The hotel business is being disrupted.
It's one thing to have a new competitor enter the field. It's a whole other thing for an innovator to come in and disrupt the entire industry.
Uber is disrupting the taxi industry's old model of business. Netflix is disrupting cable companies. The cronut is disrupting baked breakfast goods.
Overused buzzword or not, disruption is a reality is that traditional businesses are scrambling to preserve their bottom lines.
Mike Barnello, CEO of LaSalle Hotel Proprieties, made the issue clear once again regarding Airbnb, a company — and hotel-industry disruptor — that enables homeowners to easily rent out space to traveling lodgers.
"In this call we've spent time — a little bit — talking about the last call and a lot of time throughout quarter,"Barnello said Friday according to a transcript of Lasalle's quarterly earnings call. "But this is a growing concern on a number of levels.
"The amount of listings that are located in major markets is high ranging from 4% to 7% in some of our markets that becomes a shadow supply issue."
Barnello used New York City as an example of a place the seven-year-old startup had made major inroads.
"You probably saw a ... report a couple of days ago," he continued. "They came out and said that Airbnb accounted for 5% of the room revenue in New York City during that second quarter of 2015. I also said that it was 9% of demand in New York City for August — those are big numbers."
Additionally, Barnello said at least 60% of Airbnb's rooms were located in the top 14 markets, meaning companies with significant holdings in large cities were most affected.
This is particularly concerning for LaSalle, which operates almost exclusively in large cities where Airbnb has the highest rates of penetration. LaSalle has 45 properties in places such as New York, San Francisco, Washington, D.C., and Chicago.
"The fact that our performance have been reverse in 2014 and year to-date 2015 is a cause for concern, but I don't know that it means that the markets that we're in are markets to abandon," Barnello said.
He also noted that while use of Airbnb was not a new trend, it had been "gaining ground recently" and there was anecdotal evidence from properties owned by LaSalle of long-time customers switching to Airbnb.
These trends are worrying to Barnello, but he says he welcomes the competition, provided everyone in the industry gets a fair shake.
"From our perspective," he said in the transcript, "while you can't do anything about legitimate competition, what we are concerned about is just making sure that the playing field is been regulated to level of fairness in terms of life safety, health, and welfare issues, whether it's for licensing permitting and taxation. And those things are all been done legitimately, then it is what it is."
It seems as if the hotel business has started to pay attention to the disruptor.
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