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Airbnb a Definite Threat, but also an Opportunity for Hotels

by Patrick Bosworth, co-founder and CEO |

Like my colleague Ed Watkins, I was skeptical of Airbnb’s supposedly minor impact on the hotel market in New York City and, by proxy, all of peer-to-peer (P2P) lodging’s effect on the hospitality industry.

Leaving aside questions of how forthright Airbnb was with the data it shared with STR for analysis in this much-hyped report, hotels are losing bookings to P2P sites, which no hotel would consider minor. As a Goldman Sachs survey of consumers shows, more people are trying the service, and many of them “do a 180” in their preferences between staying in a traditional hotel versus finding a room via the sharing economy.

So I wouldn’t argue about whether Airbnb and the like pose a threat to hotels. They do. I’m not concerned with how hoteliers classify P2P lodging sites; I’m concerned with how they respond to those sites.

We’ve been here before with online travel agencies. Negotiations over commissions, rate parity and last-room-available clauses can be contentious, but hotels should never ignore or freeze out OTAs from their business models. Rather, they should work harder to leverage OTAs’ consumer appeal and efficient distribution while still maximizing the hotels’ revenue on that channel. The same could be said of hotels’ newest “frenemy,” P2P lodging companies.

The sharing economy’s effect on traditional hotels is still a very nuanced picture, and it underscores why a holistic Revenue Strategy is so critical today. To safeguard your occupancy and market share from any competitor — be it another hotel, an OTA and perhaps now an Airbnb host — you should communicate effectively with guests before they arrive, provide the ideal on-property experience and use all available data to market to those guests in a personalized way after they stay. That’s always been the game plan for turning customers into longtime loyal guests, and it’s more important than ever in light of the sharing economy’s growing popularity.

Hotels could partner with a P2P site as a customer acquisition channel. Click To Tweet

As long as they have confidence in the on-property experience they offer, hotels could partner with a P2P site as a customer acquisition channel and a way to learn about guests who are less enamored with traditional lodging. The sharing economy is here to stay, and ignoring P2P lodging guests in your area won’t cause them to wither on the vine, so it benefits your hotel to be an expert on them.

In general, I think smart partnerships with P2P lodging providers could come in the form of distribution deals. Some hotels are already experimenting, like Choice Hotels getting into the vacation rental business and Hyatt investing in Onefinestay. The latter partnership has a pilot test in London in which Onefinestay guests can use the facilities of the nearby Hyatt property to freshen up or hold their luggage until their P2P-hosted facilities are ready for check-in.

Perhaps some hotels can cooperate with nearby sharing economy locations to provide room service, concierge, valet or housekeeping services for a fee. It’s an obvious opportunity if the Airbnb host lives on the hotel’s property, like with the St. Regis Residences and other luxury rentals. But the same thinking could apply to a hotel with P2P lodgings across the street.

Don’t get me wrong: I’m not saying Airbnb needs to be your new best friend. Hotels have clear advantages over Airbnb that they should exploit. Think about what’s on your kill sheet when you’re trying to outperform your competitive set: What are their weaknesses, which ones lead into your corresponding strengths, and how do you make those contrasts clear in the minds of consumers?

In the case of hotels versus P2P lodging, it’s far easier to check in to a hotel. Lobbies are open 24 hours a day, but if an Airbnb host is stuck in traffic or has something pop up at work, she can’t get her guests the keys to her property. She also can’t offer her inconvenienced guests a bar with Wi-Fi while they’re waiting or a bellhop to hold their bags. If Airbnb customers are stranded while they’re waiting, they’re stuck in a neighborhood they don’t know.

Again, the way to think about sharing economy sites should closely resemble the way savvy hoteliers approach their relationships with OTAs. Ignoring Airbnb and the others won’t make them go away. But engaging with them mitigates the damage they can do to your hotel.

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Patrick Bosworth, co-founder and CEO

Patrick Bosworth, co-founder and CEO

Co-Founder and Chief Executive at Duetto
As CEO, Patrick spearheads the firm’s strategy and vision, while also championing a new approach to revenue management. Under his leadership, Duetto has grown to nearly 100 employees supporting more than 1,000 hotel and casino properties around the world. Before founding Duetto, Patrick was Director of Yielding and Business Strategy for Wynn Las Vegas.
Patrick Bosworth, co-founder and CEO
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Patrick Bosworth, co-founder and CEO

As CEO, Patrick spearheads the firm’s strategy and vision, while also championing a new approach to revenue management. Under his leadership, Duetto has grown to nearly 100 employees supporting more than 1,000 hotel and casino properties around the world. Before founding Duetto, Patrick was Director of Yielding and Business Strategy for Wynn Las Vegas.