Beyonce’s stay at an Airbnb apartment ups the ante for hotels
Wednesday, February 10, 2016
If there was any doubt about the future of the sharing economy, Beyonce's stay at an Airbnb apartment over the Super Bowl weekend officially proclaimed it as a winner. Social media is all abuzz with the star's "down-to-earth" choice of accommodation (though the luxury apartment came at a whopping $10,000-per-night price tag).
It has been interesting to see the varied reactions over this — from fans applauding her choice to detractors who feel it's merely gimmick. The latter group, of course, includes the perceptive opinion that this is a carefully orchestrated marketing ploy by Airbnb and the star didn't really have to pay. Well, if that's the case, it is a master stroke nevertheless.
While Airbnb has given the hotel industry quite a bit of grief in recent times, most hotels claim that it hasn't made a dent in their revenues and it's more of a perception change than anything else. But it is time for hotel executives to take a closer look at why more people are opting for Airbnb options.
Recent data released by STR, a lodging-data provider, show Airbnb accounted for 5.5 percent of overall Manhattan lodging in 2015, having a minor effect on Manhattan hotel business. Neither the occupancy nor the room rates had to be adjusted due to the threat posed by the shared economy model.
However, STR's report comes close on the heels of the CBRE Hotels' Americas Research, which provides another dimension to the issue. CBRE's report shows the growing influence and demand for Airbnb, with $2.4 billion spent on Airbnb accommodations across the U.S. between October 2014 and September 2015. More than 55 percent of that was spent in major cities like New York, San Francisco, Miami, Los Angeles and Boston.
But the STR study shows that only 3.5 percent of the Manhattan lodging revenue in 2015 could be claimed by Airbnb. Also, there is a huge disparity in the quality of their offerings, with over 60 percent of Manhattan Airbnb units falling in the midscale or economy compared to 13 percent of their Manhattan hotel counterparts.
But CBRE has urged caution. Even though Airbnb revenue is just 1.7 percent of the $141 billion generated by hotels, one cannot discount the fact that Airbnb's influence is growing. This 1.7 percent is a significant jump from their previous year sales, posing a competitive threat to not just occupancy but to daily room rates as well.
It could even slow down new hotel construction, which could a big blow to the employment index as well. Hotels need to take a closer look at their services and bridge the gap for these customers who are looking for comfort, warmth and homeliness.
This threat was acknowledged by several hotel executives at the recent Americas Lodging Investment Summit, though many have been scathing in their Airbnb criticism. For industry peers, there is a huge gap between what is being portrayed and what is really happening. They have demanded the company show more transparency, follow the same health and safety standards and pay the same taxes that hotels do.
More than "home sharing" by individuals looking to make some extra cash, there are reports of full-time operators who rent their properties year-round accounting for 30 percent of Airbnb's revenue. Reports like these can cause a severe dent to Airbnb's "comfortable" brand image.
As Beyonce's stay points out, it's not about money anymore. It's about the comfort of a home away from home.
The stark impersonality of hotel rooms and generic service can get to travelers after a while. Through Airbnb, one can claim anonymity and safety all in one, along with all the amenities of the home — full kitchen, bedrooms, bathrooms, etc. It is an endorsement of choice, opting for comfort and affordability while traveling. These are the coin words for Airbnb, but one needs to exercise caution here.
A recent Business Insider article by Biz Carson points out the woes of being an Airbnb guest. Reading through, one just might think twice about opting for that "homely" feel on their next trip. While hotels may have to rethink their customer service strategies and make their guests feel more at home, one cannot discount the fact that safety is not a questionable issue here.
While the price for Airbnb rooms is definitely a positive factor, quality and consistency of service is not. Since you are basically walking into anybody's home, you cannot expect the same industry standards here. A great home will lead to a great experience. If not, you may be travel-scarred for life.
This is the cue for hotels to step in as they bridge the gap, for they have the resources to offer all the above benefits under one umbrella. All it takes is a change in mindset and strategies.
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