Why Is The Hotel Industry More Focused On Harming Airbnb Than Improving Their Own Product?

Innovation

from the innovate-and-compete,-guys dept

It’s no secret that the hotel industry hates competition from Airbnb. Hell, politicians have even admitted to crafting anti-Airbnb policies to keep hotels from being disrupted. But, now, the NY Times has got its hands on a specific plan from the hotel industry to basically hamper Airbnb and burden it with legal and policy challenges (I should note, by way of some sort of disclosure, that I’m typing this while sitting at a desk at an Airbnb apartment in Washington DC — and, similarly, that it’s much nicer and significantly cheaper than comparable hotels, but I digress…).

Last year, Airbnb underwent a rough regulatory patch.

The short-term rental company became a Federal Trade Commission target last summer after three senators asked for an investigation into how companies like Airbnb affect soaring housing costs. In October, Gov. Andrew M. Cuomo of New York signed a bill imposing steep fines on Airbnb hosts who break local housing rules.

The two actions appeared unrelated. But one group quietly took credit for both: the hotel industry.

Years back, we wrote about writer Andy Kessler’s concept of political entrepreneurs v. market entrepreneurs, which (loosely defined) were those who basically used policy making to lock up markets for themselves and restrict competitors as opposed to entrepreneurs who innovated and created more value in the market by serving customers. In more traditional economics, it’s rent seeking v. market innovation and growth. Most people recognize how rent seeking is bad: it’s using the levers of regulations and politics to limit competition and innovation, in order to extract a greater share of the revenue/profits (since there’s less competition, if any) while similarly limiting innovation and economic growth that improve people’s lives.

And the hotel industry seems like a prime example of this right now.

Both were partly the result of a previously unreported plan that the hotel association started in early 2016 to thwart Airbnb. The plan was laid out in two separate documents that the organization presented to its board in November and January. In the documents, which The New York Times obtained, the group sketched out the progress it had already made against Airbnb, and described how it planned to rein in the start-up in the future.

The plan was a ?multipronged, national campaign approach at the local, state and federal level,? according to the minutes of the association?s November board meeting.

The NY Times report has many more details, but all of it is basically summed up as “annoy Airbnb and limit their ability to grow as much as possible.” There doesn’t appear to be anything in there about “providing a better experience to our customers so they might prefer us to Airbnb.” There doesn’t seem to be anything in there about “better competing with Airbnb.” Nope, it’s entirely about trying to undermine Airbnb. I’ve noted in the past (and in this post!) that I’ve used Airbnb a bunch, and have found it almost universally better than hotels. The experience is more unique, but also just… better overall. And I’ve spoken with many Airbnb hosts. It’s true that some are running “businesses” renting out multiple units on Airbnb, but isn’t opening up more people for running successful small businesses a good thing?

And, yes, I know lots of people like to claim that Airbnb is driving up rent — even if the data doesn’t currently support that claim. But even if true (and, again, it’s the hotel lobby that has mostly been pushing this narrative, though plenty of well meaning folks have picked up on it), that’s an issue to deal with in other ways (such as increasing housing stock, rather than limiting it with other regulations) rather than shutting down a useful business that opens up new opportunities, and can also increase tourism and local business.

Again, it’s perhaps no surprise that the hotel industry has been fighting Airbnb, but with the NYTimes getting its hands on the actual strategy documents from the hotel industry, that industry has made it clear that it’s seeking to shut down and limit competition, rather than innovate themselves.

Filed Under: competition, hotels, innovation, political entrepreneurs, rent seeking, startups
Companies: airbnb