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The Airbnb Effect: The Sharing Economy’s Impact on Hospitality

Photos by Ryan Gobuty.

Much has been written about the growth of peer-to-peer platforms and the impact of the sharing economy on the hospitality industry—the so-called ‘Airbnb effect.’ In an era when travelers expect high design at lower cost, how can hotels compete?

In June, Gensler’s Newport Beach office hosted a hospitality talk discussing the megatrends that are influencing the future of hospitality, in collaboration with Hotel Business Design magazine. We invited six of the industry’s biggest influencers for a panel discussion to give their candid input and understanding about where the hospitality industry is headed. Several topics were covered, including technology, millennials and community building. But the overarching theme was the potential impact that the sharing economy has on the way we define and work in our industry.

One of the pioneering brands in the sharing economy is Airbnb. Since Airbnb’s launch in 2008, they have had over 60 million guests. Airbnb’s success has greatly impacted modern-day hospitality, compelling operators to pay attention to how this new way of lodging influences their business.

Confidential project. Image © Gensler

One of the questions brought up by our panelist Daniel Hyde, VP of Design & Development for Pacifica Hotels, was, “How do we define luxury?” As Nicole Carlino, the panel moderator from Hospitality Business Design mentioned, Airbnb offers the high-design of a residential home at a lower, more preferred rate. So how do hoteliers compete with that? Hyde explained that high-design can be seen as luxury and it can feel expensive, leading people to feel like they are really getting their money’s worth. “The way in which the word ‘luxury’ is used has gotten a little…. odd,” Hyde explained.

Rick Riess, managing director of Montage Laguna Beach, agreed. “The word luxury is being used in lots of different ways,” says Riess. In order to compete with Airbnb, defining the word luxury and understanding what it means to each hotelier’s clientele may be key to remaining relevant in today’s hospitality industry. If consumers define luxury as having a kitchen sink—a feature that most Airbnb homes offer—then that may need to be added to the amenities list at hotels and resorts.

Confidential project. Image © Gensler

While high-design at a lower cost is often one of the major benefits of staying in an Airbnb property, there are also other aspects—such as community, guest services and security—that consumers miss out on when they choose to stay there. “You lose your sense of community, connection and socialization when somebody tries to take the hotel model and apply it to Airbnb,” Riess explained.

Hostels are a sort of middle ground between a hotel and an Airbnb home, seeing that hostels can provide the community atmosphere that Airbnb-ers crave, without the expense of staying at a resort. For consumers seeking high design, we are currently working on a Gensler-designed hostel project in San Francisco called, “Found.” Our focus is on providing a great night’s sleep at a great value, while allowing guests to splurge on a high-end cocktail and enjoy the hostel speakeasy.

All of the panelists seemed to agree that the hospitality industry should be aware of Airbnb and its influences on our clients and their guests. Bob Olson, CEO at R.D. Olson Construction, adds that Airbnb is a serious industry competitor and Todd Wynne-Parry, EVP, Commune Hotels & Resorts, notes that “this is a huge shift in our consumer approach.”

While this mega-trend could make a huge imprint on the hospitality industry, Hyde reminds us that “there is no security with Airbnb and no real service. Until Airbnb works out some of the kinks, it’s not a real threat because they still have things to figure out.” Jay Pecotte, senior director, Project Development, Hard Rock International, noted that he stayed at an Airbnb in Europe because he would not be in his room at all during his visit. He said that it was a practical option, but he prefers to not have to bring his own shampoo.

Lorraine Francis, AIA, LEED AP BD+C, is a Regional Director of Hospitality Interiors at Gensler. An award-winning author and Hospitality leader, Lorraine works with major brands and boutique clients to deliver a large breadth of architectural and interior project expertise. Additionally, she launched www.hotelsplusgreen.com, a platform where she leads monthly seminars regarding sustainability best practices in hospitality. Contact her at lorraine_francis@gensler.com.