Since its creation, Airbnb has been used to shaking things up in the hotel market. But what happens when a pandemic disrupts the disrupter? This article analyzes how the Silicon Valley-based "startup" adapted its business model to the COVID-19 outbreak and why some of its actions can be of use to hotel managers.
For most hoteliers, Airbnb represents more of a threat than a role model. In its twelve years of existence, the Californian company has reshaped the world of travel like no one ever before. Indeed, by introducing a new type of accommodation, namely short-term rentals from person to person, the co-founders of Airbnb have challenged some of the age-old principles of the hotel business. By reversing this paradigm, they have sent a shockwave through the hospitality sector that has forced even the sturdiest establishments to second guess their entire strategies.
In that regard, Airbnb has historically been a driver of change and evolution in the hospitality industry. We could even take the comparison a step further by equating the arrival of the Airbnb model with the COVID-19 outbreak, insofar as these two events have completely reshaped the world of travel.
However, the COVID-19 crisis hit Airbnb just as badly as the rest of the hospitality industry: a quarter of its workforce had to be let go and the company expects 2020's results to be less than half of those of 2019. But rather than wallowing in self-pity, Airbnb's leaders have stayed true to their forward-thinking mentality and decided to do what they do best: adapt and innovate. As specialists in change management in the hospitality world, they decided to enact concrete action to evolve and grow rather than simply lick their wounds. From a hotelier's standpoint, it is worth taking a closer look at Airbnb's reaction in order to learn from one of the most innovative hospitality companies around.
In this article, we will closely analyze how Airbnb responded to the COVID-19 outbreak. Subsequently, we will draw parallels between some of these actions and the changes you can apply to your hotel to better adapt to the crisis. Finally, we will argue on why hoteliers should aim to adopt an agile mentality to succeed in an uncertain environment.
The coronavirus took everyone by storm. Even though most people were aware of the situation in China, almost none of the governments were able to stop the rapid spread of the virus.
As Airbnb started facing lockdown measures and travel restrictions across many countries, they were the first in line to have to adapt their offer to the crisis. Almost immediately, the company started to highlight the risks of traveling during a pandemic through a banner on their website. When the situation became dire on a global level, it was obvious that short terms rentals would be compromised for the foreseeable future. In order to reflect this new trend, Airbnb completely revamped their website in a matter of a few days. Under normal circumstances, such change would take months to implement, but the situation called for a much swifter response.
In an environment as uncertain as the COVID crisis, it is essential to react as quickly as possible to current events. Airbnb's strength lies in its ability to adapt extremely fast without being entrenched in their ideas. This is made possible through a streamlined and efficient management chain.
Similarly, it is essential for your hotel to be able to react in an agile manner and remain open to new opportunities. Keep up with the news and be decisive (avoid being penalized by rigid management). Time is money and the faster your hotel can adopt changes and adapt to the new normal, the more you increase your chances to bounce back.
Adapt and innovate
Airbnb is no stranger to change and innovation. From offering free shelter during hurricanes, to launching acceptance campaigns to tackle segregation, the company knows how to rethink and adapt its offers to ongoing events. That being said, the COVID-19 outbreak is on a whole different scale. While previous initiatives can be seen as inconsequential in the grand scheme of things, Airbnb's response to the pandemic is groundbreaking since it reinvents its business model.
In order to keep its business afloat in a world without nearly as much traveling, Airbnb decided to take part of its services online. Through the new Online Experience feature, Airbnb's users can enjoy a wide array of activities, which would in normal times be suggested as part of a trip, from the comfort of their home. A simple yet efficient solution to some of the worldwide lockdown/quarantine measures.
The company also decided to move away from short-term rentals towards longer-term stays, closer to the services of a real estate agency. Once again, this decision is a direct response to an emerging demand trend: people are looking to get away from crowded cities to remote locations. By rethinking its services to match customer expectations in the post-COVID world, Airbnb was able to turn a desperate situation into an opportunity to grow and generate new revenues.
As a hotel manager, you could take a page out of their book and seek out your own opportunities to bolster your range of services. Since international travel has been close to shutting down and the threat still looms, refocusing towards a more local clientele is paramount. In order to appeal to this tranche of customers, who are less likely to want to spend the night in your establishment, you might want to put more emphasis on your other services. Rather than looking at it through the lens of the traditional overnight stay, think of your hotel as a one-stop-shop for multiple activities.
To do so, you might want to capitalize on the ancillary services your hotel can offer. Indeed, if your hotel possesses amenities likely to attract local customers (for example a spa, fitness centre, hairdresser, ...), try branching out and proposing them as additional sources of revenue.
Even if your hotel does not have this type of service, you can still optimize the profitability of your rooms by offering day-use stays. Today, many people are interested in renting hotel rooms as a temporary home office free of the distractions of daily life. Others may simply be looking for a little peace and quiet away from crowded city centers for a few hours during the day.
And again, this is just the tip of the iceberg; there are a plethora of different ways to go about innovating in this new hotel market; pick a strategy that makes sense in your specific case and go for it. As we saw in the case of Airbnb, the COVID-19 outbreak might be one of the best opportunities to start pivoting your business and diversifying your offers.
Communication has been one of the biggest challenges during the COVID-19 crisis. Around the world, governments and companies alike have struggled to find the right way to pass along information. Amidst this unprecedented chaos, Airbnb chose to convey a message of solidarity and empathy to echo the companies' long-standing progressive values. To that end, they doubled down on communication through multiple channels and involved top managers, such as CEO Brian Chesky, to speak up and show a more humane approach to the pandemic. Airbnb also set up news rooms for hosts and travelers, providing key information regarding their policy during COVID. Throughout the crisis, they made sure that every single stakeholder, hosts and guests alike, were adequately kept up to date with the situation and supported in navigating through the crisis.
In doing so, Airbnb stood out from many OTAs, whose clumsy handling of the pandemic (especially regarding last-minute cancellations) bread distrust amongst their customer base. In part due to its effective communication, Airbnb is likely to emerge stronger out of the crisis and stands to gain even more market shares online in the long run.
Even though you might not be able to go as far as Airbnb, the way you communicate in these uncertain times is one of the keys to recovery. On the one hand, an ostrich policy would put your hotel at risk as it might mean losing loyal clients to establishments that choose to stand out. On the other hand, broad communication campaigns with poorly chosen content might bring about negative consequences. Try focusing both on the message and the execution.
Make sure that you keep your customer base up to date with your hotel's situation during the crisis: reopening, new safety standards and cleaning protocols are all important matters you should keep your guests informed on. Broadly speaking, the substance of the message you should be passing is one of togetherness and empathy. Do not hesitate to share your struggles in these complicated times to build long-lasting trust with your guests and prepare your hotel for recovery.
Finally, aim to use a wide range of communication tools to execute your campaign: Emails, social networks, local medias, tourism/hotel associations are all channels you can use to spread your message. Remember that, even though it might not seem like a priority, such actions could be just what you need to stand out from your competition.
Play the long game
We saw that Airbnb chose to rethink its offers and provide new services in light of the new travel restrictions. But although these are a welcome source of extra revenue, the company also knows that their main business model still lies within the travel industry. Which is why Airbnb is already preparing its platform for a post-COVID-19 world.
One of the ways Airbnb decided to prepare for the future is by implementing a global resource hub dedicated to helping hosts secure bookings in this new environment. In order to provide this key information, Airbnb needs to identify future trends to understand where the market is headed. Fortunately, one of the big strengths of the platform lies in their data collection; data which can be turned into valuable insights. Here are some of the main takeaways from their research:
- Propose longer stays
- Reassure your guests
- Capitalize on last-minute bookings
- Provide flexibility
- Respect your guests' privacy
- Focus on local travel
While these recommendations are intended for hosts, most of them are still very relevant for hotels. Since the whole market underwent a major transformation during the pandemic, customer expectations have also shifted accordingly. You need to adapt your amenities to match these new needs. Keep that in mind when establishing your long-term strategy.
The startup mindset and parting thoughts
In this article, we saw that Airbnb has been hit hard by the COVID-19 outbreak. To keep their head above water, they implemented new services and tried branching out into unexplored territories. Simultaneously, the company has been hard at work on a plan for recovery after the crisis, notably by identifying shifting customers' expectations through their data. By adapting well and fast to this new and uncertain environment, Airbnb has been able to outrun competitors in their march towards full recovery (see the graph below).
Doing so, they stayed true to their original startup mindset. Indeed, all these changes were made possible thanks to efficient management and agile ways of working. By refusing to simply stand on its previous achievements, Airbnb managed to rethink how its platform operates to adapt to an extraordinary situation.
In these unprecedented times for the hotel market, it is paramount to keep questioning the status quo and never to rest on your laurels. Make sure that changes are never a hindrance to your hotel, but rather, a chance to learn and grow. The post-COVID travel industry is unforgiving, yet also full of opportunities. If you can manage to understand your guests' new expectations and adapt in consequence, you will be part of the hotels that define the industry of tomorrow.
About PrivateDeal SA
PrivateDeal SA is a Swiss company created in partnership with Ecole Hôtelière de Lausanne and providing a Smart Negotiation Solution for hotels. As a cloud based system setup directly on hotels" website, PrivateDeal allows guests to propose a price for a stay in response to which it will either accept or negotiate the offer through an AI-powered algorithm. The platform assists hoteliers in increasing direct bookings while better monitoring their pricing strategy through a demand-driven approach.