Is Airbnb Hotelier’s Friend or Foe?
After the recent acquisition of HotelTonight, If there were any doubt as to Airbnb's true intentions of entering the OTA space and start aggressively competing with online travel agency giants such as Booking Holdings and Expedia, they need to be laid to rest immediately.
The industry has conflicting views of the role Airbnb plays and will play in hotel distribution. Some hoteliers believe that Airbnb is not an ordinary OTA since it "hijacks" travel demand and diverts traditional hotel guest to private accommodations. Airbnb has already "hijacked" 10%-15% of the travel demand in many major metropolitan areas and leisure destinations such as New York City, Paris, and London. This affects negatively overall occupancy and hotel room pricing and hoteliers are unable to raise ADRs in periods of traditional peak demand. According to Morgan Stanley Research, 50% of survey respondents in the US, UK, France, and Germany reported that they booked an Airbnb in place of a traditional hotel. In other words, Airbnb is diverting traditional hotel guests to private accommodations.
Other hoteliers welcome the entry of Airbnb in the hotel distribution mix, since they believe Airbnb adds another option to the existing duopoly of Booking Holdings and Expedia.
What is your take on the subject?
Partner at Soler & Associates
Looking at competition from the standpoint of how it is hurting profits is never a great way to look at it. That rates can't be raised is a good thing for guests. The question of the acquisition and Airbnb's intention is: what can it bring to the customer. More choice is a good thing. Hotels also need to understand what is appealing to guests in apartments and try to emulate that. If it is just price then we know where this is going. Airbnb blending the categories might be good. It will commodities beds. But Booking is already doing that and hotels still sell. For OTAs and distributors, hotels are always better. Because with the same ad budget they can sell dozens of rooms. Whereas an apartment can only be sold once. The accommodations category is evolving beyond hotels.