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Luxury Hotels Are Reinventing Themselves To Challenge Airbnb

New York City's The Public, a new hotel on the Lower East Side, is redefining the standards of luxury. Using technology and innovative design to provide high-end experiences at reduced costs, the hotel aims to rival the experiences offered by home-sharing behemoth Airbnb. 

Hotel room, hotel industry

Ian Schrager’s The Public opened on June 6 with a total of 370 luxury rooms starting at around $200/night, Fast Co. Design reports. Schrager said his hotel is able to offer five-star luxury at a reduced price (luxury hotels in Manhattan often cost upward of $500/night) by using technology to reduce the number of employees and using less expensive materials, such as concrete and Douglas fir plywood. The rooms are also smaller, the majority range from 205 SF to 220 SF, and are standardized to take advantage of economies of scale.

Roughly 50 people work at the hotel, and most roles, including cleaners and telephone operators, have been outsourced. Instead of a front desk for check-in, guests use an iPad to book rooms and check in.

To remain relevant in a world where Airbnb and similar home-sharing concepts are increasingly gaining momentum, Schrager hopes the quality of experience and value offered at The Public will drive traffic. 

“I think the best way to compete with a strong idea like Airbnb is with another strong idea,” Schrager told Fast.Co Design. “... You stay in an Airbnb and you get local flavor and the culture of that location. We can beat them at that game, and we can beat them at the things they can’t do. They can’t provide this beehive of activity, this social and communal space. They can’t do it.”

Schrager’s hotel is using a strategy that resembles that of Four Seasons CEO Allen Smith, who said it would be naive for luxury hotels to ignore the Airbnb effect and underestimate just how fast markets are changing. Both brands are relying on technology to drive demand and remain competitive. 

Airbnb is also making moves to attract more luxury hotel customers, and in February the company bought high-end rental manager Luxury Retreats for $300M.