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?

Ally Northfield
Ally Northfield
Director at Revenue by Design

Probably both. In many cases the local experience that Airbnb users seek simply can't be replicated by hotels. This is evidenced by many hotels trying to replicate that experience, even going to the extent of removing the word hotel from their name. Whilst hotels report a softening of demand in areas of high Airbnb penetration, assessments of share of demand indicate that Airbnb is tapping into an alternative type of customer. If anything, AirBnb has forced hotels to up their game and re-think what it means to be a hotel typically scoring high on areas such as location, guest services and amenities.

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