Over the past decade, the multi-billion dollar hospitality industry has experienced exponential growth, increasing in overall combined revenue from $116 billion in the early 2010s, to over $185 billion today. The domestic hospitality industry’s growth, marked by significant upturns in global tourism and business travel to and from China, Hong Kong, and India have paved the way for economists to predict a stable outlook for both branded and independent hotel locations into 2020. However, new competitors have disrupted the hospitality market that didn’t exist when the decade began late 2009. Private property rental giant AirBnb, ranked the #4 unicorn company in America, has positioned themselves as a desirable alternative to traditional lodging options for the younger generation accustomed to making reservations on smartphones and tablets. However, there are several advantages the hotel industry still enjoys that allow for confidence in its continued growth for years to come.
The most obvious advantage hotels enjoy over services such as Airbnb is the standard, individualized room service and clean-up for multiple-day stays. AirBnb property owners usually do not provide clean up services for shorter stays, and even for longer durations, this perk may come at an additional cost.
Although Airbnb has taken several steps towards universalizing its standards pertaining to photo accuracy and the state of the rental, many Airbnb customers have reported that their rentals were not accurately represented in the photos presented on the platform.
While the same can be said for some smaller independent hotel chains, the majority of domestic hotels are held to a market standard decided by digital review spaces, such as Yelp! or Google. An improperly represented room will be quickly made public by disgruntled travelers, directly impacting the RevPAR for not only that particular location, but the brand overall; an effect that cannot be mimicked on a platform like Airbnb. The only way to keep an experience consistent in the private rental sector is to rent from the same renter. Contrarily, with hotels, you can know what to expect before arriving. Other perks, such as direct contact customer service, (AirBnb serves as a policy mediator between customer/renter disputes) concierge services, and protected parking provide peace of mind for travelers not familiar with the areas they are visiting. The competitive advantages of hotels over private rentals is a peace of mind that cannot be replaced, and ensures the continued success of hotels in the hospitality space.
Daulat is an Investment Management Company that focuses on investments in industries such as real estate, wireless mobile, and quick service restaurants, among many others. Daulat is headquartered in the San Francisco Bay Area, with offices spanning the globe in China, Dubai, and New York.
Rick Mirza is Daulat’s CEO and President. With years of experience in the real estate, hospitality, and financial industries, Mirza has carefully crafted the corporate culture and reputation of Daulat, efficiently working with local, regional, national, and global agencies to position Daulat as a leader in investment management strategies.
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