Airbnb Call of Duty

In early December 2015, I had the pleasure of attending BTO2015, which (for those of us here in North America) is basically the Italian version of HiTec. One of the more interesting speakers was a member of the Airbnb’s European senior management team. His presentation was awe-inspiring. I think the conference delegates were in shock, or at least I hope they were.

It is time for the hotel world to awaken to the new reality that Airbnb is the largest and quite possibly the best accommodations company in the world. Here’s why:

  1. Airbnb has a better website. It is better in the way it displays product and local area attractions. Significantly, Airbnb engages both guests and the property holders to rate and provide feedback on each other, akin to how TripAdvisor operates.
  1. Airbnb is one unified brand. They waste little time in trying to create nuances between sub-brands or even considering the nonsense of promoting some sort of new ‘lifestyle’ brand. This single entity model galvanizes a lasting high level of awareness.
  1. Airbnb invests in traditional advertising. They recognize that the internet is NOT an advertising vehicle, but rather an information distribution vehicle with social media as a relationship nurturing channel. On the other hand, TV, radio, magazines, billboards and so forth are emotive, demand drivers. Remember that share of advertising voice ultimately equals share of market. For hotels, be prepared, insofar as awareness, as Airbnb is barely saturated.
  1. Airbnb is customer friendly. If you ask past guests about Airbnb, the experience will likely elicit a smile. Why is this? Simple: Airbnb is based on personal relationships between the guest and the property owner with no faceless intermediary.
  1. Airbnb is a primal consumer experience. AirBnB encourages you to explore the properties available in each location and delve into the details. This evokes consumers’ primal ‘hunter’ instinct. As a result, the guest has done a lot of the homework before purchase and, ultimately, this process makes them feel as if they have participated in the buying decision. In this sense, the guest already has a relationship with the property before crossing the threshold.
  1. Airbnb has a wider range of product availability. This means that the customer has more choice and a wider range of price options, perhaps even more than on any OTA. Why look anywhere else?

Those who suggest sitting idly by should be reminded of the OTAs’ rise to prominence. If you think the OTA arrival was a disaster, at least you still have the guests in house, albeit with a higher commission load. Not so with Airbnb – imagine if the available rooms inventory in your city doubled overnight!

One of the suggestions at the conference was that hoteliers could team up with local Airbnb purveyors and offer to support them with ancillary services such as housekeeping, food and beverage and a host of other key amenities. In this way, the thought was that the hotel could recoup some of the lost revenue. Chump change if you ask me! Hotels are not ‘Molly Maid’ (another good company), nor are we ‘Meals on Wheels!’ Catering can be profitable, but not on a one-on-one basis.

The speaker left all us hoteliers in a precarious situation. Without any more sidestepping, what can we do to fix this situation?

  1. Hoteliers have to work together. Much like the Uber defense being waged by taxi companies in many municipalities, the solution is on a local level. Corporate head offices can do their share by supporting and encouraging property GMs to take up the sword and vanquish the enemy from their fiefdom. This means that hoteliers and B&B innkeepers will have to work with the unions (even if they are an un-unionized property), suppliers, employees and their chain headquarters.
  1. Analyze the money lost. Forecast not only the local occupancy taxes, but also any additional levies. Don’t forget to include any missing sales taxes. Then calculate job losses in the hospitality sector. Add on to this the lack of safety and health inspections. If an occupancy permit is a prerequisite for opening a hotel in your municipality, identify this element as one more violation. 
  1. Ask for levelling the playing field. Unlike the taxi-Uber fight, I don’t imagine asking for a ban will work, nor is it necessary. Hoteliers are used to competition, but the fight has to be fair. Fairness means levelling the playing field: the same taxes, the same inspections and the same licenses that all hotels must sweat and strain to acquire.

After taking a closer look at this, labeling Airbnb as part of the new ‘sharing economy’ as is so in vogue right now is clearly a misnomer. By definition, sharing is a cashless transaction. But money is being made by Airbnb property holders, a lot of money. While the argument can be made that Airbnb has liberated a new class of consumers for travel, it is nonetheless pilfering revenues and customer loyalty from hotels…definitely not what I would define as sharing!

(Article by Larry Mogelonsky, published in eHotelier on January 20, 2016.)

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