The Airbnb business model is driven by solid economic fundamentals but hotels can offer value as well
Airbnb successfully delivers relevant and quantifiable advantages in saving time, defeating distance and generally finding a way to offer a solution for a “pain point” be it constrained travel budget or a preference for a given location. Airbnb also offers the perception of control for users, and a perceived authentic experience with locals.
Airbnb is a disruptor that is able to impact the hospitality and tourism sector in a significant way. Its underlying economic drivers are powerful in a down economy that is stuck in low gear while recovering after recessionary years: more and more of us welcome the opportunity for income or extra income as home owners to rent out space for a fee. Airbnb offers that. On the customer side, most travelers need accommodation on the road and if a decent and affordable one can be conveniently booked, the value of that is recognized.
Hotels that are aware of the increased value-consciousness of travelers may better hold market share against the Airbnb threat if value added features, creative bundling and rate parity are strategically executed and marketed. The objective is not necessarily luring away Airbnb customers. The real objective is not let Airbnb out-market and outcompete a hotel and erode its share of lodging demand. Strategic revenue management would suggest competing on value while refusing to compete on room rate.
The web site is intuitive and user friendly but hotels can learn to match that
Hotels have learned over the years what the decision drivers are for various segments of guests. Price is important; however it alone is not always the most significant decision driver. The power of location is a key factor as well. The J.D. Power Guest Satisfaction Survey (2015) confirmed that “Convenience of location is the primary reason customers enroll in hotel loyalty/rewards programs, with 41 percent of members choosing their program based on convenience of locations where they travel.”
Hotels typically offer a link to a location map and driving directions to getting to their place on their landing page in the form of an optional feature: The potential guest has the option of clicking on a link that opens a map or a set of directions for drivers. It is a two-step process. What Airbnb offers is slightly different: Search results are listed on the left side of the computer screen and a location map on the right side highlights instantly the location of the unit that is being considered. This is a no-click feature (needs a scroll-down on a phone screen). The instant real-time location display is the recognition of the importance of the location as a decision driver and it is seamlessly integrated into the booking process. Hotels that pay attention to the user friendliness and intuitive approach can learn from this subtle but important design feature.
The primary objectives of hotel websites can be summarized in a concise manner: To attract, retain, engage, and convert. Unpacking these terms in a simple way, these ambitious objectives are meant to:
- Attract the potential guest and make it easy to be found through understanding the workings of search technology;
- Retain the visitor who ends up on the landing page through the use of site architecture that makes the navigation user friendly and through offering a reason to stay on the site;
- Engage the potential guest through offering appealing content and imagery; and
- Convert the visitor to take desired action (from look to book, signing up for the loyalty program, posting a review, etc.).
The site as a vehicle can create a user experience that reflects the genuine image of a business.