During the past decade, the sharing economy has changed how consumers pick a place to lay their heads. Put bluntly, it has caused some disruption in the hotel industry.

Airbnb and its ilk are snapping up market share previously reserved for global hotel chains, and the proof is in the numbers: as of November 2017, Airbnb was worth an estimated $31 billion, trailing only behind hotelier Marriott International. (By way of comparison, Hilton Worldwide's market cap is an estimated $27.4 billion, while Intercontinental Hotel Group's is approximately $12.2 billion.) According to a 2017 study by Morgan Stanley, anywhere from 46% to 42% of Airbnb guests switched to the company's homestay offerings from traditional hotel accommodations, and Airbnb itself suggests that at least 15 percent of its current bookings are business travelers. Concur, one of the world's leading travel platforms used by more than 70% of Fortune 500 companies, plans to display Airbnb's listings on its search and bookings tool.

Hotels are reacting. Some brands, like AccorHotels, Wyndham, and Hyatt, are acquiring and investing in homesharing companies – typically upscale websites in the “home meets hotel” corner of the market – to give the vacation rental industry a run for its money. Other brands are toying with the idea of clustering guest rooms around a communal living space to mimic the experience of renting a house on Airbnb. Hyatt's Centric brand is testing a new service that would allow guests to order GrubHub meals and charge it to their stay, while Marriott's boutique Moxy brand offers smaller, compact rooms in an urban, intimate setting (with keyless entry via a smartphone app, to boot). New York's Arlo Hotels highlights its partnerships with local purveyors to entice customers, and its compact rooms are accompanied by large communal and social spaces including living rooms, libraries, and courtyards.

Commercial real estate firms like ours are watching with great interest as hotels create more curated, authentic experiences, whether through partnering with local distilleries or marrying regional vendors' wares with hyperlocal experiences, to better entice guests. To be successful, they'll need to provide better value with a more nuanced, enhanced stay.

How strongly the industry ramps up this response will depend on how much more runway Airbnb proves to have, but ultimately, major brands must reexamine what they offer their guests to compete in this corner of the sharing economy.

The views in this article are the author's own. Eric Lewis is an executive managing director at global commercial real estate services firm Cushman & Wakefield, where he leads the company's hospitality and gaming practice group within its valuation and advisory service line.

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How Hotels Can Compete With Airbnb

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