Hotel Thoughts on AirBnB Notes

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Source: Hotel Earnings Call Transcripts

Hotel executives are starting to mention in their commentary that they are nervous about competitor AirBNB affecting their business

Pebblebrook Hotels (PEB) CEO Jon Bortz said the industry is losing its pricing power

“So if you look at business around marathons as an example, where we used to have really intense compression and an ability to price that maybe what the customer would describe as sort of gouging rates. I’d say we’ve lost a lot of that ability at this point within the major markets where these events take place.”

Hyatt Hotels (H) CEO Mark Hoplamazian said the service offering between AirBNB and his hotels is substantial

“Airbnb is focusing their attention on how they could be effective on the business travel front. But there are just some inherent differences in what they can offer and what hotels offer. And I think those differences are really, really material and substantive in terms of stay experience for business travelers. So, do I think that there will be incremental penetration, over time, for business travel? Sure. But it’s not anywhere near the incidence of leisure travel and that purpose of stay.”

Lasalle Hotels (LHO) CEO Mark Barnello said AirBNB is directly affecting their performance

“Although it’s incredibly hard to quantify, there is no doubt in our mind that Airbnb and other similar services are hurting our top performance on the margin… Until the short-term rental sites and their hosts are held accountable to the law we think they’ll remain a threat to the hotels in major cities, which not coincidentally are the same markets in which we own hotels.”

Intercontinental Hotel Group (IHG) CEO Richard Solomos says he expects AirBNB to be more tightly regulated going forward

“As a source of competition, it’s small, in a market that is growing heavily. This is just a new dynamic and obviously because of the model, Airbnb is making an awful lot of noise, but it’s not a new competitor. And, of course, the whole unregulated nature of that market is attracting the attention more and more of regulators. You’ll have seen all the stuff around Uber. And I think it is important that consumers are protected and there is some real danger, particularly with the Airbnb model, of a lack of regulation and a consumer misunderstanding which I think we’re hearing governments talk more and more about.”