point of view, however, this is not so much about being helpful, or indeed cosying up to Transport for London to retain its support – thought I’m sure that is part of it.

It is about being the go-to place for anyone navigating the transport system of a huge and complex metropolis. It accumulates more data about people’s transport choices, data that will be useful in some form, and particularly if self-driving vehicles blur the line between public and private transport.

That surely is the way to see the Marriott and Airbnb developments: blurring the lines. So will it happen to other platforms?

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The obvious prize out there is to take some of the business off the giants: Amazon, Google, Facebook and so on. The general rule is that potential competitors should never go head on in competition, for they will lose. What you do is to pick off segments of the business.

So in the case of Amazon, regular retailers should try to entice people on to their platforms for buying their own goods and services first. Then start to offer related services when they have built up a relationship. In the case of Google, if you cannot design a better general search engine, you create specialist search facilities for professionals.

Blurring distinctions is a way of picking off fringe business when you are not strong enough to attack the core. Airbnb is not strong enough to attack a giant such as Marriott on its home turf.

Even mighty Marriott is not strong enough to create a standalone home rental platform and compete directly with Airbnb, but put upmarket homes onto its platform and it will pick off profitable customers.

The disrupters will carry on disrupting in the markets they serve, and for the consumer that is great. But they may now be at their high point in their power.

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