Since its inception in 2008, Airbnb has hosted 25 million guests across 190 countries in over a million host locations worldwide. Equipped with $475 million from their last round of financing, the site is poised to continue reshaping the hospitality business with its unique marketplace platform model for home rentals.
Suffice it to say, Airbnb poses a serious competitive threat to hotel chains. A lot of factors have been important to the company’s success, like the advent of the sharing economy, its market readiness, as well as the inimitable rental inventory it has amassed since inception.
But one factor trumps the rest: an unmatched technical infrastructure and prowess. Airbnb has built a robust web and mobile presence that is simple, yet compelling. It’s very easy for users to engage with the brand through a single platform, which can be conveniently accessed through a number of touch points across various devices. With just a few clicks, anyone can access desired rental properties anywhere in the world.
In addition to sustaining its competitive advantage through a powerful marketplace platform, Airbnb has made clear its intention to position itself as a company that provides customers with experiences and not just technology. The firm has expressed a strong interest in developing its own concierge service, as well as hiring caretaking staff to manage rental properties and provide in-person care to customers. All of this indicates that Airbnb’s technology is there to ultimately facilitate the guest experience. This increasingly prevalent strategic intention makes the reliance many hotel chains have on premium brand differentiation to compete with Airbnb over the long-term far less compelling.
Conventional hotel businesses can learn a lot from Airbnb’s effective use of technology to invigorate their hospitality services and regain market share. Several of the leading hotel chains do in fact have some kind of software-based web and mobile presence. But this presence still typically entails a static consumer application with minimal functionality. And in most instances, there are multiple applications for different subsidiary hospitality brands.
From a customer’s perspective, the overall digital experience is confusing, difficult to navigate, and dilutive to their interaction with a particular brand of choice. This is bad for hotel chains. If the mobile user drop-off rate is an estimated 20% for each additional step required to engage with an app in its entirety (as suggested by some studies), imagine the loss in user engagement due to a poorly designed multi-application strategy.
Hotel chains need to start focusing on consolidating and streamlining their set of user applications, as well as adopting a single platform approach for all subsidiary brands. This will make it easier for customers to access and experience the hotel’s overarching brand, offerings, and services without compromising the ability to provide them with unique options based on subsidiary brand or personal preferences.
Getting to a single platform with a horizontally integrated application strategy is not an easy feat, especially given the pervasiveness of legacy systems within large enterprise settings and past investments in expensive code. But the stakes are too high to consider anything less than a total revamp of the existing technology stack.
For an even better fight against Airbnb, hotel chains should utilize what they have that Airbnb does not: fixed real property worldwide that can be renovated endlessly to make the wildest hospitality dreams of travellers come true. This is where innovative hardware, wearables, and the “Internet of Things” come into play.
Interestingly enough, in late 2014 Starwood Hotels and Resorts announced a partnership with Apple to deliver an automated hotel experience through the new Apple Watch. Guests will be able to use the watch to conduct such tasks as unlocking rooms. The plan seems to be on track, as Starwood executives confirmed the partnership for a second time this week now that the Apple Watch has been formally launched. Some reports also suggest that the company is gearing up for a digital check-in experience that is entirely mobile.
Hilton Worldwide has made its own set of waves recently by committing $500 million to mobile initiatives leading up to 2017, and—like Starwood—is announcing plans to launch digital locks, and mobile concierge and check-in services in 2015. These are promising developments that suggest hotel chains are indeed rethinking their technology strategies given the new competitive landscape.
There are a lot of ways for the hotel experience to be empowered by the best of what technology has to offer today. It will be exciting to see how conventional hospitality businesses ultimately draw inspiration from their new nemesis to address changing consumer preferences in this increasingly digital day and age.