One hotel CEO's assessment of Airbnb should keep everyone in the industry up at night

The hotel business is being disrupted.

It’s one thing to have a new competitor enter the field. It’s a whole other thing for an innovator to come in and disrupt the entire industry.

Uber is disrupting the taxi industry’s old model of business. Netflix is disrupting cable companies. The cronut is disrupting breakfast baked goods.

Despite the term being a possibly overused buzzword, the reality is that traditional businesses are scrambling to address disruptors from stealing to much from their bottom lines.

Mike Barnello, CEO of LaSalle Hotel Proprieties, made the issue clear once again regarding Airbnb, a disruptor that enables homeowners to easily rent out space to travelling lodgers.

“In this call we’ve spent time — a little bit — talking about the last call and a lot of time throughout quarter,” Barnello said during a quarterly earnings call Friday. “But this is a growing concern on a number of levels.”

“The amount of listings that are located in major markets is high ranging from 4% to 7% in some of our markets that becomes a shadow supply issue.”

Barnello then used New York City as an example of where the 7-year-old startup has made major inroads.

“You probably saw a … report a couple of days ago,” he continued. “They came out and said that Airbnb accounted for 5% of the room revenue in New York City during that second quarter of 2015. I also said that it was 9% of demand in New York City for August, those are big numbers.”

Additionally, Barnello said that at least 60% of Airbnb’s rooms are located in the top 14 markets, meaning that companies with significant holdings in large cities are getting hurt worse.

This is particularly concerning for LaSalle, which operates almost exclusively in large cities where Airbnb has the highest rates of penetration. LaSalle has 45 properties in places such as New York, San Francisco, Washington DC, and Chicago.

Lasalles holdingsLaSalle Hotel PropertiesThe markets in which LaSalle operates, from its annual report.

“The fact that our performance have been reverse in 2014 and year to-date 2015 is a cause for concern, but I don’t know that it means that the markets that we’re in are markets to abandon,” said Barnello.

He also noted that while it was not a new trend, it has been “gaining ground recently” and there has been anecdotal evidence from different properties owned by LaSalle of long-time customers switching to Airbnb.

These trends are worrying to Barnello, but he claims to welcome the competition, provided everyone in the industry gets a fair shake.

“From our perspective while you can’t do anything about legitimate competition,” he said. “What we are concerned about is just making sure that the playing field is been regulated to level of fairness in terms of life safety, health and welfare issues, whether its for licensing permitting and taxation. And those things are all being done legitimately, then it is what it is.”

It seems like the hotel business has started to pay attention to the disruptor.

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