To some hotel operators, marketers and revenue leaders, it seems as though Airbnb has been a thorn in their sides for a long time. In reality, the sharing economy site didn’t launch until 2009 and took two years to book its first million roomnights. Today, it is ubiquitous, especially in markets like New York City with high hotel room rates and lots of tourists.
Now, however, as the company matures and more travelers — especially those in the millennial generation — have tried and become fans of the service, it is becoming more of a force in the business transient segment of accommodations. As a result, many revenue managers in business travel-oriented hotels now need to develop tactics to identify the risks of Airbnb and develop strategies to combat what could become a real threat to them.
In the past year or so, the use of Airbnb by business travelers has become much more common. Managed travel groups such as American Express Business Travel, BCD Travel and Carlson Wagonlit Travel now have relationships with the site, and Airbnb recently launched Airbnb for Business specifically to penetrate the business travel and group markets.Revenue managers need to develop tactics to identify the risks of Airbnb. #revenuestrategy Click To Tweet
In his recent forecast of corporate rate increases for 2017, New York University professor Bjorn Hanson cited increased use of Airbnb as one reason negotiated rates will only increase between 3.25% and 4% in 2017 compared to increases of between 4.5% and 5% this year.
And while many corporate travel departments haven’t yet endorsed the site (one study shows only one in 10 travel departments include Airbnb in their travel policies), 67% of millennial business travelers in another study say they’re interested in staying in shared accommodations.
The first issue revenue strategists face is quantifying the impact, if any, of Airbnb on their properties. Using STR data, it’s relatively easy to know what four or five hotels are in a property’s competitive set and what are their facilities, policies, amenities and basic rate structures. But In any given market, it’s nearly impossible to know how many Airbnb options are available on any given night or what they charge or what amenities they might offer.
No matter if revenue leaders can’t quantify the threat imposed by Airbnb and other sharing economy entities, they can employ some basic strategies to entice business travelers to choose their hotels instead of the often-unknown experiences offered by Airbnb:
1. Explore other market segments
Since most or all Airbnb facilities don’t have the same offerings of a typical hotel, it makes sense to explore market segments that require the amenities you offer. It could be the MICE market or it could be youth hockey groups, but many avenues of business exist that don’t fit the sharing economy model.
2. Promote your unique offerings
While it’s important to market your competitive advantage against all types of accommodations, the possibilities are greater when competing against Airbnb. Typical Airbnb hosts can’t offer formal concierge functions, or laundry service, or even daily housekeeping.
Even more critical are some safety and security issues. If a guest falls ill or needs help, their only option in an Airbnb home is to call 911, whereas in a hotel the front desk is a one-button call away.
3. Create a community
One allure of Airbnb, especially among millennials, is a feeling of community these facilities supposedly offer. But often, these homes, condos and apartments are in residential neighborhoods where guests are unlikely to meet or form communities with nearby residents during limited stays.
And while hotels can sometimes be viewed as being impersonal, hoteliers often provide facilities (communal lobbies) and services (free breakfast and cocktail hour) that can bring together guests in informal settings that can create bonds.
4. Stress the unique needs of business travelers
For a group of friends and family traveling together, shared accommodations might be an attractive option. But for the business traveler, Airbnb poses more questions than it provides answers. Business travelers need the certainty their needs can be met quickly and efficiently.
At hotels, road warriors have easier access to food and drink when they arrive late. Internet connections in hotels are nearly universally strong and reliable — not necessarily so in a residential unit.
Also, despite talk of decreasing loyalty to travel companies among business travelers, there still exists legions or road warriors and points junkies who demand the special status and free travel only available (so far, anyway) through hotel chain programs.
5. Assist in efforts to regulate the sharing economy
Through its lobbying efforts, the hotel industry in the U.S. and elsewhere continues to fight to level the playing field between the lodging industry and the upstart shared accommodations sector. This fight revolves around making sure Airbnb and its cohorts operate under the same rules and tax structures as do owners and operators of hotels.
While such a fight is out of the purview of revenue strategists, they can when called upon be a valuable resource of data and trend information to help hotel owners and their local, state and federal representatives pursue legislative and legal avenues of fairness and equity.
Thanks to Duetto’s global customer success and solution engineer teams for sharing their knowledge on this topic—especially Gayle Ehrean, Philip Niemann and Andreea Brescan—for offering the wisdom and expertise that comes from their more than 30 years of on-property experience and numerous hospitality degrees and revenue management training programs.
- Don’t Underestimate The Airbnb Threat
- Airbnb A Definite Threat, But Also An Opportunity For Hotels
- Industry Sea Change Surging Upstream To Major Hotel Brands
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