Is The Lodging Industry Ready for Change? Entrepreneurs Like Steve Streit Say Yes

Posted On Tuesday, 11 June 2024 13:44

It’s difficult to believe that it has been nearly 20 years since Airbnb disrupted the lodging industry. To be fair, the threat didn’t become fully apparent to traditional hotel and resort operators until it was almost too late for them to pivot.

But pivot they did. Now, industry experts like investor and entrepreneur Steve Streit believe the lodging business may be poised for another round of transformation.

While some believe the future will look more like the distant past, which was dominated by a mix of full-service hotels and no-frills roadside brands, Streit and his peers see lodging headed in a more interesting direction. Here’s what they expect from the next two to four years based on recent trends.

Short-Term Rentals Face an Uncertain Regulatory Future

Short-term rentals face a more uncertain regulatory future than at any time since Airbnb first hit the scene over 15 years ago. This has led many observers to call the “top” for the market and predict that traditional hospitality providers will gain back market share in the years ahead.

The regulatory uncertainty is real, but so is the consumer’s preference for the flexibility and comfort of short-term rentals. That’s creating an opportunity for startups like Streit-backed Landing, which gives multifamily property owners new tools to monetize their assets in a more predictable and stable fashion than platforms like Airbnb can offer. Look for this space to develop more in the near future.

HomeAway/Vrbo and Airbnb Are Pursuing Different Strategies

One other notable trend in the short-term rental space is the strategic divergence between HomeAway brands (such as Vrbo) and Airbnb. Both continue to pursue segments of the short-term market, but they’re increasingly focused on different parts of it and seem committed to offering different types of value. Whether this divergence continues in the next one to two years is a source of significant interest for investors in the space — and guests, property owners, and other stakeholders as well.

“Standby Apartments” Are Here to Stay

Landing is part of a larger trend of “standby apartments” — flexible living spaces that can be used for short-term stays or longer-term tenancies, depending on the needs of the property manager.

These arrangements have operated at the margins of the multifamily property niche for some time, but they’re slowly becoming mainstream amid the shift to remote and hybrid work, an increase in “flexible downsizing” among older Americans, and younger folks’ ongoing embrace of the “digital nomad” movement. 

Legacy Hotels Are Upping Their Game

Traditional hospitality companies scrambled to adjust as Airbnb and other short-term rental providers gained market share in the early 2010s. They’re still working hard to stay ahead of the curve — adding lifestyle amenities, stripping out frills that add little value, opening new outposts in neighborhoods once passed over by mainstream hoteliers, and changing room layouts to better reflect younger visitors’ tastes. In short, they’re doing their best to offer a superior alternative to short-term rentals and legacy hotel experiences.

Sustainability and Flexibility Are the New “Must Haves”

Solutions like Landing, and the hotel industry’s pivot more generally, get an important attribute of modern consumers’ lodging preferences: that flexibility is absolutely critical.

But flexibility isn’t the only thing today’s travelers want. As in other facets of their lives, they’re also looking to align with brands that share their values. For example, many travelers seek out properties that center sustainability and care for the environment. Others prefer properties that are pet- or kid-friendly. 

As travelers grow more sophisticated and more comfortable in expressing these preferences, we’re likely to see existing lodging niches deepen as new ones form. This presents an incredible opportunity both for hospitality operators and for new solutions emerging to serve the industry.

Hospitality’s Innovation Imperative

Today, as AI rapidly gets more powerful and consumers evolve their behavior like never before, every industry is facing its own version of the lodging business’s transformation.

Such changes are concerning, even scary, for incumbent companies accustomed to doing things a certain way.

The good news for lodging brands and investors like Steve Streit is that the hospitality industry has been “transforming” for many years now. If there ever was a status quo here, it’s an uncertain and flexible one.

That leaves an opening for new disruptors who want to show travelers and operators a better path forward. Although much remains uncertain, one thing is for sure: innovators like Streit will be there every step of the way.

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