Navigating the Enshittification of the Hotel Industry

A recent article in the Financial Times, provocatively starting with the term 'Enshitiffication', stirred the pot significantly (link in the comments below).

This term, as coined and described by Cory Doctorow, delineates the degradation process of online platforms, encapsulating a three-stage cycle of deterioration: initially benefiting users, subsequently exploiting them for business gains, and ultimately prioritizing shareholder profits at the expense of all involved parties. But what relevance does this have to hotels? The term aptly captures the growing disillusionment with the declining quality of online services, and I may argue that hotels are succumbing to enshittification at an alarming pace. Bear with me and let's delve deeper into this.

The phenomenon of enshittification arises from a relentless pursuit of profit, manifesting in short-term strategies detrimental to long-term value. However, this tendency can be mitigated by four main forces: competition, which discourages lowering quality through the threat of losing customers; regulation, which prevents unethical or unsafe practices; self-help, which enables users to enhance their own experiences; and workers, who have leverage in keeping their employers true to their mission.

Reflecting on my recent return from ITB Berlin, it seems an opportune moment to share my thoughts on how the hotel sector is indeed becoming enshittified.

Are hotel companies prioritizing short-term gains and profits over guest experience? The answer is a resounding yes on both counts. The industry's pursuit of ever-increasing profits and revenue per square meter, a by-product of its roots in real estate, is noticeably diminishing the guest experience—a trend showing no signs of reversal. Hotels are increasingly offloading their responsibilities onto guests for profit's sake, with mixed results, as exemplified by the experience of Michael C. Cohen from Gain (this post). This approach clearly prioritizes labour savings over guest satisfaction.

Upon examining the four forces that can prevent enshittification, the situation appears dire:

1. Competition: Despite complaints about online travel agencies and the rise of short-term rentals like Airbnb, new hotels continue to emerge, driving rates up perpetually without any signs of bankruptcy or market exit. This lack of genuine competition fails to eliminate underperforming players.
2. Regulation: Although the hotel industry faces relatively strong regulation, it struggles to unify for sensible regulations, leaving customers in limbo. Existing regulations on guest registration and payment processing often hinder guest satisfaction. Hotels' reluctance to challenge these regulations maintains a status quo that stifles innovation and improvement.
3. Self-help: The industry's penchant for maintaining incompatible legacy systems and adopting half-baked software solutions exacerbates its challenges. A lack of collaboration and coherence across hotels companies and cities/regions only serves to further shoot itself in the foot.
4. Workers: The hope lies with a new generation of hoteliers, those who have experienced the shortcomings of current offerings and are keen to drive change. Whether they will be empowered to do so remains to be seen.

Perhaps the hotel industry's largest asset, its sheer size, is also its greatest challenge. While it took ages to evolve from mom-and-pop inns to digitally-enabled operations (and yet in 2024 it is still on-going), the process of enshittification will similarly unfold slowly. Whether this is cause for celebration is debatable.

However, ITB Berlin offered glimpses of optimism, firstly with consolidated tech solutions ( Shiji Group , Amadeus Hospitality , and now Mews ) and companies playing nice with all ( Apaleo ) on display. Secondly, independent hotel groups are making their presence felt alongside giants like Accor and Hilton, signaling a potential shift back to prioritizing the guest journey over real estate returns.

As we perhaps acknowledge the onset of the hotel industry's enshittification, the pressing question remains: What do we do next?