More often than not, disruptors on the verge of being successful are welcomed with snarky, down-putting comments from the sector’s leaders.
Airbnb, for example, could probably write a book about this very topic… and, if they waited another 5 years or so, probably, that book would be about how their top competitors in the Hotels category died from their denial that the world around them is changing.
For that reason, today I want to applaud AccorHotels for its acquisition of Onefinestay for $170M. Granted, Onefinestay is focus on high end stays and adds a service component that Airbnb lacks in many ways, positioning the services much closer to those offered by a hotel…
… and that’s basically a rather strong blow at Chris Nassetta’s comment (Hilton‘s CEO) when assessing the sharing industry (although I’ll concede that he was talking more specifically about Airbnb):
“It’s a different business segment onto itself. And the segments that we are serving largely, I think, will remain separate and distinct from that. I don’t think customers suddenly woke up…and said, ‘We really don’t care about consistently high quality products, and we don’t need service and we don’t need amenities.’ I just don’t buy it.” – Chris Nassetta, CEO, Hilton
The other interesting fact about Onefinestay is that its Series D round closed in June 2015 included Hyatt as an investor… wouldn’t that make them the likeliest buyer less than a year later? Did they basically just want to get insiders info on this new threat? Did they realize that the business model was, in the end, not so much of a threat? Did they realize that they did not have the culture to make it work in the long run as an in-house product? Did they have interest but were outbid or considered it overpriced?
Or maybe, Nassetta was actually spot on about, specifically, Airbnb’s growing customer base not being a threat to Hilton – or Hyatt – because their customers do look for commodities and services that are not offered on Airbnb.
AccorHotels has been struggling with the ‘Airbnb effect’ in the past years, refocusing its product offerings and innovating on food and drinks to recover its revenue loss. Far more than just raising the bar (and filling up the bars) in its hotels, AccorHotels had also already started to morph into a booking platform for more than its own brands, conscious of its customers’ changing needs. So, after all, the Onefinestay deal is AccorHotels’ response to Airbnb, trying to fit the ‘sharing economy’ model within its product portfolio, and starting with a company that, all in all, is an hybrid model between a hotel operator and an Airbnb.
I’ll be interested to see how this pans out for both AccorHotels and Onefinestay but I do believe that this was the right decision and is only a beginning. I also think that other large hospitality groups should pay a close attention to this deal and its development as I think that their future do rely on adapting to this changing world.
Naturally, the same goes with many other industries, from transportation to healthcare or banking, tech disruptors are changing how consumers view their needs and, sooner or later, the old school nay-sayers will be left out of the equation.