Four years ago, I spent an evening at the now infamous White House Correspondents Dinner seated between Airbnb CEO Brian Chesky and Marriott CEO Arne Sorensen. (You can read Fortune’s classic profile of Chesky here, and its latest on Sorenson here.). I am a fan of both: Chesky for building a real business on top of his digital platform; Sorensen for constructing a powerful digital platform around his legacy business. But what struck me that evening was how insistent both were that they didn’t compete in the same market. Both said they could coexist without impinging on each other’s business.
No more. Airbnb announced yesterday it was partnering with a major New York real estate developer, RXR Realty, to convert portions of New York City commercial properties into a “new category of urban lodging”—read: hotels. That comes a little more than a month after buying last-minute-hotel-booking app HotelTonight. Meanwhile, Marriott announced yesterday it was launching a luxury home rental site serving 100 locations around the world, which, of course, will compete with Airbnb. Game on!
We’ve written in this space before about whether legacy businesses can beat digital natives by making smart use of their proprietary data. Marriott is a case in point. Some 50% of its bookings now come from Marriott Bonvoy, the rewards program that unites Marriott, Starwood and Ritz Carlton users. That gives them an embedded customer base that rivals Airbnb users. And Marriott also has been very smart in adding new properties, like the hotels in their Autograph collection or the Ian Schrage Edition hotels that enable them to compete for travelers seeking “unique” experiences.
I won’t predict how this will play out. But it is going to be a fun competition to watch. And at the very least, it should make people think twice before investing in a high-priced Airbnb IPO.
Separately, Boeing CEO Dennis Muilenburg survived a shareholder attempt to strip him of his chairmanship yesterday, and gamely spent 15 minutes answering questions from the press. You can watch the press conference here. One reporter asked if he had considered resigning. His response:
“I think the importance here is we are very focused on safety…My clear intent is to continue to lead on the front of safety and quality and integrity.”
I take that as a no. More news below.
President Donald Trump, along with Don Jr., Eric, Ivanka and a bunch of Trump businesses, have launched a federal lawsuit against Deutsche Bank and Capital One in an attempt to stop them from complying with congressional subpoenas for documents relating to Trump finances. The suit claims the subpoenas “have no legitimate or lawful purpose” and are only intended to harass the president. Deutsche Bank said it will still provide the requested information to the House intelligence and financial services committees. CNBC
Alphabet’s shares fell more than 7% after the Google parent reported slowing growth. Its earnings were hit by increasing competition in the online ad market, and also by the $1.69 billion antitrust fine levied in the EU last month. Alphabet blamed currency exchange rates for much of the slowdown. CFO Ruth Porat also blamed poor hardware results on falling sales of Pixel devices in a competitive phone market. Fortune
Vodafone, which has been defending its use of Huawei equipment in parts of its European telecoms network, has admitted to Bloomberg that it found “backdoors” in some of the Chinese firm’s equipment as much as a decade ago. The security vulnerabilities were found during Vodafone testing, and the telco says they were resolved years ago. However, other sources said Vodafone stuck with the company because its products were relatively cheap. Bloomberg
The co-working space firm WeWork is planning an IPO to raise funds. Ratings agencies have given it a “junk” credit score, as its growth has been based on heavy borrowing and it is yet to turn a profit—last year its losses doubled to $1.9 billion. WeWork apparently made a confidential IPO filing in December, but now it’s moving the process ahead. BBC
Around the Water Cooler
Anti-sexual-harassment campaigners are urging the board of companies such as Amazon and Walmart to step up their fight against the problem, by forcing the issue onto the agenda of annual meetings. Activists already reached a settlement with CBS that means they’re no longer calling for a shareholder ballot on policy changes there, in the wake of the Les Moonves scandal. Financial Times
Many banks have now told staff not to stay at hotels owned by the Brunei-backed Dorchester Collection hotel group, because of Brunei’s death penalty for homosexuals and adulterers. The banks include JPMorgan, Deutsche Bank, Goldman Sachs, Bank of America, CitiGroup, Jefferies, Morgan Stanley and Nomura. Deutsche Bank chief risk officer Stuart Lewis: “The new laws introduced by Brunei breach the most basic human rights, and we believe it is our duty as a firm to take action against them.” CNBC
German unemployment dropped by 12,000 last month, which is much better than the Reuters consensus forecast of a 5,000 fall. Meanwhile, the Eurozone as a whole saw a drop in the seasonally-adjusted unemployment rate to 7.7% in March—down 0.1 of a percentage point from the previous month, but down heavily from 8.5% in March 2018. And, according to the latest figures, the unemployment rate across all 28 EU countries was down to 6.4% in March, which is the lowest it’s been since such figures were first collated in January 2000. European Commission
The EU’s top court has cleared the legality of the bloc’s 2017 trade deal with Canada. The Court of Justice said the deal’s much-criticized dispute-resolution mechanisms were compatible with EU law. Reuters