The New York Times has published a 2016 document by American Hotel and Lodging Association regarding how to compete against Airbnb in the coming year. You can find the excerpt here. It highlighted their dire need for regulatory support to make the industry more competitive against the technology newcomer, Airbnb. According to a Morgan Stanley AlphaWise survey, as reported by Bloomberg, of all surveyed Airbnb users, 41% switched to Airbnb from traditional hotels in 2015, while 49% did so in 2016.

Airbnb is now considered the largest hotel brand in the world. Available in 190 nations, Airbnb has 1.5 million listings, surpassing the newly merged Marriott-Starwood’s 1.1 million rooms. Airbnb does so without owning one single property listed. The sharing economy has given technology platform companies significant competitive advantages: being able to sell to consumers without having significant physical asset investments. Unlike its fellow unicorn, Uber, who lost almost $3 billion, Airbnb has achieved profitability in the second half of 2016, reported Bloomberg. According to this article, one person close to the company indicated that revenue at the company increased more than 80 percent during 2016, and that the company still has almost all of its $3.1 billion in funding. The possibility of its acquisition and investment opportunities pose significant threat to incumbent property-owning hotels. Last November, Airbnb also invested heavily in defeating San Francisco’s proposition F, which would limit short-term rental to 75 days. Airbnb significantly outspent its opponent, hotel workers’ union, by more than 15 times.

The playing field isn’t level. For the incumbent hotel industry to fight Airbnb, one avenue surely is through the regulatory channels. New York City has passed a law to fine multi-unit building hosts who rent out units for less than 30 days up to $7,500. Airbnb fought against it and lost. The city’s incentive first is to ensure enough units are available for long-term residents so that housing cost doesn’t skyrocket even further than it is.

Perhaps a more effective way to compete here for the hotel industry is to segment customer needs more deeply and thus differentiate itself. Let’s face it: the St. Regis and Ritz-Carlton travelers are not going to give Airbnb the time of day. The hotels Airbnb is taking market shares from are the lower-end hotels where they offer few services and thus cost less for them to operate. Airbnb has successfully captured the customer need for the lower prices and the “local experiences.” Thanks to the lower cost of an Airbnb property (the hosts already own or occupy it) and the small property scale, the hosts can afford to offer more personal services.

Can the hotel industry compete in this space? Yes. Outside the box thinking: take a page out of Nordstrom’s playbook. Nordstrom as a stand-alone brink-and-mortar retailer has no chance of competing successfully in its space with the entrance of Net-a-porter, Gilt, and other luxury fashion discounters. Enter Nordstrom Rack, which is far more profitable than its mainstream, regular priced sibling. Smarter play: HauteLook. HauteLook is an online/app only direct competitor to other flash-sale luxury discounters. HauteLook rounds up Nordstrom’s multi-channel retailing operation. Items purchased from HauteLook can be returned at any Nordstrom Rack.

Do you see a parallel here? The lesson for the hotel industry is this: follow the new comer. Just as Nordstrom acquired and launched HauteLook, so too should the hotel industry operate at Airbnb’s level. Scale is an advantage for spreading costs. The combined Marriott and SPG already own brands with low price perception: Courtyard, SpringHill Suites, FourPoints, Moxy, and etc. The unmet customer need is the local experience. This is pretty easy to fix. How about creating a competitive advantage that Airbnb has no chance of overcoming? Marriott points. Sure, Airbnb can offer its own loyalty program. But that spells “costs.” What Airbnb doesn’t have is this: Marriott can make points from the lower-end Marriott-owned hotels (lots of it, of course) available for nights at the Ritz-Carlton of the world.

There is a need there. Aspiration is a powerful emotion. Capitalize on it.