WHILE AIRBNB AND other shared economy options continue to change the hospitality industry landscape, hotels are looking for ways to compete. Their options, according to an article from Next Big Thing Travel & Hospitality co-founder and Puzzle Partner President Alan Young range from blocking them to partnering with them.
Young contends that traditional hotels will see more stress on their business as experience-minded millennials increase their presence in the market. He cited a survey by Hipmunk that found 44 percent of millennials prefer rentals to hotels. “This generation reached their twenties and started planning their own vacations just as Airbnb started up,” Young wrote. “Their limited budgets and craving of unique experiences made Airbnb a natural fit for them, plus they prefer the easy online booking, even via mobile devices, that Airbnb offers.”
With Airbnb’s value set at $30 billion without the overhead of actually owning property, Young said hotels are taking a multi-faceted approach to competition, following four main strategies.
Blocking – Not infrequently, neighbors of would be Airbnb hosts take issue with the plan, and since they also do not collect hotel taxes, local governments have been known to impose regulations barring the usage, Young said. “Local regulations in major destinations like New York City prohibit short-term apartment rentals, and new laws that impose serious fines may force some listings off the market,” Young said. Rather than filing the actual legal actions, he says hotels generally partner with organizations that oppose Airbnb, run social media and advertising campaigns supporting restrictions, and speak at planning commission meetings and other public hearings in favor of Airbnb-adverse regulations.
Competing as traditional hotels – Some hotels take on the competition directly, either by emphasizing features that distinguish a hotel from an Airbnb property or integrating into their hotel properties Airbnb features travelers prefer. And some exploit natural advantages over the shared economy option, Young said. “It’s difficult for Airbnb to match hotels’ ability to offer blocks of rooms for meetings or group travel,” he said. “Business travelers want a consistent level of service, and high-end luxury travelers want responsive, sophisticated service. Although Airbnb is attempting to compete in these markets, they can’t yet offer the level of service provided by traditional hotels.”
The convenience of hotels’ 24-hour operation offers another advantage, Young said, as are loyalty programs. As for competing with the uniqueness of staying at an Airbnb property, hotels are working to individualize their properties as well. “Some hotels are now offering original guidebooks written by locals, while chains are creating collections of properties, like Hilton Curio, where the hotels are distinctive rather than cookie-cutter,” Young said
Competing as short-term rentals – Other hotels are taking on what has been the central Airbnb business model, housing travelers in actual houses. “Accor acquired onefinestay, which lists upscale homes, and the hotel chain is providing concierge services to the listed properties,” Young wrote in his article. “Another chain moving into home rentals is Choice Hotels, which offers Vacation Rentals by Choice Hotels. Stays at Choice’s vacation properties earn points in the hotel’s loyalty program, and points can be used to book either hotel or vacation rental stays.”
If you can’t beat ‘em … – Rather than fighting the Airbnb giant, some hotels are partnering with the company. Young said they list their rooms on Airbnb’s website, taking advantage of their lower reservation fee. “In some cases, hotels provide check-in services for Airbnb properties and allow Airbnb guests access to their amenities, blurring the lines between hotel and short-term rental stays,” Young said.
In the end, though, Young said Airbnb is not likely to kill the traditional hotel industry, citing the steady increase in RevPAR over the last few years. “With innovative approaches to hospitality spurred by the new competition, hotels are likely to continue to thrive,” he concludes.