Marriott didn’t think of Airbnb and the Homeshare market as much competition but has since launched a Homeshare program. It only goes to prove that their leadership is tone deaf, out of touch and still just doesn’t get it.
Marriott Hasn’t Thought Much of Airbnb in the Past
Marriott’s CEO hasn’t been shy that he doesn’t think much of Airbnb. Well, actually, according to his daughter he has nothing to worry about – he clearly hasn’t looked into the matter much himself. Here’s the New York Times take on the matter following CEO Sorenson’s comments on stage at an event.
“Mr. Sorenson, Marriott’s chief executive, said he had never used Airbnb to book lodging, but his daughter has. She told him he had nothing to worry about.”
He isn’t the only executive at Marriott that feels that way.
“Any comparison stretches only so far, said Tina Edmundson, Marriott’s global brand officer. She has sampled Airbnb, twice. How did she like it? “It was O.K.,” she said, scrunching up her face a little. “It was fine.”
They just haven’t taken Airbnb seriously to this point and that has guided their awfully miscalculated approach to homesharing.
Slanted Toward Ultra-Luxury Properties
Run a search on Marriott’s new Homes and Villas site for Cabo. Here you go, I’ll make it easy for you. Look at those values!
I get it, they don’t want to sell extra bedrooms in apartments they are focusing on premium homes, after all, it’s Homes & “Villas.” Fine. But there is the premium market and then there is just-for-celebrities premium. When you look at the Cabo search results, $1,300/nt before taxes, fees, and cleaning look like a steal compared to most of the properties available from between $4,000-13,000/nt. The market for $10,000/nt+ properties is so limited that I’m not sure a dedicated website even makes sense to operate, and for Marriott to go in this direction is bizarre.
Fails to Capture Airbnb Market
Even on the rare occasion that Marriott has a property that might otherwise compete with a traditional Airbnb property like this one, it still seems that they miss the boat. With no offense to the homeowners, even in peak summer I just can’t see spending $2600 for their property for a week.
At a comparable Airbnb that I find to be more updated and a better value, the cost is half the price. But unlike the Homes & Villas properties, Airbnb has tons offered above and below this price point. The above property from Homes & Villas was the cheapest available for the Charleston, South Carolina market when I searched. Other markets have some that are cheaper, but they are sparse and less impressive than the less expensive Airbnb choices.
It’s not just the cost that Marriott needs to improve to compete, it’s also the value. The properties are worse with Homes & Villas for a serious premium (in some cases more than twice the cost). You can get great value at less than $100, or $1,500 – it depends on what you’re getting for your money, it’s not just price.
Just Another Example of Marriott’s Tone Deaf and Clueless Management
Marriott’s management didn’t understand Airbnb and the appeal when the CEO’s daughter told him that they have nothing to worry about. Maybe he should look at Airbnb’s latest valuation (estimated at $35-38 bn) compared to Marriott’s current market cap of $43 bn and consider whether they are closer to rivals than an afterthought. Marriott considers Hilton a peer and they have a market cap of only $25 bn. By comparison, IHG (who hates their elites) has a property volume on par with Marriott yet a market cap of just under $12bn. Airbnb is far closer to a Marriott competitor than traditional hotel brands if considering the metrics of valuation and coverage.
Marriott clearly sees that homesharing is a market they should enter. Perhaps they have found a genuine gap in the market, but to say that Airbnb isn’t a threat (though they are nearly the same size business), then to introduce a similar offering shows they no longer believe that. It’s reminiscent of Blockbuster dismissing Netflix on an investor conference call.
However, the reason that Airbnb is successful isn’t solely because they have amazing premium properties customers can book, and it’s not just because they cater to the lower end of the market – it’s because they offer what their customers want. When searching locations (Marriott has said there will be more soon than there are now), the properties in major cities only come into play where they would not compete with a Marriott hotel. That’s not to say they only offer in markets where Marriott doesn’t have a location – Cabo proves that wrong.
They are selling against their own new product by trying to sell their old product. For example, most prominently under the property description is a list of “Home Features” which really demonstrates what the property doesn’t have. How many homestays do you know that have a butler or concierge service generally? This is designed to push guests back to Marriott properties. Airbnb doesn’t tell me what a property doesn’t offer unless I specify that it is important to me.
Marriott delivering a premium-only Airbnb competitor is tone deaf and further underscores that they don’t know why people book Airbnb properties and frankly, don’t care. While I don’t believe that Airbnb will make hotels irrelevant, if Marriott can’t find a way to connect customer needs and wants (both current, future, and those of other brands) to their senior leadership making these foolish choices, they will Bonvoy their company and suffer the fate of Blockbuster while the rest of the world watches Netflix and chills.
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