Assessing The Airbnb Threat To The Hotel Industry
If the hotel industry isn’t talking about OTAs, it’s Airbnb.
Some hoteliers believe that Airbnb is an imminent threat [link to: to business while apparently the vast majority are not so concerned or so it would seem according to a recent gathering of hotel executives at STR’s annual event for traders. Speaking at their event, which took place last week in Nashville at the Hotel Data Conference, STR said Airbnb’s precise impact won’t be clear until the home-rental booking start-up shares more of its transaction data with third-party researchers. However, they did point out that in recent quarters, they have had to repeatedly revise hotel rate growth estimates downward. “There were lots of contributing factors to that,” Amanda Hite, STR Chief Executive, “But traction from alternative accommodation has to be one of them, at least in some markets.” So in the absence of data, at the moment, no one knows for sure what Airbnb’s impact is – financially that is.
There is consensus that Airbnb does apply to a certain market. For those who believe there is no real threat, they say that Airbnb is always going to be niche and is constrained by how many people want to stay in an Airbnb type of experience – which doesn’t compete with their target audience. Which might be somewhat true. However, while not limited to one specific market, Airbnb is attracting a certain type of guest: Millennials, and “No matter how you slice it, Millennials are the most important target population for the hospitality industry. Some 82% of Millennials travelled in the last 12 months, according to Mintel, compared to just 75% of the overall US population. Millennials are now the biggest generation; they travel more, and they’re expectations while traveling are different.” Grabinski Group.
This new generation of travellers are looking for tailored technology, personalised service and authentic experiences – all of which Airbnb can deliver on. With Airbnb, no matter what device you are searching and booking from, pages load quickly, you can easily get and review personalized recommendations, you can search and book various room configurations etc. In order to be somewhat competitive with Airbnb, Benjamin Habbel, the founder of Voyat, an e commerce optimization platform says hotels need to solve a lot of basic pain points for consumers when booking online and steal basic things from Airbnb such as making their web pages load quickly on mobile devices, reducing the number of clicks it takes to finalize a transaction, offer connected rooms via their booking sites in advance etc. AGH! It is shocking to think in this day and age the hospitality industry still hasn’t got the basics right when it comes to technology, especially the user booking journey! Similarly, John Fareed, MD Consultancy Horwath commented that “The hospitality industry is data-rich but information-poor,” and went on to explain that if the industry just made better use of the data it already has it could make big gains. Sigh.
So in summary, is there a threat from Airbnb? Airbnb does pertain to a specific audience, but it is certainly not limited to Millennials. In order to remain competitive, Hotels will need to invest in the digital guest experience as much as the real-world one. Historically investing in technology has been a turn-off for many executives because of the potential costs and/or they simply can’t afford to ramp up their tech spending. As Skift put it, “Perhaps the best sign of whether hoteliers decide Airbnb is dangerous will be if they boost their tech spending during budget season next month. Or if they don’t.”