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Old Industrials Begin to Battle Digital Platforms

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This is going to become a typical scene as old-age industrial empires begin to challenge digital companies. This account, from Fortune Newsletter, is on Airbnb and Marriott. Expect real battle ahead with the good news that consumers will win on better services and lower prices.

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