The Taste with Vir Sanghvi: Why hoteliers need not worry about Airbnb
Each time I go to a hotel conference or talk to a group of hoteliers, the same subject always come up. Are hotels doomed? Why would anyone stay in a hotel when they could just book an apartment or a villa on Airbnb? It is much cheaper and now, in an apps-based world, takes only a minute or so to book.
The parallel that hoteliers use is Uber. Hasn’t Uber sounded the death knell for the taxi-business? Won’t the hotels vs. Airbnb battle follow the same pattern? If Uber worked against taxis, then why won’t Airbnb be the same when it comes to hotels? It is a valid question though there as many differences as there are parallels between the two examples.
The idea of Uber is not new. In London, for instance, there have long been so-called minicabs or private taxis which are far cheaper than the hideously overpriced London black cabs. One reason they never had the same impact as Uber was because the business was divided among several small companies.
But the main reason, I suspect, was because they were not cool. Uber’s greatest advantage, all over the world, is that its brand is cool. In India, Uber is not necessarily cheaper than a kaali-peeli taxi, hailed on the road. But while the taxi seems downmarket, Uber seems cool.
I am not sure that the same argument applies to the hotel business. There is a strong monetary argument in favour of Airbnb but I don’t think the brand or its properties are necessarily cooler than a hotel would be. When I hear people say that they rented a wonderful apartment in say, Florence, my first reaction is, “Wow! That’s really good value.”
I do not say, “Oh that’s so much cooler than the Four Seasons or the Villa San Michele.” It is not the brand that seems cool. It is the value argument that appeals. Yes, there are newcomers into the hotel business who can be compared to Uber. But they tend to be people like, say, OYO Rooms. At that level of the market (three star and below), once upon a time, you only found dodgy properties that no one had heard of. Once OYO came along, with upgraded and branded guest-houses, it created a brand that not only promised good value but also seemed cooler. What would you rather tell your friends: “I am staying at Sagar Guest House” or “I am at an OYO property”?
The answer is obvious.
There will be times when hotels will not be able to compete with Airbnb. A villa in Tuscany that can accommodate two whole families (with children) probably costs less, on a daily basis, than an ordinary single room at the Four Seasons in Florence or the Villa San Michele. There is no way a luxury hotel can compete in that space on a price basis.
But the rest of the time, people who stay in luxury hotels will not abandon them even if Airbnb options are cheaper because there are things a hotel provides (apart from the branding:there is the service, the ambience, etc.) that no apartment rental can match.
It could be that as a guy who has stayed in hotels all his life, I am just unwilling to accept that the end is nigh. But I don’t think that is it. On the whole, I am perfectly willing to adapt to the changing world in most fields. I no longer watch entertainment TV in real time. (Actually, I don’t know anyone who does.) I am much happier watching shows on Amazon, Netflix or Hotstar. If I read a review of a book that sounds interesting, I download the book on my Kindle. I only go to the cinema to watch super-hero/action movies that require big screens. Otherwise, there are plenty of other ways to consume movies in my own time and in my own way.
If I am in London, I’ll always try and take an Uber rather than be ripped off by a Black Cab driver. I’ll do my restaurant bookings on an App. When I travel on my own (not through a company’s travel desk), I’ll use the internet for flights. And so on.
But here’s the difference. Virtually none of the new technology options I now prefer have to do with branding or coolness. They have to do with convenience or time (do I really want to watch the Homeland telecast on Star World when I can watch it whenever I want on Hotstar?) and value (Uber in London).
So yes, if I was going with a party of six to Florence, then I would take an Airbnb villa and avoid one of the expensive hotels. It would be foolish to pay for three rooms at say, the Villa San Michele. But if I was going to New York on my own for a few days, I’d still take the Park Hyatt or The Pierre. (In any case, Airbnb now has its own problems in New York.)
Perhaps some of this has to do with branding ; the future of the hotel industry depends almost entirely on branding, I suspect. But I also love hotels in a way that I could never love a one-off rental. (Yes, I might use the rental because it is cheaper but I would have no real affection for it.)
What do I love about good hotels? At one level, it’s the usual stuff: the sense of service, luxury, of adventure, of pampering, etc. But there is another level at which hotels are special. The best hotels are like old friends with personalities of their own. They don’t have to be expensive, they just need to have character.
It is easier for a grand hotel to have character because it usually has the advantage of history. When you step into the Oberoi Grand, you feel you are entering into decades of history, back to an era when Calcutta was the greatest city in Asia. The Taj Mahal Hotel in Delhi captures the many ways in which the city has changed over the last forty years. I love the Connemara in Madras because it was, for many decades, the grandest hotel in South India. (The Taj’s new CEO Puneet Chhatwal is committed to restoring the hotel to its former glory when it reopens later this year after extensive restoration and upgrading.)
But newer hotels can have personalities too. I am writing this column at Udaivilas in Udaipur (sadly, I am here on work so I can’t fully sample its delights), which keeps winning awards for being the best resort in the world (or, at the very least, is in the Top Ten Resorts). Udai Vilas wins these awards because, 16 years after it opened, the hotel still radiates calm and elegance.
Or, consider the ITC Grand Chola in Chennai. When it opened I predicted that future hotels would be judged as pre-Chola or post-Chola. And indeed, it has set new standards for modern luxury. Each time I go, I feel I am floating on a sea of marble and each stay generates its own kind of excitement.
Whether we realise it or not, great hotels become old friends to the people who frequent them. When the Oberoi New Delhi re-opened after renovations this January, all its regulars came to check it out with a critical eye. The attitude was not “Hey, let’s see what’s new!” Instead, it was “I hope you have done nothing to damage the hotel I know so well”.
This is not a new feeling. When the Taj destroyed the original Machan in Delhi with thoughtless renovations, every single Machan guest acted as though a much loved friend had been mugged. It isn’t just the expensive hotels that have character. Of the many hotels Taj has in Goa, the Exotica and the Hermitage are the group’s top properties. But ever since it opened in 1980, my favourite has always been the cheapest of the Taj’s hotels in Goa: the Holiday Village.
For much of the 1980s, many of the rooms had no air-conditioning and there was no room service. But it was such a charming property, with Goan style villas from where you could hear the waves roaring through the night that I never seriously considered staying anywhere else.
I went back this year and found they had defaced the property by building a hideous new modern building for the Caravela restaurant. Like all regulars who hate it when a hotel they know well is damaged, I told them they needed to find a few sticks of dynamists and blow the new building up.
Can you ever imagine anyone feeling that strongly about an apartment or a villa they once rented through an App? None of this is to say that hotels will always triumph over the likes of Airbnb.
But there is enough room for both to survive and even flourish. I regularly download books on my Kindle. But each time I go to Delhi’s Khan Market, I pop into Bahrisons. In Bangkok and Singapore, I go to Kinokuniya. In London, I devote a day to Hatchards and the large Waterstone’s in the old Simpson’s building on Piccadilly.
Partly, it is that I can find books that I had never heard of before. (Most of my food books are on paper; very few are Kindle editions.) But mostly it is because I love bookshops. I hardly ever leave one without carrying bags and bags of books.
Should hoteliers worry about Airbnb? Yes, of course, they should. In terms of price, the likes of Airbnb can wipe them out. Just as bookshops have been hurt by the likes of Kindle, hotels will lose some customers. But there are things that good hotels provide that can never be replicated. So there is no need to panic. Hoteliers should just focus on running better hotels, and creating experiences that no rental can replicate.
As long as they recognise that their job goes much beyond renting out beds and focus on providing services and an ambience that no rental can match, hoteliers will discover that their properties will continue to thrive in the era of Airbnb.