The Future of Hotel Chains: Branded Marketplaces Driven by the Sharing Economy

Brendan Richard

University of Central Florida, Orlando, USA

Email Address: brendan.richard@ucf.edu

Shane Cleveland

The Walt Disney Company

Email Address: shane.cleveland@disney.com

Recommended Citation

Richard, B., & Cleveland, S. (2016). The future of hotel chains: Branded marketplaces driven by

the sharing economy. Journal of Vacation Marketing, 22(3), 239-248.

The final publication is available at Sage via

http://journals.sagepub.com/doi/full/10.1177/1356766715623827

Branded Marketplaces Driven by the Sharing Economy 1

ABSTRACT

Over the past few years the sharing economy has grown tremendously, disrupting the traditional

tourism industry via the mass deployment of exponentially increasing capacity. In this new

economy, ownership and access are shared by individuals creating, broadcasting and exchanging

their own products and services. Rather than compete against the sharing economy, hotel chains

have the opportunity to oversee this communal sharing and leverage the strength of their brands

by extending them to peer-to-peer (P2P) rentals. This potential future of P2P rentals offers an

attractive option for guests looking for a unique stay free of the current uncertainty of the

informal economy in safety, legality and quality. This paper introduces propositions regarding

the future state of the P2P rental market, presents a scenario detailing branded marketplaces,

discusses the drivers of change, explores branding considerations and offers recommendations

for future research.

Keywords: Sharing Economy, crowdsourcing, brand strategy, hotel, scenario

Branded Marketplaces Driven by the Sharing Economy 2

1. Introduction

Have you participated in the sharing economy recently? If so, you are not alone. The

sharing economy is rapidly deploying social technologies that are radically disrupting how

people experience products and services. Empowered with the ability to create, broadcast and

exchange their own products and services via online marketplace platforms, consumers are

sharing nearly everything, including their homes (Airbnb), cars (Lyft), clothes (ThredUP) and

even their food (Shareyourmeal). The sharing economy is also swiftly gaining acceptance by

nearly every measure – recent surveys project that consumers are prepared to double their usage

of collaborative websites (Owyang, 2014). This anticipated demand has driven a flood in capital

funding - in just two years (2011-2013) over 200 collaborative start-up companies have

generated over US $2 billion in combined funding (Owyang, Tran & Silva, 2013). The

consumer peer-to-peer rental market alone is currently estimated to be worth $26 billion

(Economist, 2013). Airbnb, the largest marketplace platform, has over 140,000 people staying in

rooms every night with listings in over 34,000 cities across 192 countries (Friedman, 2013).

Currently valued at over $20 billion by the private venture market, Airbnb has a market

capitalization greater than that of established hotel chains including Starwood, Wyndham and

Accor (Ali, 2015; Olsen & Kemp, 2015). In spite of its growth, though, Airbnb has been

criticized for inconsistent quality, unsafe rentals, illegal rentals and avoidance of accommodation

taxes.

The rapid ascent of peer-to-peer (P2P) rental marketplaces represents a potential threat to

established firms as it cannibalizes purchases and drives down room rates. Should traditional

hotel chains be concerned? One study found that in one market for every 10% increase in

Airbnb listings, hotel room revenue fell by 0.37% (Zervas et al., 2014). In this increasingly

collaborative economy, how can hotel chains innovate and adapt to accommodate the changing

environment? It has been proposed that hotel chains have the opportunity to develop or purchase

their own branded marketplace platforms rather than compete directly with the sharing economy

(Owyang, 2013; Sigala, 2015). A branded marketplace platform would be backed by the hotel

chain’s brand, resources, knowledge and expertise. Peer to peer (P2P) rentals via this platform

would alleviate issues currently associated with the sharing economy, offering consumers a more

reliable, consistent and higher quality experience (through more stringent standards and training)

as well as access to amenities provided by the hotel chain.

While there is a revenue opportunity for hotel chains to incorporate the sharing economy

into their business models, this approach poses interesting brand marketing questions. Hotel

chains have the ability to extend their brand by developing their own “branded marketplace”

platform (“e.g., “Hiltonbnb”). Various considerations factor into a successful brand extension,

but “Shared” products and services represent a challenge for traditional hotel chains because the

firms would find it difficult to exercise as much control over their partners (i.e., thousands of

individual participants) as they currently exercise with their management firm and property

ownership partners. O’Neill and Mattila (2010) note the issues that impact consumer satisfaction

Branded Marketplaces Driven by the Sharing Economy 3

in the industry with the addition of a third party between the hotel chains and the consumer.

Thus, there are special considerations to leverage current brand equity and avoid negative

reciprocal effects on the parent brand. For example, can a branded marketplace maintain

sufficient quality to fully leverage and extend brand trust? Similarly, would a branded

marketplace dilute or reinforce the core brand personality?

Predicting the future requires both an assertion that forecasted events will happen and the

explicit detailing of the underlying mechanisms that will cause the event to occur. As such,

relative to other forms of future research, predictions are proposed to be more scientific and

precise in their assertions (Bergman, Karlsson & Axelsson, 2010). Tourism researchers have

used this framework to provide structure to their visions of the future (Mistilis, Buhalis &

Gretzel, 2014; Yeoman & Mars, 2012). This paper provides propositions, organized into a

quadrant matrix (Pearce, 2012), that are related to the gap in the peer-to-peer rental market and

the business stakeholders that have the potential to address that opportunity. A branded

marketplace scenario is then posited (Wack, 1985; Formica & Kothari, 2008) to assist in

envisioning a future in which hotel chains meet this unmet need, and to stimulate hoteliers to

adopt a long-term outside-in perspective,. Next, the underlying drivers that will enable the

scenario to occur are presented. Finally, branding considerations and recommendations for

future research are discussed.

2. P2P rentals in the lodging industry

Travelers who want to take part in the sharing economy have no shortage of choices

when it comes to marketplace platforms that connect individuals seeking to share their

accommodations. Looking for a vacation rental? Try HomeAway, Flipkep, Housetrip or

villas.com. Taking a business trip and need a room for a night? Try Airbnb, Homestay or

Wimdu. Need a place to stay without making a payment? Try couchsurfing. The growing

supply of marketplace platforms has been fueled by a strong demand for person to person (P2P)

rentals from consumers. It has been estimated that sharing revenues represent approximately 5%

of the U.S. accommodation transactions in 2014, with P2P bookings accounting for roughly 2%

of the market (15). P2P bookings are expected to grow to as much as 10% of the market by 2025

thanks to a glut of underutilized assets (spare rooms) in the market, a favorable perception of

price value (Olsen & Kemp, 2015), and travelers’ preferences for genuine local experiences

(MacCaneel, 1973).

Despite the advantages of growth, price and unique experiences, P2P rentals via

marketplace platforms have several weaknesses relative to their more traditional competitors. As

one of the largest P2P rental marketplaces, Airbnb has faced challenges that are indicative of

those within the industry as a whole. Airbnb has faced criticism for encouraging illegal rentals,

dodging accommodation taxes and offering unsafe rentals. Accused of fostering informal

tourism accommodations, Airbnb faces legal challenges for encouraging the illegal rental of

assets. The issue stems from ordinances enacted by cities seeking to prohibit or limit short-term

Branded Marketplaces Driven by the Sharing Economy 4

rentals, limit rentals to specific geographic areas or limit the frequency with which a residence

can be rented (Gottlieb, 2013). In addition to challenging illegal rentals, local governments are

also taking issue with landlords who are avoiding paying accommodation taxes on otherwise

legal P2P rentals.

Proposition 1: There exists a gap in the market for a differentiated product that goes above and

beyond traditional peer-to-peer rental offerings, driven by the consumer need for a safe, legal,

higher quality, consistent product.

The proposed gap in the market for differentiated peer-to-peer rental accommodations

can be met by several different stakeholders in the industry. Individual hosts seeing the long-

term value in offering a differentiated product can independently take steps to improve their

product (e.g. obtaining additional insurance, more frequent safety inspections, and higher quality

amenities). Individual hosts are closest to the product, although they are frequently limited in

their ability to differentiate their product by their lack of access to capital and hospitality

expertise. The marketplace platform itself (e.g. Airbnb) could instigate the development of

premium offerings by branding products (e.g. “Airbnb Premium”) that meet certain quality and

safety standards and possess a minimum threshold of amenities. Marketplace platforms have

access to capital that their peer-to-peer renters don’t, but they lack the expertise in hotel

operations possessed by hotel chains. Hotel chains have access to capital and have an

established expertise in hotel operations, but are the most disconnected from the actual product.

Proposition 2: The provider of the business solution to meet the gap in the market exists on a

spectrum, where distance from the product (low to high) and access to resources (e.g. capital and

expertise) (low to high) are the variables of interest.

Figure 1: Differentiated Offering Provider Matrix

Proximity to

ProductLow Medium High

Low Hotel Chain

MediumMarketplace

Platform

High Individual Renter

Access to Resources

(e.g. Capital & Expertise)

Branded Marketplaces Driven by the Sharing Economy 5

3. Scenario: A branded lodging marketplace

In the future a traveler seeking out a premium offering in the peer-to-peer (P2P) rental

market will be able to browse “Hiliottbnb,” a branded marketplace platform, operating as a brand

within its hotel chain’s portfolio. Built on top of a white label marketplace software (e.g.

NearMeCO, ShareTribe), “Hiliottbnb” offers travelers a marketplace of guest homes and rooms

for P2P rental. While the underlying platform has been developed by a third party, the layer

visible to the consumer is indistinguishable from the hotel chain’s other online offerings

(including basic branding elements as color scheme, brand voice, etc.) supporting “the transfer of

brand identity from the parent brand to these extensions, and therefore facilitate(s) their

acceptance” (Lei, et al., 2008: p. 277). Functionally, the marketplace platform operates in a

similar manner to its competitors (e.g. Airbnb, Homestay or Wimdu) since the hotel chain has

the ability to compete on product and service quality rather than marketplace platform features.

With the support of the brand, supply chain, resources, knowledge and expertise supplied

by the hotel chain, consumers utilizing “Hiliottbnb” for P2P rentals would experience several

product features unique to hotel chains, including a centralized reservation service and customer

service department; quality guarantees; a managed rating system; quarterly maintenance

inspections; branded products (e.g. bedspread, toiletries); local housekeeping services; and a

virtual concierge. Consumers are assured of a certain level of product quality and safety that is

set by “Hiliottbnb” as a prerequisite for participation in the marketplace. Hosts using

“Hiliottbnb” are incentivized to participate in their branded marketplace platform via services

that seek to alleviate pain points for hosts. A centralized host services center provides guidance

and oversight to the P2P rental process, ensuring that the legality and tax implications of rentals.

Host services provided by the hotel chain ensure proper record keeping correlated to local, state

and national laws. The maximum allowable number of rentals and tax records are provided to

the host to ensure that the marketplace and associated hosts are operating within legal

requirements.

The peer-to-peer rental offerings provided by “Hiliottbnb” represent a safe haven of

consistency, reliability and quality in an industry known for the variability of its offerings. The

platform’s differentiated product features “enlarge the pie” by attracting new consumers to the

market who would not have traveled otherwise. Host services offer support and incentives for

hosts to participate in the hotel chains’ marketplace platform. Finally, the elimination of illegal

rentals and tax evasion have ensured the long-term viability of the platform and continued

governmental support.

4. Drivers of Change

4.1 Driver One: Increasing supply

What factors will continue to propel rapid growth within the lodging and travel segment

of the sharing economy? The industry is particularly well suited to the sharing economy since

Branded Marketplaces Driven by the Sharing Economy 6

transactions represent only the temporary use of an asset without a transfer of ownership. In

addition, there are few assets more underutilized in the marketplace than spare rooms and homes.

P2P rentals within the sharing economy provide value when they are significantly underpriced or

have no substitution relative to commercial competition. For example, Airbnb provides travelers

with a cost-effective accommodation that can represent a more local personalized experience

relative to its commercial competitors (Olsen & Kemp, 2015).

4.2 Driver Two: Price value

The sharing economy benefits from the attractive theme of sharing, the agility derived

from its decentralized nature, unique personalized offerings and most importantly price value.

The ability of the sharing economy to compete on price is due to the lower capital costs of non-

commercial asset owners and the lack of management costs associated with a non-commercial

business (Olsen & Kemp, 2015). Delivering on price value is critical because price has been

shown to be a major factor in hotel purchase decisions (Chu & Choi, 2000; Lockyer, 2005a,

2005b). An analysis of Airbnb offerings versus competitors via kayak.com assessing room rates

across six cities (Chicago, Montreal, Rio de Janeiro, San Francisco, Sydney and Venice)

revealed that significant cost savings exist when assessing shared rooms versus one- to two-star

hotels and private rooms versus three-star hotels (Guttentag, 2013).

4.3 Driver Three: Genuine experiences

Beyond mere cost savings, some travelers prefer the experiential benefits of staying in a

residence that these new platforms provide: the opportunity to reside in a ‘non-touristy’ area, the

feeling of being in a home, the advice that owners can provide about local experiences, the

ability to share in local experiences with the owners and the access to practical residential

amenities (Guttentag, 2013). One Airbnb guest was offered the use of a local mobile phone

(Yglesias, 2012), another Airbnb guest was offered the opportunity to dine with his host and go

out drinking in the evening (Gross, 2009). These experiences tap into some travelers’ preference

to participate in genuine local experiences, and to share in life at is lived by local residents.

Travelers desire to “try to enter back regions of the places they visit because these regions are

associated with intimacy of relations and authenticity of experiences” (MacCannell, 1973: p.

589). The yearning for genuine local experiences and access to ‘back regions’ are

accommodation features that are inherent to P2P rentals and representan advantage over

traditional hotel chains.

4.4 Driver Four: Concern for safety

While price and experience are important to travelers and will influence their selection of

where they will stay, Chu & Choi (2000) found the security of the hotel is rated as the top

priority by leisure travelers who comprise the category most likely to be engaging in the sharing

economy. The safety perception made by the guest in the peer-to-peer rental market is even

more important than in the traditional hotel industry due to the nature of the product offered.

Branded Marketplaces Driven by the Sharing Economy 7

Each offering is unique with its own host and history, both of which will vary in their level of

transparency. In the peer-to-peer rental market safety incidents are typically beyond the control

of the marketplace platform (e.g. Airbnb). Any liability insurance offered by Airbnb is

secondary (hosts must make claims to their primary insurers first, many of which frown upon

sharing economy rental activities) and does not extend outside of the United States (Lieber,

2015).

4.5 Driver Five: Seeking out quality and consistency

Chu & Choi (2000) found the “room and front desk” factor to be one of the most of the

most important to guests, along with “service quality.” Guests expected staff to provide efficient

services, understand requests and be helpful. Guests expected the room to be clean, check-in/out

service to be efficient, and the reservation system to be reliable. The perceived quality of service

is also influential in guests’ repeat purchase behavior (Chow, Garretson, & Kurtz, 1995).

5. What are the branding considerations?

The implications of the shared economy and a branded marketplace approach directly

involve brand management theory and practice. A branded marketplace represents an attempt to

extend the hotel company’s brand equity beyond the core brand, a common tactic in the lodging

industry. However, a branded marketplace poses specific considerations for brand equity in the

form of brand trust and brand personality, both of which help drive loyalty to the brand. Trust

indicates the consumer’s ability to rely on the information about the brand, while personality

indicates the consumer’s emotional touch points with the brand (O’Neill & Mattila, 2010). Thus,

a key goal for hotel brand management is to extend trust without diluting the brand personality

(O’Neill & Mattila, 2010).

5.1 Brand extensions. The concept of a branded marketplace implies a vertical line extension of

an existing brand into the same product category but different market. The “fit,” or perceived

consistency, of the extension with the parent brand is a key factor in the performance of the

extension (Aaker & Keller, 1990; Loken & John, 1993). Additionally, brand extensions have the

feedback capability of diluting or reinforcing the parent brand’s equity. Lane and Jacobson

(1995) note the potential for negative impacts to brand equity from brand extensions that do not

fit well with the core brand or represent the brand poorly. This has different implications based

on whether it is a step-up or step-down extension from the core brand - specifically, a step-down

extension generally has lower perceived risk but also has reduced positive feedback from

consumers (Lei et al., 2008) a finding that could influence the approach of a branded

marketplace.

In the lodging industry, brand extensions have been a primary driver of growth as they

allow travelers to select different products based on their immediate needs and still attain

reliability in an oftentimes unfamiliar setting (O’Neill & Mattila, 2010). Thus, the industry has

been a central setting for empirical explorations of how brand knowledge is extended to different

Branded Marketplaces Driven by the Sharing Economy 8

markets. Cabral (2000) finds that a higher quality firm will be better able to extend brand equity

through a brand extension as well as to enjoy positive performance from the extension. Also,

research indicates that brand extensions benefit from reduced costs (Aaker & Keller, 1990) and

are connected with improved performance (Court et al., 1999), a phenomenon that is magnified

when strong brand equity commands consumers’ loyalty (Hem et al., 2003). Thus, brand

extensions are not just about the extension of information about a brand but also the extension of

a relationship with consumers (Fournier, 1998).

5.2 Brand Trust and Quality. As brand extensions involve the extension of a relationship, brand

trust is needed for a relational exchange and thus underpins brand loyalty (Morgan & Hunt,

1994). Brand trust reinforces brand knowledge, the various dimensions of information about a

brand that a consumer possesses (Keller, 2003). A credible brand that has built trust has “lower

perceived risk and information costs” (Erdem et al., 2006: p. 34), enabling the consumer to rely

on their brand knowledge and the commitments of the firm. Specifically, brand trust relates to

both a firm’s perceived capability to consistently deliver on its quality commitments as well as

the firm’s perceived intentions toward delivering on these commitments (Delgado-Ballester &

Munuera-Alemán, 2005). When these basic components of brand trust are present, the firm is

better able to leverage brand equity through a brand extension (Reast, 2005).

Brand trust has been particularly explored as it relates to a firm’s ability to ensure and

convey quality. Perceived quality has been shown to strengthen brand loyalty in the lodging

industry as consumers feel better able to trust the brand commitments (Wilkins et al., 2009).

Reast (2005) notes that this is because quality leads to increased consumer satisfaction in the

basic performance of the firm. This research reflects Scott and Walsham’s (2005) suggestion

that trustworthy action builds and reinforces a trustworthy reputation. Thus, quality underpins

the renewable nature of brand trust: if the quality of a service or product delivers on consumer

expectations created by previous brand experiences, then brand trust is reinforced. Conversely,

trust can be undermined by nonperformance. This is because a trustworthy reputation is both

scalable and vulnerable (Scott & Walsham, 2005). The scalability of this quality suggests that

brand extensions can expand brand trust, whereas the vulnerability dimension suggests that

extensions can cause impairment to the parent brand’s equity, specifically if they do not cohere

to the parent brand. This is reaffirmed by Balachander and Ghose (2003), who examined the

reciprocal impacts of brand extensions. Brand trust is therefore critical to a successful brand

extension and a branded marketplace approach.

5.3 Brand Personality and Dilution. Brand loyalty is not just driven from a trust in the brand’s

reliability – it is also driven from consumers’ emotional attachment to a brand personality (Malär

et al., 2011). Aaker (1997) parameterized brand personality with five dimensions that represent

human characteristics ascribed metaphorically to brands. This model builds on Biel’s conception

(1993) of brand personality as the emotional component of the brand image. In this way, the

various components of a brand personality can represent actual or desired traits to the consumer

Branded Marketplaces Driven by the Sharing Economy 9

(Malär et al., 2011) and lead to both a deeper emotional connection to the brand and to increased

brand loyalty (Murphy et al., 2007).

Brand personality is especially critical for differentiation in areas such as hotel branding

where functional product differentiation is difficult to build and sustain (Li et al., 2014). This

phenomenon has been seen in both the upscale (Lee & Back, 2010) and economy segments (Li et

al., 2014) of the industry. Diamantopoulos et al. (2005) indicates that extensions actually have

no adverse effects on the parent brand personality, regardless of the fit or other impacts on the

parent brand equity. However, personality also requires coherence - these personalities can face

dilution (Diamantopoulos et al., 2005) if various actions of the firm are inconsistent.

The dual challenge of leveraging both brand trust and personality also represents a dual

opportunity. Scott and Walsham (2005) note that openness and collaborative problem-solving

reinforce trust, so an extension of the brand relationship into the sharing economy could increase

brand trust by exhibiting those qualities. Additionally, initiatives such as service guarantees can

further reinforce trust in the brand and mitigate the risk of brand dilution that may come with

such a marketplace (Lei et al., 2008). As with trust, demonstrated quality measures also

reinforce brand personality and its positive impact on performance (Tran et al., 2013).

Nevertheless, if a branded marketplace is positioned as a poor fit with the core brand, it can

sacrifice the consumer’s trust or the positive impact of a strong brand personality.

In addition to the context of these strategic branding questions, the nature of consumer

relationships with a brand also evolve with the concept of a branded marketplace. By

transforming the consumer’s basic experiences with the brand (Chang & Chieng, 2006), every

facet of the brand-consumer relationship could be impacted. Specifically, branded marketplaces

may potentially overturn established norms of consumers’ relationships with brands as well as to

help shape new norms (Aggarwal, 2004). As these norms undergird how values such as quality

and personality are communicated to the consumer, consumer responses would be heavily

impacted.

6. Research questions

6.1 Platform considerations

To realize the opportunity of establishing branded marketplace platforms, consumer

research is needed to better understand consumer preference and potential purchasing behavior

for branded P2P rentals. Specifically, what premium will a branded rental command, and to

what extent will it cannibalize hotel chain’s existing lower tier offerings (e.g. Fairfield Inn by

Marriott, or Hilton Garden Inn)? Additionally, further research needs to explore what level of

product features and service quality will be expected by the consumer. Will amenities like

branded toiletries and bedspreads, money-back guarantees or housekeeping service be

sufficiently valued by consumers? Finally, the pricing structure will need to be explored to

determine what should be included in the base price, and what should be offered as an upcharge.

Branded Marketplaces Driven by the Sharing Economy 10

A variety of research methods will be required in order to fully explore the proposed

research questions regarding pricing, cannibalization, product features and service quality. A

pricing and product survey and conjoint analysis (Iyengar et al., 2008) in which different features

are offered at different price points will assist hotel chains in better understanding what

differentiated value is offered by branded P2P rentals as well as what features should be included

in the product offering. Hotel chains currently employ a hands-on methodology featuring mock

hotel rooms in which employees and consumers can experience product features firsthand

(Penner, Adams & Rutes, 2013). This methodology can be extended to include P2P rentals, via

mock-up house, apartment, and room rentals. Rather than placing test rooms at the corporate

headquarters or onsite at a property, these mock-up P2P rentals can be located in their natural

setting, a house or apartment purchased or rented by the hotel chain. Employees or consumers

can be offered the opportunity to stay in these mock-up P2P rentals. While consumers are

staying at these branded P2P rentals their perceptions and experiences can be accessed via a

variety of methodologies. Consumers can be asked to keep a journal; they can be provided with

a post-stay survey featuring measures including “SERVQUAL” (Parasuraman et al., 1988), they

can participate in a post-stay online focus group, and with their approval they could even be

observed during their stay.

6.2 Branding Considerations

To address the issues of branding in the context of a brand extension, consumer research

is needed to address the basic brand strength to determine if there would actually be benefits

from the extension. Specifically, is the target market familiar with the core brand, and what is

their level of trust and commitment to that brand? Additionally, further research needs to

explore the fit of a branded marketplace with the hotel chain brand: does the branded

marketplace cohere with the current brand positioning? Finally, research needs to address the

challenges of the extension: as a “step-down” extension, does the branded marketplace pose a

greater risk of diluting the brand, and does the extension have a complementary or opposing

personality to the core brand? More specific research questions relating to consumer-brand

relationships also arise from the paradigm. Specifically, does the risk of “misfit” (Beverland et

al., 2006) threaten the consumer’s positive responses to the brand? Also, is a branded

marketplace a step toward involving the consumer as an active participant rather than a passive

observer in the brand storytelling process (Woodside, 2010)?

The evaluation of these branding concerns can be studied using a variety of tools. The fit of

the current brand and the branded marketplace can be evaluated through a market study of the

extension’s positioning utilizing Aaker and Keller’s (1990) model of consumer reactions to

brand extensions. Similarly, Aaker’s (1997) 42-item brand personality model can be deployed

with focus groups and studies to explore the 5 dimensions of the model in relation to a branded

marketplace: sincerity, excitement, competence, sophistication, and ruggedness. Although the

scale has faced some criticism over its applicability (Austin et al., 2003) it has been utilized to

successfully explore brand personality over a variety of environments (Li et al., 2014; Lee &

Branded Marketplaces Driven by the Sharing Economy 11

Back, 2014; Diamantopoulos et al., 2005). Finally, a context-specific adaptation of Garbarino’s

(1999) measurements of brand trust could be leveraged to examine current and projected levels

of trust and commitment.

7. Conclusion

Given the rapid growth of the shared economy within the lodging industry in terms of

both available room nights and market valuation, traditional hotel chains would be wise to

consider strategies that avoid direct competition with online marketplace platforms. Rather than

risk cannibalization of existing brands or facing established competitors, offering a differentiated

product within the sharing economy represents an opportunity for traditional hotel chains to

significantly expand their market share. Since the sharing economy is comprised of

underutilized existing assets, hotel chains can bypass the lengthy process of partnering with

property ownership and the wait times required to build new properties. Instead additional

capacity can be turned on almost instantaneously. Hotel chains only need to ensure the safety

and quality of the product, and provide training and amenities to the host. While it can take

years to build a new hotel property, a P2P rental could be operational in months or even weeks.

The challenge hotel chains face is transferring their brand, knowledge and resources from their

current model to the more disruptive sharing economy model. While expertise in training and

customer service transcends product offerings, the ability to manage a disparate collection of P2P

rentals across a multitude of hosts will be an acquired skillset. Culturally hotel chains will have

to adopt flexible policies that allow for the inherent variety within the P2P rental market.

The scenario proposed in this article is limited to the implementation of an independent

standalone marketplace platform in which the hotel chain has the advantage of full control over

the product and the revenue, but also the risk inherent in going it alone. An alternative solution

to an independent platform is offering branded P2P rentals embedded within a currently existing

platform (e.g. Airbnb, Homestay or Wimdu). This alternative raises additional branding

considerations related to co-branding that would need to be explored further. For example, co-

branding adds an additional brand to the relationship between the core brand and the consumer,

which could negatively impact brand equity as it diluted the various connotations of the brand

with new connections (Keller, 2003). Conversely, some of those new connections could prove

more durable if they align with existing dimensions of the brand, providing positive

reinforcement to overall brand equity (Keller, 2003). In addition to branding considerations,

offering branded products via a third-party platform would disadvantage hotel chains’ ability to

control the product and protect revenues, similar to the rise of online travel agents (Starkov,

2003).

The explosive growth and inverted structures of the sharing economy has impacted many

industries, but few as much as the lodging industry. The basic marketing challenge for hotel

chains is how to apply critical brand elements, such as trust and personality, toward this

opportunity while still preserving and reinforcing core brand equity. This paper offers a way

Branded Marketplaces Driven by the Sharing Economy 12

forward for additional research on the marketing implications of the sharing economy on the

lodging industry as well as a scenario of a branded marketplace platform that would allow hotel

chains to extend their core brand equity and capitalize on the sharing economy.

ACKNOWLEDGEMENT

We would like to acknowledge Jeremiah Owyang, Founder—Crowd Companies, who provided

us with guidance on the topic and whose work in the field of the sharing economy inspired us to

write this article.

Branded Marketplaces Driven by the Sharing Economy 13

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