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?
Co-founder and CEO, Kalibri Labs, LLC
From the time they announced they were pursuing boutique hotel inventory in March 2018, Airbnb's intentions became obvious. Just as Expedia and Booking.com have to diversify into short term rental, Airbnb has to add hotels. Growth rates are critical if they want to IPO and their penetration in vacation rental cannot maintain the meteoric rise with head-on competition from the OTAs. Pushback from tax and safety regulations in major markets has been another persistent headwind.
In terms of how this plays out for hoteliers? Anything that puts more competition into the mix to challenge the duopoly of Expedia and Booking.com has to have some advantages. However, as 3rd parties are direct competitors to the more profitable Brand.com, they will usually be a second choice as a demand driver. Google's recent enhancements to their direct booking platform pose a serious challenge to the OTA's economic model while Airbnb has some advantages with its higher level of direct app usage by its core user base. Airbnb is no more friend to the hotelier than the OTAs, but the biggest concern for all is Google.