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?

Max Starkov
Max Starkov
Hospitality & Online Travel Tech Consultant

Airbnb is an intermediary focused on private accommodations first, hotel accommodations second,  which is the exact opposite to the major OTAs. Via Airbnb, the hotel industry loses over $1 billion a year to private accommodations. It is a matter of simple supply and demand: by adding 10%-15% to the supply side, Airbnb takes 10%-15% from the travel demand side, which directly affects hotel ADRs, Occupancy and RevPARs. 

In this  sense, Airbnb is not just another OTA, not a “new and exciting alternative” to the OTA duopoly, since it diverts traditional hotel guests to private accommodations. 

To combat the negative effects of Airbnb on the bottom line, hoteliers must identify and promote their unique value proposition, focusing on hotel-exclusive guest services and amenities not offered by private accommodations, such as self-checking apps and kiosks, IoT devices, smart TVs and other guest-facing technology applications, true HSIA, room service, housekeeping, communal spaces, safety and security, ADA compliance, concierge services, baggage storage, guest appreciation and loyalty programs, etc.

View all 14 views in this viewpoint