airbnb potential hotel distribution

Airbnb’s growth has truly been explosive. According to a recent article in the Wall Street Journal, Airbnb generated $340 million of revenue in the third quarter of 2015, with bookings totaling $2.2 billion. The number of nights booked has doubled from 11.3 million in the third quarter of 2014 to 23.8 million in 2015.

Since Airbnb has become a dominating presence in the sharing economy, many in the hotel industry have wrestled with whether to fight it or join it.

As an industry, it’s difficult to forget what happened after 9/11. This was a time when we were fighting for survival and began bastardizing ourselves, giving more and more inventory to OTAs and agreeing to higher and higher commissions. By “feeding the beast,” we created a huge problem for the industry.

Incremental demand driven by OTAs has always been small; and, OTAs spend the bulk of their money on marketing. The net effect is that we do about the same amount of business, but our commission costs continue to increase dramatically. And with their additional revenues, the OTAs can invest in even more marketing and enhanced technology. Now they are in a position to take, and they are taking, an even bigger share of our revenue, driving our commission costs up even higher.

Our industry is celebrating the best year ever in regards to occupancy and average rate. Imagine, if we didn’t have to pay the OTAs, how much more profitable we would be.

Read rest of the article at Lodging Magazine