In the book, Toffler argued that the acceleration of technological change creates a sense of “shattering stress and disorientation” – a shock. This is a feeling that has become commonplace; anyone who got up today at 8:55 a.m to log into a company zoom meeting at 9:00 a.m is aptly familiar with this process.
“Shattering stress and disorientation” and “too much change in too short of time” are also current industry sentiments for the hospitality sector – which went from a nine-year growth period to laying off thousands of workers. Let’s put this into perspective: occupancy rates are hitting single digits, airline travel has been pulled down by an astounding 90%, and June job openings – one of the busiest months in hotels traditionally – has declined by 93,000.
Hotels are scrambling to stay alive and hotel start-ups? They are cash-strapped, working day and night to raise additional funding for business continuity. However, the pain of smaller hotel start-ups seems insignificant in the face of the
$25B of debt saddling US hotel owners. Prominent hotel brands are still functioning through the money they make on fees, and the luxury of liquidity and access to secondary capital markets. In contrast, half the hotel owners in the US, mostly small family owned businesses, are in default of their mortgages and risk foreclosure minus financial restructuring or a government bailout.
COVID-19 has become an inflection point for the hospitality industry. The companies that are doing well have been the so-called “outliers” – the likes of Airbnb, Hipcamp, Autocamp.
These companies’ success lies in their technology innovation, quick adaptability, and solution-based business models. So-called disruptors like OYO and Sonder never had a winning real estate strategy and were never designed to solve the many problems already plaguing the industry. However, Airbnb with its internal royalty program – Superhost – changed the game, and showed how the antiquated hotel loyalty programs that were losing steam with the newer generation could be re-engineered. Because that is what Superhost is – a program that Airbnb developed to reward its top-rated and most experienced hosts by giving them prime website space and tags that created a revenue-generation mechanism.
Airbnb’s model should stand as an example of the digital transformation that needs to occur in the hospitality industry – especially as hotels start reopening properties. The hospitality industry has been plagued with problems long before COVID-19 came to the stage and rather, I would argue that COVID-19 just accelerated a deterioration process that the industry was going under its shiny veneer of shallow growth.