NB This is a viewpoint by Michael McCartan, managing director EMEA for Duetto.
Travellers have more choice and better rate transparency than ever when it comes to accommodation – thanks to the constant evolution of online distribution platforms – and hoteliers need to pay attention like never before.
First came the online travel agencies (OTAs) in the 2000s, when hoteliers were initially happy for help selling rooms during a recession. But today, those intermediaries now own the digital marketplace and hoteliers are struggling to regain control of their inventory and maintain profitability.
Now comes the age of the peer-to-peer network and a new Goliath. Airbnb —with two million listings in 34,000 cities — recently confirmed raising $1.5 billion. Yes, $1.5 billion, placing the San Francisco startup’s valuation at $25.5 billion, more than every hotel company (other than maybe the recently merged Marriott-Starwood).
Hoteliers need to take note, look at the Airbnb model, find opportunities and raise their game or risk falling further behind.
The data
A recent report by STR Global found that 16% of vacation accommodation options in London could now be attributed to Airbnb. In New York City alone, there were more than 27,000 Airbnb listings as of this summer, showing how significant the peer-to-peer player has become in these gateway cities.
Let’s take a closer look at London, where the average Airbnb rate for accommodation in the city is £139 a night, compared to an ADR of £135 for London’s hotels. The peer-to-peer platform is now a market contender.
The question is – what can hoteliers do about it?
Hoteliers may short-sightedly think Airbnb is not going to affect them. But with a unique travel proposition that numbers 25,361 units in the UK’s capital alone, this is one digital trend that is not going away.
Let’s consider the hoteliers’ response to the emergence of OTAs a decade ago.
Many chose to either ignore or bemoan the OTAs, rather than seeing it as an opportunity to develop a more holistic revenue strategy to attract and engage the guest with customized pricing and appealing offers.
With Airbnb we cannot afford to be that blinkered again. Hoteliers cannot afford to concede any more ground in the digital arena. We need to learn, improve and innovate.
Airbnb offers a static rate and little to no extra services beyond the ‘room’ – or so many hoteliers may think.
However, every Airbnb product is totally unique. It is an alternative accommodation option for travellers looking for an authentic experience.
It is a personal choice, delivering a personalised service – something the hotel industry sometimes seems to forget.
What can hoteliers learn?
To put it simply, hoteliers need to personalise their offering.
Airbnb does well where hotels struggle. They engage with consumers before they purchase. Customers can ask questions about the area, logistics and more, and hosts are willing and able to help. Hoteliers don’t do that well and have traditionally followed the belief that the stay and hospitality starts at the entrance of the hotel.
We’ve seen this before. It’s the same mistake hoteliers made when the OTAs entered the market. For OTAs, the consumer journey begins during the discovery phase and it gives consumers confidence early on. Airbnb does this really well and it’s the essence of why Airbnb has succeeded.
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