Keeping a Hotel Relevant in the Age of Disruption

SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.

Have a question for Ms. Real Estate? Ask anonymously by clicking here.

Dear Ms. Real Estate:

I am in the process of making a decision as to whether to purchase a Marriott Courtyard located in a non-gateway city, but a city with a growing economy, including a growing tourist industry. However, over the last year Airbnb has shown steady growth, and to date has been permitted to operate with few to no regulations. How do I evaluate the long run impact of this growing, low-cost competition? Can you prioritize those amenities that can best compete with the cost and care advantages offered in private residences?

—Diligently Defending Against Disruption

Dear Diligent Defender,

You are wise to incorporate the adaptive responses required to compete with Airbnb's disruptive technology in your due diligence process. You have no doubt considered the locational and physical advantages of the site to business visitors, and since tourism is one of your local market's strengths, you have no doubt already checked that the property is either close to popular visitor attractions or has access to them via public transit – though there is the other disruptive technology, Uber! The presence of Airbnb does add to the weapons you will need to maintain profitable levels of occupancy and room rents. Below, I have listed some of the priority amenities and services that you'll need to provide and add to the capital or operating cost budget in evaluating your profit and loss forecast, if they are not already available in the property. Your insight into local market conditions may suggest additions to dealing with the challenge of Airbnb competition.

1. Efficient meeting space. Hotels like the Marriott Courtyard continue to be a favorite meeting place for those companies that restrict daily travel cost budgets – which also holds true for almost all local, regional and state governmental employees.
2. Free Wifi. You can assume that all available Airbnb residences come with Wifi, so this is not an area to tack on fees, if you wish to remain competitive.
3. Friendly information at the desk as to places to visit, best places to dine, from pizza to 100% organic/vegan meals, location of nearby services, etc. When staying in a private home where the host is available, one of the advantages is receiving such information on a timely basis.
4. Sports equipment. A gym is a much better option than a pool for two reasons: the former is a great attraction for those with less time to exercise, and is much less costly than pool maintenance.
5. 24-hour free coffee and tea for your on-the-run customers.

The first three are a must. If you have all the above five plus guest-attracting features of special importance in your local market, you are in a pretty good competitive position. But be sure to advertise all of the above as offered in your Marriott Courtyard on the more popular reservation apps.