The Battleground for Customers – Book a hotel or stay at an AirBnB?

Technology and economic growth have contributed to many changes in the life of hoteliers. Technology has contributed to a massive increase in the reach that hotels have over the past 20 years. Previously hotels were unknown outside their local community and could only gain reach through traditional Travel Agency listings plus they were using fixed rates and can now benefit from flexible pricing due to additional visibility of demand. Technology brought autonomy to hotels, as they were now able to sell their inventory on different platforms via different sellers at different rates. Technology seemed to be a savior for many hotel owners, even if that meant paying a 3rd party a commission.

The apartment rental business, however, was not seeing the same success as hotels were. Laws were preventing privately owned apartment short-term rentals and therefore also not as many marketplaces or Tour Operators for Apartment rental as there were for hotels. Families and groups were looking for accommodation options that had a living room and facilities such as a kitchen. AirBnB discovered the need for flexible and convenient short-term housing and created a platform, which matched people with apartments and the guests looking for apartments, simultaneously laws surrounding apartment rental were changing. The immense success of Airbnb came from a larger group of customers than just families and groups, including young people that might have booked hotels before Airbnb. Although Airbnb is not considered a direct competitor for hotels, we think there is a large pool of young people that are sitting on the fence when booking their accommodation and check both Airbnb and OTAs when booking their travels. There are actions hotels can take to become more attractive to this group and in turn to make them pick hotels over Airbnb.

There are many trails of thought surrounding what the government or other institutions should do to ease the problem of “unfair” competition for hotels and traditional apartment rentals, such as the Bristol Hoteliers Association (BHA) calling for ‘exclusion zones’, where they want residents to have the option and authority to block any properties or rooms from being offered in the street in which they live. AirBnB is a major competitor for independent hotels and it does not look like they will be going away anytime soon. So what can hotels do to compete with AirBnB?

Whilst hotels are taxed to operate, apartment renters have had the luxury of not having to pay as many taxes. With close to no additional fixed cost and few variable costs, apartment renters can charge low prices, that are difficult for hotels to compete with. With the help of technology to assist back-office practices like waste management, hotels have a great opportunity to improve operations and lower the cost of running a hotel. Doing that, in combination with the use of Revenue Management software, hotels can have good revenue return and sell their rooms at the optimum price.

Hotels have become infamous for the often unnecessary and unattractive “bureaucracies” such as set early breakfast times and the extra payment for early check-in or late check-out. Removing these will attract the guests looking for flexibility and all-inclusive price.

Hotels need to focus on and market what makes them unique as an industry, and the main strength of hotels is exceptional service. Hotel guests appreciate services that are not available through Airbnb, for example, the concierge that can offer advice on how to get authentic local dining experiences, the storage of bags after checkout, the 24/7 staff on-site and immediate assistance in any circumstances.

AirBnB offers a user-friendly booking experience, one that hotels can learn from. Hotels can and should invest in making the booking experience for clients booking on their website more user-friendly. However, as a large percentage of guests book hotels through Online Travel Agents such as, hotels have the opportunity to take full advantage of the options on these profiles to enhance the guests’ booking experience for their specific hotel. Find out your guests’ preferred method of contact through the OTA and send them a customized welcome message. Or make sure your profile on the OTA is complete with tips about the neighborhood you are situated in, such as little-known walking routes, great cafés or amazing restaurants nearby.

To summarize, here are a few options that can increase your hotels’ competitiveness to Airbnb for those guests that could go either way in their booking:

  • Lower fixed costs and optimise prices – With the use of back-office and Revenue Management software, hotels can take advantage of the cost-cutting and revenue optimising opportunities.
  • Remove the bureaucracies – Hotels have become known for the often unnecessary and unattractive “bureaucracies” such as early breakfast times and the extra payment for early checking or late check-out. Removing these will attract the guests looking for flexibility and all-inclusive price.
  • Service – Sell your industry strengths, the exceptional service! Hotel guests appreciate the service a hotel offers that is not available at an Airbnb, such as the concierge offering authentic local experiences and the ability to store bags past checkout time.
  • User Interface – Work on creating a user-friendly and complete profile for your hotel on OTAs, and customise the guests’ online journey at every interaction.