Can hotels stop the growth of Airbnb?
Thursday, May 11, 2017
Airbnb made innovative disruptions to the lodging industry by adding millions in room inventory to the market. Because almost anyone can rent out their extra space that is currently underutilized to other consumers on Airbnb.com, the listings on Airbnb have now exceeded 3 million, covering more than 65,000 cities in 191 countries.
As a substitute for the traditional lodging facilities, including hotels, hostels and short-term rentals, the increasing supply of Airbnb properties is no doubt making an impact on hotels' bottom lines. It is commonly believed that those multiunit operators — hosts who are managing three or more units at a time — create the biggest threat to hotels because they gain many advantages over the operators for the traditional lodging products, such as running a business with less strict tax and safety regulations.
Hotels' strategies for fighting against Airbnb
Hotels are working hard to fight against the competition from Airbnb, other room-sharing websites and online travel agents (OTAs). For example:
- Hotels are encouraging travelers to search and make reservations directly on the hotels' websites by offering special discounts if they book directly, even though this strategy might possibly push Airbnb and OTAs to work closely together against hotels.
- Hotels are reinventing loyalty programs to win more new travelers and, at the same time, keep their repeat customers.
- More hotels are adding local flavors to lure travelers. If travelers choose Airbnb over hotels because they want to gain some unique experience as a local resident, this strategy may work particularly well.
- Hotels are responding to the shifting needs of customers by introducing new brands and through acquisitions. The merger of Marriott and Starwood is a good example.
- Most recently, hotels are planning for a lobbying push over the Priceline-Expedia "monopoly," in addition to the legislation push toward Airbnb. Hotels want to play a "fair" game in the competition with Airbnb and OTAs. So far, hotels have successfully convinced legislators to impose stricter regulations on room-sharing operators in several locations, including San Francisco, Vancouver, Amsterdam and London.
Challenges that Airbnb faces
Despite Airbnb's phenomenal growth since its inception in August 2008, the company is facing more challenges lately.
On one hand, hotels are gaining more success in combating Airbnb. For example, New York City just passed a new regulation, charging steep fines to those Airbnb hosts who break local housing rules, resulting in fewer qualified listings in the market. Airbnb is also more willing to work with local governments to collect taxes on room-sharing rentals, now at the same rate as the one for hotels.
On the other hand, Airbnb is facing allegations for the hosts' racial discrimination against renters.
The question is: Will those challenges slow down Airbnb's growth?
Airbnb's strategies for growth
Airbnb wants to become more than just a leading room-sharing platform in the market, as suggested in the following moves taken by Airbnb recently:
- Airbnb acquired a couple of travel service companies, including Luxury Retreats and Tilt, as the company is getting ready to become a full-service travel company.
- Airbnb wants business travelers, too. Not only has the company launched a website that tailors to business travelers, but they also work closely with the hosts to ensure the listings meet business travelers' needs. The most recent move Airbnb took was to introduce new booking tools that were specifically designed for business travelers.
- Airbnb is working on a gadget that will provide travelers with reliable internet connections during their trip. For business travelers as well as those young leisure travelers, stable WiFi connections have become a must-have amenity for their stays.
Competition between Airbnb and hotels
It is unlikely that anyone can stop the growth of Airbnb. The competition between Airbnb and hotels is only going to get tougher.
Can you predict what the next moves for hotels or Airbnb might be? What suggestions would you make to hotels or Airbnb to win the battle?
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