How can hoteliers win the booking war with Airbnb?
Let's face it, there is a real "booking war" going on between hotels and Airbnb for every guest and every roomnight. Airbnb may have won the 2020 occupancy battle, but hoteliers can beat Airbnb at its own game and ultimately win the booking war.
Late last year Airbnb completed its much-anticipated IPO and now the company's market cap is over $120 billion, more than the combined market caps of the top seven hotel chains: Marriott, Hilton, IHG, Wyndham, Choice, Hyatt and Accor.
There is no doubt that Airbnb has drastically disrupted the travel industry and positioned itself as a unique purveyor of private accommodations worldwide.
In 2019 - the last "normal" year in travel - Airbnb was able to capture 11% of lodging revenue in the U.S. in addition to the 7% taken by Expedia's Vrbo (STR, AirDNA). Short term rentals captured similar percentage of travel demand in many major metropolitan areas and leisure destinations around the world, forcing hoteliers to fight for every guest and affecting negatively occupancies and ADRs in periods of traditional peak demand. According to a Morgan Stanley Research 49% of surveyed Airbnb guests in the US, UK, France, and Germany reported that they booked an Airbnb in place of a traditional hotel.
In 2020 Airbnb captured and even bigger share of 18% of the lodging market in the U.S. and together with Vrbo accounted for 29% of total lodging revenue. Quite understandably, the traveling public preferred to stay at stand-alone, host-less accommodations in vacation areas where they did not have to mingle with other guests.
While the Airbnb founders and Wall Street brokers are giddily excited, hoteliers worry that access to cheaper public capital would allow Airbnb to further increase its share of the current ultra-weak travel demand at the expense of hotels.
In spite of all the hype, there are a lot of headwinds against Airbnb's unchecked growth:
- Shortage of rentable inventory: 80% of rentals on Airbnb are host-less weekend houses and villas or investment/uninhabited condo apartments, yet there are only 1.5 million such entities in the U.S. and far fewer in Europe and APAC. Airbnb is at the mercy of people to buy or build vacation homes that they would then be willing to rent. In contrast, hotel developers are pro-active and build new hotels if they sense travel demand with insufficient supply.
- The work remotely mandates means that many owners of second homes - potential Airbnb hosts - are working from their second homes and will continue to do so in the future, which means a segment of the rentable second homes are off the market.
- Real estate sales of new and existing houses are booming, primarily city-dwellers buying houses in the suburbs or second homes in vacation areas and moving there. This further depletes the limited housing stock of second homes.
- Airbnb is embroiled in legal actions all over the world. Many municipalities have imposed severe restrictions on short term rentals (min 30-day stays, maximum 90 rental days per year, some are even renting thousands of apartments formerly listed on Airbnb and sub-leasing them to their own citizens on a long-term basis, etc.)
- In my view, to sustain growth, Airbnb has to enter hotel distribution as a full-fledged OTA and challenge the duopoly of Booking and Expedia. This means that Airbnb will be facing even greater headwinds in the future: much higher costs for operations and marketing, building a new tech stack, hiring thousands of tech, sales and support staff, opening support and sales offices in key destinations, acquiring new core competencies, adopting new expertise, and new business models.
All of the above are the reasons why short-term rental listings on Airbnb dropped from 7 million in 2019 to 5 million today.
Why travel consumers use Airbnb?
First, we have to ask ourselves, why do travel consumers use Airbnb to begin with? Expectations for privacy and desire to avoid other travelers, amenities like kitchens, swimming pools and party patios, perceived value and lower cost per member of the travel party, etc. are just some of the reasons.
Though hoteliers cannot match traveler's expectations for privacy, they can offer a range of very powerful counter arguments and enticing benefits to sway the travel consumers away from Airbnb. Hoteliers should focus on and promote features and amenities that Airbnb properties lack, thus presenting their unique value proposition to the traveling public.
Here is a simple and inexpensive action plan that can help your property do just that.
Assess Your Property's Value Proposition
To start with, spend time and research Airbnb to identify the rental properties in your neighborhood, and what their typical amenities and features are. Identify your property's value proposition and create a list of all of your property's amenities, services and attributes that, in your view, are better than the average Airbnb in your area.
Then review and update the property descriptions on the hotel website, social media profiles, CRS and WBE descriptions, directory listings, GMB, and promotional materials.
Make sure to educate your staff about the key advantages your property has over the Airbnb's in the area: from better location to no cleaning fees to better cleanliness protocols and WIFI and free breakfast.
Product:
I believe selling on value versus selling on price alone can compensate to a great extent the allure of Airbnb's properties - villas, weekend homes, condos. Naturally to do so, hoteliers must remember and relearn how to sell on value versus price alone!
Airbnb with all of its pretenses for uniqueness of its accommodation listings is becoming more and more a reseller of commoditized inventory that you can find on Booking, Vrbo, etc. and on vacation rental management companies like Vacasa and Evolve. This is where you can truly outwit Airbnb and provide real value to your customers.
Do you have cooking classes, weekend specials, coronavirus destressing packages, spa packages, family fun packages, activity packages, special occasion packages, wine tastings, F&B packages and promotions, private chef gourmet dinners, work-from-hotel packages, destination experience packages, etc. that you can use to target your local, short-haul and drive-in feeder markets?
Especially now, it is not difficult to be creative and figure out what your customers want and need – they, like all of us, have been locked at home for most of the past year. You can easily come up with enticing packages and special offers based on what your guests would love to do and experience at your property and its surroundings in the current environment.
Create and offer suite specials. If you have rooms or suites with kitchenettes, fireplaces, whirlpool bathtubs, etc. - promote them vigorously. Promote your suites and adjacent/connected rooms for family travel and family reunions.
A big appeal of Airbnb is that guests feel like a local with a unique experience of staying in private homes and apartments. You can combat this by delivering "live like a local" messaging and creating packages that provide guests with the ultimate destination experience. Launch campaigns that promote a more unique, local experience such as promoting local dining, local pub crawls (in future better times), visits to hidden boutiques and local hangouts, and complimentary passes for public transportation or Uber passes.
Pricing:
While Airbnb is seen by the traveling public as a more cost-effective option than hotels, this is not the case with today's hotel ADRs, and especially with the steep cleaning fees of $75-$300(!) Airbnb charges for every stay. Not charging cleaning fees is a huge advantage that very few hotels are taking advantage of today.
Start by introducing weekly and monthly rates for both rooms and suites. How many hotels offer rates for extended stays which are favored by travel consumers in the current pandemic? A weekly rate is NOT a daily rate multiplied by seven. A monthly rate is NOT a nightly rate multiplied by 30! Make sure that your CRS, WBE (Website Booking Engine) and Channel Manager can support weekly and monthly rates and fire them if they can't.
In addition to monitoring rates of your comp set, you should monitor closely Airbnb's pricing for their listings in your property's neighborhood and take both into account in your revenue management practices.
Your pricing should always emphasize the value and additional complimentary services guests will experience by booking the hotel at a comparable price, including free breakfast, parking, swimming pool, WiFi, etc.
If you haven't done so, please examine and relax your cancellation policies. A "no questions asked" no-fee cancellation policy goes a long way in these times of great uncertainty and is a definite competitive advantage over Airbnb's rigid cancellation policies.
Cleanliness Protocols:
Promote your property's professional Cleanliness Protocols, including infrared fever detection devices, clearly marked guest pathways in the lobby and public areas outlining required guest movement and social distancing; availability of free masks, gloves and disinfecting wipes throughout the property, frequent sanitation in common areas and disinfection of touch screens of self-service and check-in kiosks; new arrangements of seating furniture in the lobby and tables in the restaurant and dining rooms.
Even better, promote the next gen technology like UV-C Light robots or devices and electrostatic sprayers your property is using in its cleanliness program, and compare this to Airbnb's superficial spray-and-wipe methodology. Very few, if at all, Airbnb properties use sophisticated cleanliness technologies.
Contactless Guest Experience:
Promote your property's contactless guest experience, from mobile check-in and registration, to mobile room keys and contactless check-out, AI-powered voice assistants in the rooms to control utilities and media center, and communicate with front desk, virtual concierge, smart TV synced with guest's own streaming services, issue resolution messaging services and front desk communications via the guest own smartphone, etc. How many Airbnb properties offer a similar contactless experience and guest service? Practically none.
Location:
Most hotels are located in the most desired tourist, cultural, entertainment and business centers, near or at major transportation hubs, which cannot be said about the typical Airbnb property, located in residential neighborhoods or developments. This is one of the strongest "bragging rights" hotels have and your property should take full advantage of it. Start by featuring your location on the Home Page of your website, CRS and WBE descriptions, feature it in all of your directory listings, in your social media profiles, etc.
Have you noticed that vacation rentals do not appear when searching for accommodations in Google Maps? The reason is that a vacation rental - second home, villa or condo - is not considered a business entity by Google. Use this to your advantage and optimize your Google My Business (GMB) local listing, upload photos, property and amenity descriptions, etc.
Since the GMB account is the entry point to manage customer reviews, and Google Reviews now has the lion's share of hotel reviews, make it a habit to monitor and respond to all customer reviews about your hotel. Naturally, handle your property's reviews on TripAdvisor in the same manner. Travelers often turn to Google and TripAdvisor when planning travel. Having positive reviews on these sites is important, as this may encourage travelers to choose your hotel over Airbnb.
Amenities:
Hotels offer amenities that are typically unavailable in Airbnb rentals, including spa services, onsite dining, fitness centers, comfortable lobbies, conference and function rooms for business meetings, social events, formal and informal gatherings, and co-working spaces for work from hotel.
Many hotels offer inspiring communal spaces for guests to gather and socialize, including inviting lobbies, lobby bars and cafes, executive meeting rooms, and more. This can be a place to meet other guests or just a place to relax and work. Airbnb options lack this communal space, as many Airbnb spaces are just rooms within apartments or an entire space to a guest. In addition, Airbnb guests do not have the same opportunity to socialize and mix and mingle with other travelers. Hoteliers can highlight this on the website with images of guests enjoying communal spaces and socializing.
Your hotel should highlight these amenities with rich imagery and descriptive copy on the website and social media profiles.
Other notable amenities include heating and/or AC in every room, elevators and ADA compliant rooms and conveniences for the elderly and disabled - how many Airbnb properties can brag with amenities like these?
One of the most undervalued hotel amenities is the reliable high-speed WIFI which is the "Achilles Heel" of any Airbnb property. Brag loudly about your property's WIFI speeds, whether 200, 400 Mbps or a cool 1 Gbps! Airbnb typically does not charge for WIFI, so my recommendation is that your property should not be charging for WIFI in this environment! In 2021 charging for WIFI is like charging for hot water or linens and towels.
Services:
Hotels offer services that guests cannot get when staying in an Airbnb rental, the most important being "service with a human touch" even if it is from a COVID-mandated distance. These services include room service, housekeeping on demand, portage, concierge and information, and luxuries such as premium linens, toiletries and plush robes. You should highlight guest services throughout the hotel website and social media, PR and marketing, and also showcase your employees that are dedicated to making stays comfortable and convenient.
One of the services hoteliers often forget to promote is their F&B, and especially breakfast. Airbnb properties offer no breakfast and do not live up to the promise of the second "b" in the Airbnb brand name! If your property offers free breakfast, promote it aggressively. If you offer paid breakfast, consider creating packages including complimentary breakfast. The convenience of the on-premise F&B is a major advantage over Airbnb.
Another great service to brag about is the ability to offer early check-ins and late checkouts to accommodate guest arrival and departure times. At an Airbnb you have to check in the earliest at 4pm and checkout the latest at 11am. Can your hotel do better? Of course, you can. My recommendation is to make this a featured service: "Based on availability, we can accommodate early check-ins or late checkouts upon request".
Security and Safety:
Airbnb is not always a safe option for travelers. Accommodations are booked through property owners and in residential neighborhoods that are unknown to the guests. If the guest is unfamiliar with the area, they may be staying in an unsafe neighborhood or use unsafe transportation to/from the Airbnb rental. Some acquaintances from Australia booked an Airbnb in Brooklyn a few years back, which turned out to be located above a pub – they could barely sleep because of drunken crowds and didn't dare go out during the evening because of constant harassment by drunk patrons. Hotels, however, are located in central locations, and typically have 24/7 front desk and security. You should highlight this on the property website, social media, directory listings, etc. by listing your security measures.
ADA and Accessibility:
Very few Airbnb accommodations are ADA (Americans with Disabilities Act) compliant. Hotels are ADA compliant by law and offer ADA-compliant accommodations and access for disabled guests, such as wheelchair accessible bathrooms and elevators, which cannot be said for almost all Airbnb accommodations.
Baggage Storage:
Travelers often arrive to their destination earlier than expected or leave later in the day after check-out. Hotels often offer luggage storage so guests can explore the destination without having to carry around heavy bags. Airbnb hosts typically do not offer this service. They expect guests to arrive at the time of check-in and depart with their luggage at time of checkout. This was the reason why back in 2019 Central Park in Manhattan was full of tourists lugging around their heavy suitcases, killing time until their flights.
You should promote extensively your complimentary baggage storage information under amenities and services.
Guest Appreciation/Reward Program:
Many hotels offer guest appreciation or reward programs for repeats guests. Especially now, in the post-crisis era, repeat business will make or break a hotel since acquiring a new guest is 10-15 times more expensive than "convincing" repeat guests to come back to the property. Rewarding your guests for staying again at your hotel will undoubtedly increase guest retention.
In spite of all of its claims, currently the Airbnb's SuperGuest Reward Program, launched three years ago, is still in its infancy. You could say that Airbnb even avoids talking about this program of late, which gives a great opening for any hotel, branded or independent alike.
If your property has a reward program, guest appreciation or loyalty program in place, promote its benefits to the fullest, even add new crisis-inspired benefits and perks.
If you don't have a reward program, consider introducing, as a matter of priority, a simple reward program based on number of roomnights stayed at the hotel. Example, "Get a free roomnight with 5, 7, 10 roomnights stayed." No technology needed, guests monitor and keep a count of their roomnights themselves, and upon request, the property can verify the claim by a simple search in the PMS. Hotels.com amassed a whopping 50 million loyalty members with their reward program of giving a free roomnight with ten roomnights booked via the OTA site, which is very simple to understand and implement.
You can highlight your reward or loyalty programs in the WBE and CRS descriptions, on the website and social media profiles, via PR and digital marketing initiatives, and promote member-only specials, upgrades and perks.
Marketing:
To combat the negative effect Airbnb has on your property's bottom line, you need to invest in an effective digital marketing strategy.
Ask your PR firm and digital marketing agency to come up with a "We are better than Airbnb" PR, content marketing and digital marketing plans, and then finance these plans and have them executed.
Following the strategy outlined above will allow you to stay competitive and win the booking war with Airbnb.
Abbreviated version originally published in Hotel Recovery 2020 https://hotelrecovery2020.com/2021/02/how-can-hoteliers-win-the-booking-war-with-airbnb/
