Hotels VS. Airbnb: Positive Rivalry Drives Innovation

Business and Hospitality

What could a global hotel executive have to say about Airbnb? The rule is typically: ‘If you don’t have anything nice to say, don’t say anything at all.’ Since peer-to-peer accommodation start-up Airbnb launched in 2008, the mood has been tense between traditional lodging providers and the DIY movement that Airbnb represents.

However Kimo Kippen is the Former Chief Learning Officer at Hilton Worldwide and view on Airbnb is defined by one word: exciting. Airbnb many not own hotel rooms, valuable property, or even a long-standing reputation, but what it does have is an ingenious platform that grants so much more autonomy and choice to its users. Kippen sees this competition as inspiration and is pushing Hilton to make greater efforts to innovate and keep up, for example through an integrated app that allows digital check in, greater room control, and digital room keys.

There are countless studies which demonstrate that competition increases motivation – as far back as 1891, psychologist Norman Triplett found that the presence of another cyclist made his study participants pedal faster.

The rivalry between companies like Apple and Microsoft has led to ever-advancing technology for the public, the result of two competitors spring-boarding off one another and pushing each other to innovate.

The hotel business is booming, with the industry showing all-time high performance and growth projections in 2015, according to competitive benchmarking firm STR. Supply is climbing, and the pace of hotel closings is slowing. This is even as a study from Boston University in June 2016 found that Airbnb has contributed to a reduction in “aggressive hotel room pricing, an impact that benefits all consumers, not just participants in the sharing economy.” That likely hurts the bottom-line of hotels and yet they have, on the whole, been resourceful enough to have the best year ever. In turn, changes are being enforced on Airbnb, most recently through a new law in New York that only permits room rentals if the host is also living in the apartment, and prohibits rentals in multi-unit buildings for less than 30 days – violations are punishable by a $7,500 fine. This is controversial for many reasons, and no doubt hinders Airbnb’s ability to function. Will they find ways to remain competitive?

Hotels and peer-to-peer accommodation will find themselves in a beneficial rivalry only if the focus is on self-improvement, as opposed to the destruction of the other. When the latter happens, it punishes the client and hinders the spirit of innovation.

  • Transcript

TRANSCRIPT

Kimo Kippen: How does Airbnb or platforms like that, because now they're not just Airbnb, it's a very expanding and very competitive space, how does that play out in terms of the industry? I think it is not a zero sum game and that we, in this case in the hotel business, really have to just appreciate that, again, consumer/customers, our customers are going to want to access their, in this case their hotel solutions or their hospitality solutions in the way that they want to receive them. So we, again, want to make sure that from our brand value proposition that we're able to offer brand value proposition that meets our customer's needs. So we're constantly looking in terms of innovation and how we can expand to meet that all still within the context of Hilton, our brands, our purpose and our vision and our mission. But then thinking about how that means how we drive greater loyalty with our customers so that they're really part, you know, that we value them deeply as Hilton customers and as Hilton Honors members and that that's something that we want to continue to expand and also to provide greater innovation in the way that we do that.

I think there's so much to learn from Airbnb and providers such as that. Really for me what's so exciting is the platform. Look at the Airbnb example or the Uber platform, again, these platforms don't own taxis, they don't own hotel rooms, but what they do have is the platform. And so think about it from our platform and where we're taking again tied directly to our brand, in that platform, again, would be one that, of course, that would be digital and it would manifest itself on a very personal way customer to our service that we provide them, they would access it through the service that they receive. And that's how we can drive greater loyalty being able to do that. But learning about the platform, how they've nuanced the platform, again, to meet the customer where the customer is at the unit of a one to have that all be self accessible and then all determined by, again, self through technology, that's very exciting. So again, the innovation that we're looking at, particularly within our guest rooms, is that this also would become your digital wallet; this becomes everything that you would control in your guestroom; this becomes everything that you would need to do within the hotel. And ultimately what we're looking for is how all of that would be integrated together so that it would be seamless and transparent to the guest experience as they're moving from department to department from leaving the hotel to then checking into go to their next experience or to catch their next flight, all of that becomes very much an integrated experience that they're doing and that has to do with the platforms that are made available out there.

So the power of the platform I guess is what would be my greatest learning or admiration and how can we learn about that platform? And then customer data, which I think is really the real important backend of this, is all of that customer data that we then are able to have in a very, very positive way, again, to customize our solutions for our customers to better me to their needs and then ultimately to be predictive. So the predictive analytics that those platforms are then providing, again, with the many partners that we work with to have integrated solutions to have a seamless guest experience is where I think it's all going and that's really exciting.

We have several internal solutions that we do that we have on our learning management systems platform. In addition we have other enhanced technology that we can use to do that. Very much operate like an app internally to be able to do that. And then we link that back to social collaborative sites that we have. We have that, again, by brands or by hotels or by functions that we can do that to use these collaborative tools to support that. What's happened really I would say there's a major shift from a guest prospective is this enabling technology is able to, and androids, is able to enhance the guest experience. So for our customers, for our Hilton Honors customers, and we have millions of them, they're able to make their entire reservations through their device. They're then able to check in on their device. And we're in the process now of enabling the entire system, more than 745,000 guest rooms in 104 countries. What we're doing now is making the ability for our guests to be able to go straight to their room.

So what you'd be able to do is you would be able to check into your hotel. And what I mean by check in you would announce to the hotel I'm thinking of arriving at 3:00. And then it would auto pick a hotel room for you, or it would allow you to pick your own room and based on your status it would give you a show of rooms that you could then pick from. Because some customers want to be near the elevators, some customers don't want to be near the elevator. Some don't want to be higher than the sixth floor or whatever it may be we can provide those choices to them as Hilton Honors members. And then the capability that's being put in place, many of them around the world already have it enabled, is that directly on their device they would be able to go straight to their room. A green circle goes on your iPhone or your android and then you just touch it and then the door blinks, the little green light blinks and then you hear a click. And that sound and that light blinking flashing is like a thing of beauty. So in addition to that - so just think about that happening. So when you go down to the gym the same thing happens. If you had to get into the elevator to get into the elevator you had to be able to use your key, a digital key would also just show up on your device. And if you're checking out of a hotel and you valeted your car and you're getting your car out, again, your digital key would help you to do that.

So again, think of that from a guest prospective. And then what we're doing simultaneously we're creating that entire experience for our team members so that they can learn on their devices. And in many cases we do that in a gamified way, so using gamification to make that fun and engaging bite size little chunks to be able to do that. And then we want to ensure that they've done that so there has to be a degree of success or a degree of completion. You could say think about that from a compliance perspective, so that we know that they know that they know it. And that's what we're looking for. And again, those are all things that we measure, those are all things that we track and those are all things that go to ensure that our team members are able to provide great guest experience because they're competent and they know what to do.

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Big Think Edge helps organizations get smarter, faster by catalyzing conversation around the topics most critical to 21st century business success. Led by the world’s foremost experts, our dynamic learning programs are short-form, mobile, and immediately actionable.