“A new take on hospitality” — Interview with Chris Herndon of The Guild

April 25, 2017

The Guild is a unique new concept in hospitality. Currently based in Austin, TX, The Guild combines local and inspirational experiences with the consistency and comfort of traditional hotels. In their own words, they are “the best of both worlds: a hotel and a short-term rental rolled into one providing stylish, spacious suites with hotel-like amenities, a mobile concierge team, and a sick rewards program.”

They also make recommendations on local essentials such as things to do and places to eat. Aiming to share only the “best of the best” inside scoops, they definitely offer a highly curated level of tips that are sure to satisfy even the most seasoned travelers.

We spoke with The Guild co-founder Chris Herndon about the exciting changes happening in hospitality industry and where his company positions itself in this fast-paced travel scene. Chris is a serial entrepreneur and as such, his point of view brings much value for the traditional hospitality veterans as well as alternative new players in the game.

Travel Tripper: Thank you Chris for joining us today.

Chris Herndon: It’s my pleasure.

TT: Tell us a little bit about your yourself and what you’re currently up to?

CH: Sure! I guess I should begin by saying that travel has always had a big place in my world. I am definitely someone who has always traveled a lot, both for work and pleasure. And the more I traveled, it seems the more I wanted to experience my destination like a local. But I also enjoyed the fancy hotel stays, where I could benefit from various amenities. Also, I have always been a reward points junkie so I definitely valued that aspect of staying at a traditional hotel. My current venture, the Guild, definitely combines all these characteristics that define me.

Basically, what we do is allow travelers to experience their destination like a local while enjoying must-have amenities of a swanky hotel. Think of us as one part eclectic home, one part boutique hotel, and one part your hipster cousin who knows only the best things to do in town.

We launched in March 2016 and since then we’ve seen consistent growth month over month with strong profit margins, and we’re thrilled that our customer satisfaction score has always been very high since day one.

TT: That’s wonderful. You currently have six properties all located in Austin, TX, correct? Tell us how your business model works.

CH: Yes, that’s right. So we primarily partner up with new construction apartment buildings. The first few months are the most critical period for developers because they want to achieve stabilized occupancy levels that ideally reach 90% or above as quickly as possible. So they have a strong sense of urgency to lease their apartments at this point and reduce their costs. The longer they can’t lease them, the higher the carrying costs. That’s where we come in.

TT: So it’s a win-win. But does the building feel too empty and lifeless when your guests arrive?

CH: That’s a great point. Not at all, because by the time our guests arrive, building occupancies are already anywhere between 30 to 90%. And these are mid-rise or high-rise buildings, where interaction with other occupants are usually limited to common areas such as the elevators and the pool. Having a low occupancy actually makes these areas more efficient and attractive for our transient guests. No long waits for the elevator, and the pool area is more relaxing and quiet than it would have been at a fully-occupied building, especially on the weekends. So our guests are actually very happy in that sense.

TT: Do you think the concept of the Guild would have worked in the pre-Airbnb era?

CH: I think this kind of travel began to materialize more and more for corporate travelers after Airbnb. It is perfect specifically for budget-conscious travelers if you think about it. But just because someone is budget-conscious, it doesn’t mean they are willing to give up on quality.

One thing that is still challenging about Airbnb is their review system. If you feel like your host is more of a friend than someone you do business with, then you’re less likely to be completely honest and transparent about your stay. Also, I’m assuming mutually agreed upon ratings must be common when a host and a guest become friends, which devalues the meaning of perfect five-star ratings. So I think there’s high margin for errors on their review system.

TT: Would you say you consider traditional hotels as your competition or Airbnb apartments?

CH: Definitely traditional hotels. I feel like Airbnb guests’ priorities are different than a typical hotel guest’s or ours. If there is another apartment down the block from us that is priced slightly lower, chances are Airbnb guests will choose that place over us, but we wouldn’t lower our price because of that. Yes, our apartments are listed on Airbnb, but in fact a small percentage of our guests actually come from that channel.

TT: What are your sources of business then? Where do you sell your rooms online?

CH: In addition to our own website, theguild.co, we also partnered up with large OTAs. We are building direct corporate relationships to increase our corporate travelers. As a condo-hotel with excellent amenities and services, we think we offer the perfect product for them.

TT: Could you break down your distribution mix?

CH: We receive approximately 25% of our business directly from our website, 15% from Airbnb and Homeaway, and the rest from our OTA partners. We are constantly working on increasing our direct website contribution, of course.

TT: What are some of the marketing initiatives you deployed to increase direct website business?

CH: Our website traffic has been very word-of-mouth so far. Aside from such organic traffic, we haven’t really spent a ton on paid advertising. We have been growing in a grassroots fashion. I think our transition over to Travel Tripper will be very beneficial in that sense, whereby we’ll significantly increase our booking engine conversion rate.

Another marketing alternative that works well with our target consumers is partnering up with influencers in the travel and style spaces. We have them experience our product and services firsthand and then share those experiences with their followers.

TT: How do you manage decentralized online distribution? For instance, when a room is booked on Airbnb, do you have to update availability on other sites?

CH: We pretty much automated our system. We use Rate Gain as a two-way channel manager. Our rates and availability are live on GDS; we revenue manage our properties much like a traditional hotel would.

TT: What are some of the challenges of managing/marketing alternative accommodations?

CH: For the time being, the most prominent one is the arrival experience, which we want to make more frictionless. Residential building lobbies are designed for more long-term residents, obviously, which means there is minimal signage directing our guests on the hallways. We provide our guests with picture-heavy guides to make the check-in process flawless. As our partnerships with building developers evolve, I am sure we will come up with more permanent and better solutions.

Another problem our guests occasionally face is when a key-code for the door malfunctions but that has a very easy solution. Thanks to the virtualness of our service, we can instantly and efficiently handle such situations. When a guest sends us a message and informs us of the situation, we can immediately reset their code and send them the new one. We are the white-glove service in the cloud 24/7.

TT: That’s a wonderful way of summarizing your text message service. Could you actually tell us a little bit more about it?

CH: Sure! Basically, we like to think of ourselves as your favorite cousin or a friend with whom you can interact on your own terms. We eliminated much of the fuss and frictions from human communications. I think especially younger travelers enjoy and embrace this aspect of our product because it eliminates the unpredictability of personal reactions. You control the conversation and you know exactly what you’re getting.

TT: But do you have any international guests who might not be fluent in English?

CH: About 20% of our guests are international and 80% is domestic. We have used online translation services in the past for our text message service and they worked well. We rarely have a problem with a guest because of language barriers.

TT: What are some of the improvements to The Guild we can expect to see in near future?

CH: We are building more and more strategic early conversations with new developers such as taking over an entire floor of a building, which will allow us to have more control over the arrival experience. When we have the entire floor, we can put up more visual branding materials and even offer light amenities on the floor.

We now have reached the critical mass of guests on any given night so from this point on, we are working on building a true community around our platform. Like I said, we accommodate a lot of corporate travelers especially from the big consulting firms so one initiative in community development is to organize an event where we bring together consultants from Bain and Deloitte and let them have a good time while networking.

TT: Sounds a lot of fun! Do you have any plans to expand into other cities soon?

CH: Yes, absolutely! We targeted few other cities but nothing is definite yet. I can say that within the next year, we will have expanded The Guild to other big cities, where local regulations allow space to develop our product and where we can see potential to build strong partnerships.

TT: Wonderful—we can’t wait! Where do you see the future of traditional hospitality accommodations?

CH: I think traditional hotels will be experimenting with alternative ways of accommodation similar to Airbnb-type models. I think Accor Hotels acquiring One Fine Stay for $170M and making a strategic investment into Oasis Collections is a good sign that large chain hotels realized this sector isn’t going away.

Also the necessity of having in-house restaurants will slowly become less critical for the success of the overall operation. If you think about it, we already have well-functioning, streamlined services like Uber Eats and Postmates, which give users more choice. Along the same lines, common areas in a hotel will be deemphasized because self-service will become the new norm. Consumers prefer to be in control of the whole process from A to Z without giving up on service when they want it. But for something like check-in, no one wants to wait in long lines and they shouldn’t have to.

TT: Thank you so much Chris for sharing your experiences and insights with us. We wish you the best of luck with The Guild!

CH: Thank you!

Key takeaways from Chris Herndon on alternative accommodations:

1. Alternative accommodation options like The Guild are not going away. If anything, they will continue to see increase because simply put, consumer behaviour and expectations are changing. It is for hoteliers best interest to adapt to this change now and reevaluate their growth plans for the future.

2. Increasing your direct website traffic does not always have to rely on paid ads but can work with alternative marketing techniques that best speak to your target audience.

3. Building a community around your product is essential for continued success of your business.

4. Increasing the conversion rate on your booking engine is best achieved with solution partners like Travel Tripper, that have expertise in that area.

5. Hotel food and beverage operations will move towards third-party managed partnerships with tech startups that offer consumers more choice and flexibility.

6. Hotel lobbies will be used less and less for check-ins and other mundane aspects of travel and more for guests socializing and self-services.

We want to extend a special thanks to Chris Herndon for sharing his valuable insights and experiences with Travel Tripper. To learn more or to book a visit, visit theguild.co.