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How Much of a Threat Does Airbnb Pose to the Hotel Industry?
Image Credit  – Airbnb

How Much of a Threat Does Airbnb Pose to the Hotel Industry?

Airbnb is one of the largest community-driven hospitality companies, connecting potential hosts with potential guests online. To date, over 26 million guests have stayed with an Airbnb host in 190 countries across the world.

Last year Boston University released a study estimating the impact of Airbnb on the hotel industry and concluded that such companies ‘can pose a legitimate competitive threat to the hospitality industry going forward’.

Airbnb is not the only room-letting website challenging the hotel industry, with companies such as HomeAway and London-based Kippsy looking to claim a share of the market. It is, however, at the forefront of the community-based travel trend.

And it’s not just individuals renting out spare rooms to supplement their income. Castles, boats and treehouses have made up many of the website’s more alternative listings- you can even rent out your own private island in Fiji.

Undeniably the room-rental website has made an impression on the travel market - but what does this growth mean for the wider hotel industry?

Memorable experiences

Part of Airbnb’s appeal is its “collaborative consumption” ideals; sharing rather than owning and moving focus from the accumulation of physical possessions to the thrill of experiences and adventure.

General manager for Airbnb in the UK and Ireland, James McClure emphasises this idea of memorable experiences, which he says is much more important to travellers than the hotel they stayed in.

“Meeting an artist in Paris and seeing the city through their eyes, discovering an amazing local restaurant in Tokyo - these are the things that people want to achieve when embarking on their next adventure.”

“Airbnb opens up local districts, local stories and an experience that hotels generally can't. In London, for example, 70% of our listings are outside the main hotel districts, enabling people to discover places that they otherwise wouldn't.”

McClure added that travellers gain a completely different perspective on the places they visit with an Airbnb host.

“From the feedback we have had, people really remember Airbnb trips more than any others because of the people they met and the authentic experience they gained.”

Alain Portmann, head of media and insights at digital performance marketing agency House of Kaizen, whose clients include British Airways and Superbreak, believes that the biggest attraction of a service like Airbnb, in his opinion, is coverage.

“Case in point, Harlem has about 55 hotels, but 713 Airbnb listings,” he says.

Bed, breakfast and business

Forbes reported last year that the hotel industry had been ‘blindsided’ by the likes of Airbnb, which the publication says is restructuring - and possibly even threatening - the value chain of traditional industries.

Portmann, who joined PerformanceIN for a travel roundtable earlier this month, disagrees, stating that Airbnb has merely affected a segment of the industry, not the industry as a whole.

He also argues that hotels still maintain a strong standing with business travellers.

“The impact on hotels, across leisure and business, is distributed unevenly across the industry, with lower-end hotels and hotels not catering to business travellers being the most affected.”

Denise Bartlett, UK public relations at travel metasearch engine Trivago echoes Portmann’s statement, suggesting that the room-rental model is not built with business travellers in mind.

“Airbnb is perhaps not best geared for business travel, which often requires very specific and often uniform facilities and services” she tells PerformanceIN.

“Airbnb will also struggle to compete with four and five star hotels, which offer luxury on a large scale. Boutique hotels must compete with a similar ethos to Airbnb, while room rental appeals to budgets travellers.”

Bartlett added that although there is no denying the popularity and appeal of companies such as Airbnb, there will always be a demand for hotels in the hospitality sector “which provide a different kind of service to that offered by house, flat and room rentals.”

Airbnb’s McClure disputes the assumptions that the service is merely a cost-saving option for millennials and explained that Airbnb is looking to further expand into business travel, having recently announced a partnership with US business travel and expenses management company Concur.

“Business travel is an area where we expect to see further growth”, says McClure. “Already we are seeing many business travellers book with us because they get a home away from home when working abroad.”

McClure adds that Airbnb’s relationship with Concur means that travellers will have access to more booking options and easier expense management - a significant step towards growth in the business travel sector.

Unexpected popularity

Airbnb has allowed anyone with a spare room and a mattress to operate their own bed and breakfast. Many Airbnb hosts are using the service to pay off mortgages, change career or simply to share their local knowledge with new people.

It is perhaps this element of a ‘sharing economy’ that has not only led the company to thrive, but to emerge as a potential competitor with a sophisticated business model and a vast variety of accommodation - at all levels - for potential guests.

Portmann states that what is certain in the industry is that hotels need to be “equally worried” about Airbnb as they are about traditional online travel agencies, who, with price comparison and cashback offers, pose their own threat to the hotel industry.

“Unlike competing for a finite number of hotel room nights that can be sold in a city on a given day, Airbnb is adding to the entire supply and demand for available accommodation,” he says.

Trivago’s Bartlett further remarked that Airbnb certainly captured the attention of the hotel industry who were, however big or small the initial impact, taken by surprise.

“In terms of the unique ethos and huge growth, perhaps the popularity was unexpected,” she admitted, adding;  “It will be interesting to see how the hospitality industry responds to this new competitor.”

Adele MacGregor

Adele MacGregor

Adele works as a news and features reporter for Existem, covering the latest updates from the performance marketing industry. Adele has written for Media Wales, Grazia Magazine and publications in Spain and the US, with topics ranging from social media and digital skills to local music and gymnastics.

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