NB: This is an article by Alex Shashou, President & co-founder of Alice.
There has been so much debate over the impact of Airbnb to the industry following CBRE’s research reports showing $2.4Bn spent on lodging by the company’s users in the past year. Hotels have been quick to send out a mixed message, some re-affirmed and others denied the impact on their bottom line.
While for some the jury is still out on whether Airbnb is truly a threat to the hospitality industry or not, there’s no question that with two million room listings in 34,000 cities across the globe, Airbnb has cemented a new category of hospitality for many travelling consumers. It is without question that the hotel industry could pay closer attention to the sharing economy and learn from this new category.
Typically disruption occurs when a new marketplace is created that has a lower cost base than the incumbent, and Airbnb’s story is no different. While the peer-to-peer lodging marketplace is certainly a value alternative when seeking lodging, hotels still provide better amenities, service and standards that are not matched by Airbnb. History (and most recently, a TrustYou study) has shown that consumers are more than willing to pay top dollar for a better experience. While the traditional elements of hospitality are still where hotels can truly shine and offer service that Airbnb today lacks from its offering, hotels can still learn a tremendous amount from the giant technology unicorn. The problem is that the hospitality industry has been fairly staid and slow to adopt innovative technologies to improve the overall experience and operational execution.
In a mobile and technology-driven world, consumers demand a customized, personal experience that they can also manage through their smartphones, tablets and computers. A Magnani Caruso Dutton study found that 70 percent of travelers indicated that a hotel’s website, app and other digital tools impact their decision to book a stay. Only a small percentage of hotels offer digital tools. The gap can certainly close to enhance the guest experience.
Equally important, when competing with this new market-place that has no fixed costs, is that hotels can also use technology to improve their operations. There is so much room to lower the cost of running a hotel. Interestingly though, most hotels hire a Revenue Manager whose sole goal is based on revenue return, leaving the bottom line management to the General Manager.
To remain competitive and continue to provide guests and staff an experience that will improve the hospitality experience, hoteliers can ditch some of their old-school ways for more digital, forward-thinking strategies.
Here are a two technical ways and two nontechnical ways hotels can better position themselves to compete against Airbnb.
Tech 1: Turn your hotel into a data platform – map the entire guest journey
While Airbnb is the third-party provider in the peer-to-peer exchange, they do an excellent job at keeping close tabs on the entire user journey on both the guest and Airbnb side. On their site, users go through the discovery phase, they book and complete the stay, and finally, the host and guest leave their reviews of the experience. Since every phase of the user experience is completed through Airbnb’s channel, they’re able to leverage the data to improve the guest experience, build their product and find new growth opportunities. Their effective usage of data has catapulted them to a $25 billion valuation, millions of users around the world, and has left valuable lessons for the rest of us for thinking about data.
Hotels are still running so many analog communications and fragmented technologies to manage their operations that this total data driven understanding of the entire guest journey is a pipedream for most. Some groups can spend hours simply downloading and compiling their data from all various sources while others recognize that half of the guest’s journey is a blind spot to them, relying on effective staff training to ensure a good experience.
Hotels need to be able to run a cloud based communication layer across every department, giving them a complete view of everything their guests are asking for irrelevant of the format of the ask (phone, email, web, in person). By unifying all guest to staff and staff to staff communication into one platform, hotels would be able to understand everything their guests are doing from booking to checkout.
Tech 2: Use this platform to gamify good behaviours through self-governance
What is incredible about Airbnb (and Uber for this example) is the ability to scale their supply side without such a big overhead cost in doing so. One of the primary reasons for this being possible is the notion of self-governance that exists due to the ratings system. As each host is rated after every stay by the consumer, a poor experience will very quickly be the death of a host’s ability to attract more customers. This ratings process creates a system-wide level of self-governance that leaves Airbnb with little work to do on managing the quality of their hosts.
Relating this to a hotel is currently impossible. Outside of a rude staff member whose name gets taken down and complained about, hotel staff currently perform an unrated service. We don’t see staff getting 1-5 stars on cleaning the room or delivering a burger. However, once Step 1 happens connecting all the services in a hotel, then Step 2 is a real possibility.