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How Hotels Should Respond to Airbnb’s Growing Ambitions

by Patrick Bosworth, co-founder and CEO |

At its Airbnb Open conference in November, the sharing economy platform unveiled Airbnb Trips, its foray into guided tours and events. Whatever effect it has on Airbnb’s $30 billion valuation is not for me to say, but I think it portends different things for branded and independent hotels.

Where a new platform like Airbnb Trips is trouble for hotels is the new front it opens up in the competition to create more value for leisure travelers. If Airbnb can position itself as the “super brand of travel,” as Brian Chesky likes to say, then presumably it could steal room nights.

How @Airbnb Trips is trouble for #hotels — and what @ptbosworth says to do about it Click To Tweet

That being said, Airbnb Trips is not a sure thing. These tour and activity offerings are incredibly hard to launch and to scale. Companies have to get word-of-mouth going among the customer base and among potential suppliers who could lead tours and plan fun outings.

In its few initial launch markets, Airbnb is doing this in a very labor-intensive way, in the hope that the model starts turning over on its own and building upon itself. If that’s still the business model for Airbnb Trips in two years, it won’t scale. But if in a year it takes on a life of its own, it could be a formidable force in the leisure-travel market.

Branded Hotels’ Response Remains the Same

How should traditional lodging companies approach this? Where hotels compete effectively and should be able to win is on guest service.

 

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As I’ve written before, the ability to welcome a guest 24 hours a day at a staffed front desk, rather than try to coordinate getting into a room with an off-site, sometimes unreachable host, will always be a major advantage. In most hotels, room service lasts 24 hours, and housekeeping and laundry respond on demand. Airbnb tries to mimic these high-touch services, but it’s too tough to do, even with super-engaged hosts.

However, where Airbnb is trying to make inroads with its Trips function is to claim the mantle of more authenticity compared with hotels.

Good guest service is an expectation at any hotel, but it’s often quite formal and impersonal. Airbnb is trying to change that with the Experiences and Places offerings under the Trips umbrella. Travelers are likely to perceive a more authentic experience if they attend a meetup of like-minded tourists organized under Places, or if they participate in some fun activity they find in the Experiences category.

Will enough travelers opt for hotels’ reliability over Airbnb’s authenticity? That’s a question for hoteliers and their marketing staffs, and they’ll need a strategy to address this as soon as possible.

For some flags that are highly commoditized hotel brands — typically rolling up to one of the big players — the customer base is too broad to attempt this targeted approach for activities and community building. Those hotel companies certainly shouldn’t try to compete with Airbnb on building a peer-to-peer technology company, either. Their appeal is in their location and their consistency.

Independent Hotels More Threatened — and Better Positioned

Presumably some independent hotels or small brands could move toward embracing this new way to travel, but it depends greatly on how the property is positioned in its market and how well it speaks to its core customers.

Beyond marketing, smaller hotels could hire employees that come from the customer segment they’re trying to reach.

For example, a friend of mine in Los Angeles was approached by Airbnb to develop an Immersion or Experience, because he is deeply connected to both L.A.’s electronic dance music scene and yoga community, and he often hosts events that combine both. My friend and his company are cool, and Airbnb was interested in crafting an authentic Experience around that to entice Airbnb users when they’re staying in L.A.

It would not surprise me, however, if the concierge or managers at The Standard Downtown LA also know my friend, because that hotel also actively cultivates a young, hipster clientele.

One way to do that is by hiring managers and front desk staff who belong to that demographic. That positioning is also seen in the events The Standard hosts, like “Winyl” (wine+vinyl) dinners in the lobby bar, or in the content it shares on its website. This Standard Guide to Drunchies (another portmanteau, drunk+munchies) is exactly the kind of content one might expect from Airbnb or any media company pitched at millennials and younger travelers.

In the case of either branded or independent hotels, both must be solid on their fundamental offerings of clean rooms, convenience and impeccable service. The latter have more to do to defend their value proposition from Airbnb Trips, but they also have more to lose.

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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.