The rental recruitment system that Airbnb employs expands its own business by listing the rental operator's property as an Airbnb-rentable property. “Short of adopting a similar business model, more mainstream hotel companies will be forced to continue to invest significantly in capital upgrades of their owned real estate portfolios and the growth of those portfolios through the acquisition of existing properties and developable land,” according to the DBRS report. It's possible, says DBRS, that such a business model could translate to other industries aside from hospitality and transportation, where Uber, Lyft and similar services recruit drivers in much the same way.

In the meantime, capital upgrades to existing properties not only don't come cheap but tend to be ongoing as well. DBRS cites a recent CMBS deal that it rated in which limited-service Hilton-franchised properties that were part of the collateral had received over $9,800 per key in capital investment since 2014 and were projected to receive an additional $4,200 per key through 2020.

Upon reviewing a number of single-borrower CMBS transactions executed in 2017, DBRS also observed that limited-service hotels had received more than $3,800 per key annually in capital upgrades over the past six years, with an additional $2,800 per key expected over the next five years. Capital investment per key was even higher for full-service hotels, which had received nearly $8,400 per key and were expected to receive more than $10,100 per key over the next five years.

Yet spending money isn't the only tactic hoteliers are employing to stay competitive. DBRS notes that operating companies are making adjustments to the standard hotel model based on feedback related to changing consumer preferences. These adjustments may include creating more residential units along with “more innovative hotel product offerings that offer a 'neighborhood feel' that is conducive to socializing.”