Industry Update
Opinion Article28 October 2015

How Virtual Reality Can Help Hotels Compete With Airbnb

By Abi Mandelbaum , CEO - YouVisit

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The Internet has been a powerful tool for the hotel industry, bringing with it innovations like online booking and social media marketing. But it's also made possible the rise of peer-to-peer service AirBnB, which has steadily pulled market share away from traditional brick-and-mortar hotels.

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However, an emerging technology might offer hotels the means to retain the market share they've worked hard to achieve. As a virtual reality industry boom quickly approaches, smart hoteliers should consider creating VR experiences as a way to set themselves apart from AirBnB hosts.

AirBnB's impact on market share

To better understand why hoteliers should seek to set themselves apart, they should look no further than AirBnB's drastic growth. The company has projected about 90 percent growth over the past two years, and it's expecting to bring in $850 million in revenue this year, according to the Wall Street Journal. This is over three times the revenue the company recorded in 2013.

WSJ also reported that the company posted about 1.4 million listings in May of this year, up from 600,000 listings in February 2014.

A more sophisticated experience

With AirBnB's market share growing, some hoteliers believe their target customers have begun to expect something different from hotels. Four Seasons Executive Vice President Christopher Norton recently told Wired that customers now expect "a level of service that is different, more sophisticated, detailed, and skillful."

One way for hotels to show off this increased level of sophistication is through VR. In fact, at least one hotel group is already using this new technology to woo millennials and set itself apart as a forward-thinking brand.

Last year, Marriott International unveiled phone booth-like VR stations, called "Transporters," as part of its "Travel Brilliantly" campaign. These booths allowed customers to put on an Oculus Rift VR headset and be transported to London and Hawaii. More recently, the hotel group announced that in two of its locations it would allow guests to check out VR headsets that are preloaded with three travel experiences.

Still, this is just one use of VR. More practical uses would be for hoteliers to create virtual reality tours of their properties and even a "VR concierge."

A virtual reality tour of a hotel would allow potential guests to fully experience a property from the comfort of their home, including all amenities. While these VR tours could mimic old-school virtual tours created with traditional photography, they could also be created in an interesting way that would allow guests to experience what it would be like to arrive and stay at the location.

A VR concierge would act as a city guide. Hotels could place a dedicated VR headset in their lobby that is preloaded with information about local restaurants and attractions. A hotel group might also consider creating a dedicated VR concierge app.

These VR experience might sound intriguing, but the question is: how do they help hotels compete with AirBnB? Put simply, the majority of AirBnB hosts do not have the resources necessary to create a high-quality VR experiences.

When a user searches for a room on AirBnB they are shown traditional photography of the location. Typically this photography is taken by the property's owner; however, AirBnB does offer free professional photography to those hosts who qualify.

For a hotel group, economy of scale makes the difference. A number of factors go into creating a high-quality VR experience, meaning the cost can range from a few thousand dollars to significantly more. Neither AirBnB or its hosts can afford to create these types of experience and expect to reap the same rewards as a hotel group.

Peer-to-peer businesses like AirBnB may be growing in popularity, but they're not without their weak spots. Hotels who can distinguish their product as different, and of greater value, will be able to get back whatever market share is lost to this emerging market, and then some.

Abi Mandelbaum

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