Home sharing continues to gain traction at the expense of traditional lodging options, and the hospitality industry has reacted in stages. Initial resentment and denial of startups like Airbnb has now given way to begrudging acceptance that the sharing economy is here to stay. The Hyatt and Wyndham chains have even made investments in lesser known home sharing brands.
Hyatt Hotels Corporation invested in onefinestay, a niche upscale vacation rental provider with an inventory of homes in four major cities: New York, Los Angeles, London and Paris. Executives from both companies discussed the new dynamics in the lodging category at the NYU/New York University Tisch Center for Hospitality and Tourism’s recent Stephen W. Brener lecture.
The takeaways highlighted below related to branding, scaling and customer relationships apply across a range of products and services.
The five-year old British brand onefinestay follows a different model and doesn’t compete directly with Airbnb, said Evan Frank, co-founder and vp, Americas. The company is a more service-led option for those wanting to monetize their real estate. They work with travel agents and real estate brokers to source homeowners willing to rent out their places for at least six weeks a year and provide them with property management services. The guests, typically extended stay or leisure travelers, are under onefinestay’s care, not the homeowners’ care.
Hyatt invested in onefinestay this year, because as Steve Haggerty, global head of capital strategy franchising said, “it’s a growing business, though not dominating the demand side. We’re well-positioned to fend off risks. We’re not fighting it, and it’s not a zero sum game since we share values. Currently we’re a passive investor trying to understand the business better.”
“We’re now riding a new phase in the boutique hotel business,” said Frank. He also sees synergy in the investment. “We view Hyatt as an opportunity for cooperation, not competition. There’s actually more cooperation than is generally perceived.”
“It’s harder to own customers today. Even loyal customers only stay an average of a couple nights per year at Hyatt. There’s not a closed environment in any stage of trip planning,” said Haggerty. “We focus on stay and non-stay occasions (like spas and restaurants). We need to foster an empathetic style within our community. After their stays, we also have a forum for engaging with our guests.”
“We’re a hospitality company that uses technology to acquire customers more efficiently,” said Frank. “Our homes are under different roofs, so we have distributed logistics under a customer service wrapper. We control the accommodations experience once the guests are in-stay.”
“The existential threat to anyone in our business is becoming a commodity,” Haggerty cautioned. “Hyatt is a brand-led lodging company with a strong culture. We’re later and newer to brand strategy. Brands in our portfolio don’t have to be completely separate though, since the same person can stay at different brands for different purposes.”
Onefinestay is scaling gradually, Frank explained. “We need density so we can manage enough homes in each city. Our host portfolio includes two segments: primary and secondary homes. We need to place careful bets to control the customer experience more tightly. We prefer to unlock accommodations in urban settings, not resort destinations.”
“We’re not trying to be the biggest hotel company,” said Haggerty, with a clear reference to Marriott International and its recent purchase of Starwood Hotels and Resorts Worldwide (though Hyatt was initially in talks to be the buyer). “You need to be where your customers want to travel. We grow to serve our high-end customer base and figure out where we’re not located yet that we should be.”
“What keeps us from growing more quickly is that it’s hard to get quality assets in high value markets,” Haggerty added. “Our growth plans are not modest, and in fact we’re growing at a higher rate than our peers. We want to serve our customer base well through their lifetime.”
(Images courtesy of Hyatt Hotels and Onefinestay)