Acme Hotels Case Study Traditional Hotel in the Sharing Economy Introduction to Strategic Problem Pria, as CEO of Acme Hotels, was reflecting on the monumental changes that have occurred in the hotel industry over the past few years. She was up late Saturday night putting together a plan to pull her executive team together for a 2 -day off-site meeting. Acme was the 2nd among all hotels in US and 3rd in the world in revenue and # of bookings. As one of the top Hotel operators and employers worldwide there was an untapped collective depth of know how and expertise that could be leveraged to help with the problem of the industry rapidly changing with Acme's revenues and # of bookings decreasing across the portfolio of offerings from midrange to luxury accommodations and vacations. The sharing economy was growing and threatened the traditional hotel industry. Pria considered that Acme did have great assets, such as historical excellent relations and loyalty with over 410,000 corporate clients, whose relationship with Acme should be enhanced to make sure these important clients stayed with Acme Hotels. The business travellers howeverDeveloped by Mark Anglin were a double-sided coin, for all the positives and given the direction of the industry, Pria felt Acme was too reliant on the business traveler, especially if there is a recession. Industry Disruption Caused by the disruption from AirBnB and now a growing number of sharing economy competitors, the team needed to address declining bookings and revenues, increasing costs, unclear understanding of today's customer segments and what they expect when looking for accommodations away from home. Disruption occurs when a new marketplace is created that has a lower cost base than the incumbent, and Airbnb's and its peers story is no different. To add complexity to this current state, all customer segments were looking for value for money. All this points to the number 1 most strategic issue: how can Acme provide more of what each customer wants at a lessor cost, or, provide differentiated, valued services compared to the competition and make Acme the preferred choice and allow at least some higher priced offerings. How does a hotel succeed in this age of disruption? How can you make the sharing economy work to your advantage while maintaining ground against your traditional competition? AirBnB and Hotel Pros and Cons While hotel brands typically offering standard rooms, Airbnb allows users to rent out rooms in residents' homes or larger properties like villas and houses to enjoy a more unique, personalized, and community-oriented travel experience. Airbnb offers a more affordable and local alternative to travelers and has gained major momentum from its popularity among younger Millennial travelers. While Airbnb states that there's plenty of room in the hospitality industry for both their business and hotel brands, many hotels are concerned that this new sharing economy will reduce their overall share of tomorrow's travel market. Against this negative backdrop however the reliable and industry statistics are showing there is a constant year-over-year rise in travellers globally. The hotel industry is forecast to grow 5-6% but continued growth is never guaranteed. As part of this great growth are those with increased mobility and AirBnB is growing around the world taking market share for the increasing mobility of from all parts of the world. The growing market of travellers from all parts of the world, especially the substantial and increasing wealth from many countries throughout Asia, India and a growing mobility of people from all over Africa is an enormous opportunity but also presents the challenges of determining how to obtain these as first time and repeat customers. The mindset of Acme Hotels is US-centric and that has got to change. Many employees do not have the cultural awareness knowledge to provide services in a graceful, user-friendly manner.Developed by Mark Anglin But even brand loyalty with the promise of repeat customers is changing from long-term relationships to consumers' needs for instant gratification and personalization. By directly competing with Airbnbhighlighting how they are the superior optionhotels can preserve their bottom line and remain the first choice for tomorrow's travellers and Acme was determined to be the preferred choice for all segments of travellers. Also, there were numerous Strengths, according to Boston University research, one-third of consumers aware of the sharing economy say they trust hotel brands much more than accommodations like Airbnb. These travelers cite the many attributes of hotels, which include: Security Cleanliness Consistent quality Familiarity Comfort To combine with this trend and set of opportunities it presents, Pria was absolutely determined to take advantage of is costs that can be offset with technology and margins can be increased by adding technology-enabled value -added services to the different customer segments. She knew technology and felt also technology can enable customer loyalty and her team her team could implement strategic decisions on the basis of data that is collected from disparate online sources and upturn their Acme hotel business. As AirBnB and sharing economy competitors have extremely low fixed costs Pria knows that there is so much room to lower the cost of running a hotel. Market Trends Pria believes that she can flip the fact that the problem is that the hospitality industry has been fairly staid and slow to adopt innovative technologies to improve the overall experience and operational execution and is an opportunity. For example, in a mobile and technology-driven world, consumers demand a customized, personal experience that they can also manage through their smartphones, tablets and computers. A Magnani Caruso Dutton study found that 70 percent of travelers indicated that a hotel's website, app and other digital tools impact their decision to book a stay. Only a small percentage of hotels offer digital tools. Pria knows the gap can certainly close to enhance the guest experience. Today there is little view from data on the customer journey in each stay. Half of the guest's journey is a blind spot to them, relying on effective staff training to ensure a good experience. This has to change. Pria worried that there was a lack of innovation abilities and the required technology know-how within the current employee base. While the peer-to-peer lodging marketplace is a value alternative when seeking lodging, hotels still provide better amenities, service and standards that are not matched by Airbnb. History and recently more studies have shown that consumers are more than willing to pay top dollar for a better experience. Pria was reminded that with a lot to build on in a traditional hotel, customer segments wanting more value for money does not necessarily mean they are demanding lowest cost. Whether the customer spends $200 or $2000 for the room, they are always looking for theDeveloped by Mark Anglin value of money. And the high end, luxury market is changing. Luxury is a term which has many definitions now and changes around customer perception more than ever. Brand or a well- designed hotel is not enough anymore. It's about the experience. Change in guest expectations is one of the biggest challenges in hotel industry. You've witnessed that now-a-days guest demand a lot more from the hotel. Free WiFi, entertainment system, unique stay experience and swift check-in check-out services. While certain types of travelers prefer staying at hotels, many of today's travelers are seeking a different type of travel experience. Airbnb offers these new and novel types of experiences, which has propelled the company to incredible popularity, especially among the coveted Millennial travel market. The appeal of the concept can be attributed to a number of economic, social, and technological shifts in the tastes and tendencies of travelers. Many favor Airbnb because it reflects these societal shifts and offers more of a exciting, personal, "home away from home" experience instead of a standard hotel stay. It allows guests to have more personal, localized, and memorable travel experiences. Cities focused on finance and business are increasingly aiming to enhance their tourism and leisure potential, becoming "bleisure cities" (business + leisure). In addition, segments such as millennials, which will account for 50% of the workforce in 2020, require a mixed experience for their business trips, extending and adapting their stays to discover and enjoy their destinations. City hotels therefore need to increasingly merge the leisure and lifestyle experience with modern workspaces equipped with the latest technologies. And as part of lifestyle the emphasis is on "access-based consumption" which has put a spotlight on wellness and well-being, beyond materialism. All of this suggests A co-everything world where work, play, and life blend into one seamless mosaic: Technology has changed the way we live our lives, and how we are connected to work, to each other and to the things that drive us. An upcoming 5G world and the IOT is only likely to accelerate the pace of change. Take LiveZoku (https://livezoku.com/), for example: is it a residence? A hotel? A WeWork? A space for the local community? A thriving food and beverage destination? It's all of these things. What do these trends mean? They require marketers and experience designers to re-think what the travel experience means to the customer. The notion of the experience economy was created by Pine and Gilmore in 1998, and included four dimensions: escapism, education, entertainment, and esthetic. Leveraging one, or ideally, more of these dimensions creates memorable experiences for customers, which in turn results in brand loyalty. This dynamic has been fairly well-established in the academic literature. However, Airbnb has changed the game for the experience economy by emphasizing the sharing lifestyle and a sense of community, cleverly incorporating the above highlighted trends into its communications with customers. Because of Airbnb popularity and success, six new dimensions have been incorporated into the experience economy, in the context of the travel experience: personalization, communities, localness, hospitableness, serendipity, and ethical consumerism

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