The big hotel corporations seem to be having some difficulty making homesharing work.
Nearly a year after Hyatt Hotels announced it was investing in Oasis, a private accommodations provider, the company revealed Wednesday it had to take a $22 million impairment charge related to its investment.
“That impairment relates to Oasis, which is the alternative accommodations investment that we made last year,” Hyatt chief financial officer Pat Grismer said, in response to a question from an investment analyst during Hyatt’s second quarter earnings conference call. “Oasis has underperformed our expectations as it relates to the scalability of that business and the synergies to be realized through the alliance with Hyatt. The business has consistently experienced shortfalls in operating cash flow and so, as a consequence, we felt that it was prudent to impair our investment to date.”
Just last week, AccorHotels revealed it took a $288 million writeoff for its investments in Onefinestay, a luxury homesharing platform of which Hyatt used to be a major investor in, and in concierge services provider John Paul.
Both Hyatt and AccorHotels’ disclosures about their respective investments in the alternative accommodations space suggest that the hotel industry needs a better strategy for integrating that new business into their existing business models.
Whereas AccorHotels went out and directly acquired Onefinestay in 2016 for $168 million, Hyatt instead invested an undisclosed sum into Oasis and eventually synced its offerings with its World of Hyatt loyalty program. AccorHotels brought Onefinestay into its Le Club AccorHotels loyalty program earlier this year. Similarly, Marriott International announced its own homesharing pilot in April with London-based Hostmaker, with an immediate tie-in to its loyalty programs.
But aside from loyalty tie-ins, acquisitions, or partial investments, the trouble that Hyatt and AccorHotels seem to be experiencing suggests that it’s much harder to add private accommodations as a new business unit — and that although a place to sleep is a place to sleep, managing a hotel operation is very different from managing a private home rental.
Onefinestay CEO Javier Cedillo-Espin told Skift earlier this year that the differences between homes and hotels can’t be stressed enough. “[Homes are] not made for industrial use … so there’s always tremendous need for professional care, maintenance of homes, and also professional service that goes on behind the scenes, to be able to solve those issues when things go wrong.”
In other words, managing private accommodations is very labor intensive — as is managing a hotel — but arguably in a very different way.
Despite the stumbles AccorHotels and Hyatt have had in integrating homesharing into their respective businesses, the popularity of private accommodations and the consumer demand for it means that homesharing isn’t going away anytime soon. And the hotel industry can, like Hyatt, AccorHotels, and Marriott, to an extent, choose to embrace it and bring it into their platforms or, like Hilton, leave it alone for now. The short-term pain of investing in the homesharing space could eventually lead to profits, but it’ll take time and serious thought on the part of the hotel industry to figure out how to get there.