Academic journal article Journal of Real Estate Literature

Hotel/lodging Real Estate Industry Trends and Innovations

Academic journal article Journal of Real Estate Literature

Hotel/lodging Real Estate Industry Trends and Innovations

Article excerpt

The hotel/lodging real estate industry, like many other real estate sectors, is experimenting with and subject to significant innovation. Both internal and external forces are shaping the industry, driven by technological innovation, social change, and globalization. Some industry innovations have become trends, while others are reactions to external disruptions caused by these new trends. To encourage academic research collaboration with hotel/lodging industry practitioners on the challenges and issues currently facing the hospitality sector, the American Real Estate Society hosted the "Hotel/Lodging Real Estate Industry Trends and Innovations" panel discussion at its Thirty-Second Annual Meeting in Denver, Colorado, on April 1, 2016. We were panelists for this discussion. We represent both the hotel/lodging real estate industry practitioner's and academic's perspective, and in this paper draw on the most recent hotel/lodging real estate academic research related to the trends and innovations discussed.

We review and provide perspective on four of the most important issues and challenges facing hotel/lodging real estate industry practitioners: (1) the shared lodging economy in the super-connected, high-tech economy, (2) non-traditional sources of hotel/lodging financing, (3) new forms of boutique/ lifestyle hotels/ lodging, and (4) hotel services and resort fees.

THE SHARED LODGING ECONOMY IN THE SUPER-CONNECTED HIGH-TECH ECONOMY

The shared lodging economy is easily associated with a single company-Airbnb. The shared lodging economy has exploded over the past decade to include a wide variety of firms in many related subsectors. These subsectors/firms include the hotel and vacation rental marketplace with Airbnb and VRBO, as well as tech firms that aggregate and market rentals, other firms that manage searches and meta-searches, and firms that specialize in rental and property management (Shuman, 2016).

ORIGIN AND EVOLUTION OF THE SHARED ECONOMY1

Five key factors led to the emergence and proliferation of the shared economy:

* First, the dramatic growth in the adoption of mobile technology since 2009, allowing consumers to transact for goods and services anywhere, anytime.

* Second, the Great Recession caused very high unemployment (significantly exceeding 10% in 2010) forcing many people to seek alternative ways to generate income.

* Third, continuing corporate downsizing and automation eliminated many jobs (e.g., lower and middle management, etc.), and motivated many talented people to consider other ways of generating income.

* Fourth, the emergence of technologically empowered business platforms connected those seeking talent with the providers of talent, in incremental, short-term, task-based assignments, rather than traditional long-term employment arrangements.

* Fifth, the growth of the millennial population, a generation that has moved away from traditional expectations of success, like owning one's own home or car.

These factors caused a dramatic shiftin the way consumers transact, and accelerated expansion of the shared economy as a new way of doing business. Sized at $110 billion in 2013, the shared economy is projected to grow to $335 billion by 2025 according to Gravity Tank, Inc. illustrated by the five industries depicted in Exhibit 1.

THE AIRBNB REVOLUTION

Airbnb, the largest player in the shared lodging revolution, epitomizes how the shared economy is changing the lodging industry. According to Ting (2015) in 2007, Airbnb soon-to-be co-founders Joe Gebbia and Brian Chesky created "Airbedandbreakfast.com" to cover part of their rent on a San Francisco apartment. Less than a decade later, that start-up has evolved into a lodging industry giant with a market valuation of over $30 billion, surpassing the value of most major lodging companies that have been around for nearly a century.

Airbnb, founded a decade after the online travel agency revolution began, followed a similar path as Expedia to become a formidable threat to the lodging industry. …

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