Industry Update
Opinion Article 2 February 2017

Airbnb Really Is the Big Bad Wolf

By Phil Butler, Analyst and Editor in Chief at Argophilia Travel News

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The hotel industry is in a nightmare of dire concerns over a beleaguered hospitality market. Airbnb and the impact the so-called "sharing economy" is on every hotelier's mind, and understandably. The industry is for all intents and purposes, lost in a forest like Little Red Riding Hood trying to figure how much business the Big Bad Wolf is gobbling up. Here's a critical take on just how big those BBW bites out of the hoteliers are.

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I just got off a Skype call with one of the hospitality industry's most respected media experts. I'll withhold the name out of respect, but the conversation bears on this vitally important industry paradox. Are Airbnb's profits eating into hotelier pocketbooks with bigger bites than we thought? Well, the answer to this may be yes, but the competitive dilemma for hotels has less to do with alleged "sharing economics". I use Airbnb sometimes in order to find non-traditional accommodations, but also to discover the people behind these properties. If you'll tolerate an explanation, I believe I can show how our "BBW" Airbnb is just another OTA, when all is said and done. I think many readers will be shocked to discover it's not just a hotel BBW.

We are headed to Crete for Easter. The island is a real paradise for us, a place our family would actually like to call home soon. We know many hotels and villa owners on Crete, and we also know Airbnb has a massive presence there. This fact brings me to the point of Airbnb the OTA or middleman. While the service has gone to great lengths to censor guest-host communications and to obscure the real property owners of accommodations, anybody with a few minutes can ferret out the source of a listing. Okay maybe not anyone, but a hotel or other high profile property website is a few clicks away from paying an Airbnb service fee, I assure you. (Go on, hate me Airbnb)

Before I drive home my point it's necessary to show the valid points industry experts have with regard to Airbnb's "cut" of this market. One of the best articles I've read on this subject was written by Daniel E. Craig, who is the Founder of the edgy marketing and reputation management service Reknown. His report, "The Incredible Shrinking Hotel Industry" focuses on the threat of the "sharing economy", and in particular Airbnb's luring vacationers away from hotels altogether. His insights and recommendations are spot on, all except for a stunning epiphany I had. While the Reknown exec differentiates Airbnb from OTAs, the reality is the same intermediary taking almost the same cut. Furthermore, experts gauging just how big and bad the Airbnb wolf is always fail to show hoteliers using this OTA wolfie.

Case in point the wonderful city of Chania, where we aim to spend Easter. Now let me show you something using a random city as an example of Airbnb being used like an OTA. I won't reveal my methods or my next hotel stay found via Airbnb, but the list of hotels, villas, and apartments USING Airbnb is pretty extensive in Chania and the area. One, the Anatolia Charming Hotel can be found here on Booking.com ($38), and it is listed here on Airbnb for just under $100 plus a whopping €89 euro service fee.

Uh oh, I can hear the reader saying aloud. Yep, if I choose to go through one or more middle people I can pay either €719 eurothrough Airbnb, or I can do 20 seconds work and pay €471 euro (today's exchange rate) at Booking.com. Yikes! You say? Indeed, but now factor in Booking.com's commission, which is at least 15%. Sadly, I could not find the charming hotel's (and it is charming) website, but I suspect they could not afford one after paying so many blood suckers. (sorry)

You want more, I can sense it. Well, there are dozens in the Chania region, and hundreds on Crete I guess. Horizon Suites is another example of a Chania old town treasure vacationers can get fleeced on. On Airbnb, the town center apartments would cost me €1264 (above screenshot) if I booked via the wonderful "sharing community". If if I choose to book via Booking.com on this one I pay only €630 euro. The math is pretty easy, April 5th through April 12th by sharing is 2X more expensive.

While Daniel Edward Craig's good advice did not extend to hoteliers sub-contracting out their rooms to Airbnb for the OTA/Billboard effect, clearly this has occurred to industry people out of necessity. Craig points to adaptation to the shared economy, and to hotel improvements and innovation. I agree wholeheartedly there as a matter of good industry competitive practice. But I would go that step further to suggest these hoteliers do a fair share of marketing to inform guest, and to get the best guest experience and loyalty. To put it bluntly, if I pay twice the price for a Chania apartment, I am going to be heartily pissed. And it only takes one journalist or consumer advocate to ruin your business.

Big bad wolf? Airbnb's hyper OTA disruption of this space is any Red Riding Hood's nightmare. This sharing economics is a little bit too harsh on some travelers in my book. While it is not strictly Airbnb's fault that hangers-on and unnecessary middlemen milk the system, the obvious pitfalls could spell disaster. Let's hear your opinion. Meanwhile I'll look for the worst Airbnb fleecings by the little wolves who manage properties out there.

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Phil Butler

Phil Butler is a publisher, editor, and analyst who's also a partner at the travel PR firm, Pamil Visions. A widely cited expert on technology startups, digital marketing and PR, and Eastern Europe, he's contributed to media such as The Epoch Times, The Huffington Post, NEO, Travel Daily News, The Prague Post, Pravda, and many others worldwide.

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