Friend or Foe? How Airbnb Growth Will Affect the Hotel Industry

The hotel industry is entering a pivotal moment, when conversations about the co-existence of Airbnb and hotels, and the opportunities it can provide, are essential in order for the hotel industry to continue to thrive.

Consider Airbnb’s recent acquisitions of Luxury Retreats and social payments app Tilt. It’s evident the company is looking to establish a presence in both the luxury-vacation-home and group-travel markets.

This is a significant move for Airbnb, but what does it mean for the myriad travel entities already established in both of these areas? There are many factors affecting the success of hotel-booking brands, including hotel brands themselves and third-party aggregators, and the effect that Airbnb poses to the industry overall is little more than a bump in selection variety.

More Airbnb Luxury Offerings Would Increase Luxury Flash Deal Sales

The hotel industry itself is experiencing a revolution right now, but Airbnb is less of a threat to hotel than it may at times seem. Airbnb’s recent acquisitions of both Luxury Retreats and Tilt are a good indicator of how Airbnb must expand its offerings in order to compete.

Take a look at the acquisition of Luxury Retreats; it provides Airbnb with an opportunity to expand supply in resort markets where private owners hold some of the best vacation products money can buy. Luxury Retreats has an enviable footprint in resort destinations, including the Caribbean, Mexico, and Hawaii, giving Airbnb an even stronger footing in resort and city destinations, where Airbnb already has vast supply. The acquisition of Luxury Retreats and Tilt will impact luxury hotels in resort markets in a similar way to Airbnb’s effects on most hotel markets: value proposition.

There are a variety of ways to perceive the value of luxury homes compared to traditional luxury-hotel rooms. The number of rooms provided versus an entire house; location; added services, such as personal chefs; and, most importantly, privacy are all incredibly valued and scrutinized factors in the luxury-vacation home market.

So, when luxury homes offer the kind of experiences incomparable to those of a luxury hotel, such as complete privacy or a private chef, the hotel industry suffers. However, Airbnb’s new hold over more luxury-home rental properties does not mean the end for luxury hotel chains in the same locations.

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