How Hotels Can Compete in the Airbnb Landscape
October 17, 2018 12:26pm
By Mia A. Mackman
Airbnb came on the scene in 2008, amidst corporate scandal, economic downturn and instability. Initially people were skeptical, but Airbnb has gained remarkable momentum building its platform with transparency and trust, at a time people were greatly seeking both. In the early years, Airbnb's inclusive and diverse model provided low-cost travel options with uncommon flexibility, which became an enticing alternative to the traditional big-name hotel booking systems.
The social component and owner-intimacy of Airbnb also intrigued adventurous solo travelers, seeking more local and organic destination experiences. The notion of exploring beautiful places "off the beaten path" always holds distinct appeal. These systems produced bookings based on realistic travel and stay expectations and a digest of genuine, host and guest reviews. This created an alternative to staying at expensive hotels and made travel experiences more accessible and adventurous for a wider variety of people, incomes and lifestyles.
Another upside of Airbnb is that it is widely perceived as a people's platform. It has empowered an enormous volume of people to earn money by hosting guests in their homes, rooms or by sharing travel and tour experiences. These features in addition to a foundation of honesty and process transparency have made Airbnb a game changer for the travel market.
Sustainability and Health
The popularity of Airbnb has generated not only new views on style and stays, but they have moved into the experiential and event market, promoting local attractions, events, and various travel experiences. In April, Airbnb expanded its programming yet again to include a new Global Office of Healthy Tourism and announced the formation of its new Tourism Advisory Board. These new dynamics support local resources, sustainable tourism, rural regeneration and ecological impact.
Airbnb released new data highlighting their strides and support of healthy tourism. Some of these include, "88% of Airbnb hosts around the world incorporate green practices into hosting, 79% of guests said they decided to use Airbnb because they wanted to live like a local, and 66% of guests said the environmental benefits of home sharing were important in their choice of Airbnb."
There's no question, forming alliances and collaborating with other companies is a magnificent thing. We are experiencing an era of soft and dramatic and change across multiple industries. A part of that change, is increasing the propensity to work together in bigger ways. While this is true, hotels and resorts have traditionally maintained their autonomy within their singular locations or the boundaries of their respective brands.
As new travel aspects surface across Airbnb initiatives, the contest to compete is constantly evolving. For hotels and resorts this presents an exciting opportunity to initiate innovative hotel experiences. It's time to review and replace outmoded guest methodology and program structures with new, more adaptable and effective strategic targets.
Depending on the choice of property, destination and time of year, hotel pricing can vary substantially. Many times, pricing is based on availability, season or simply demand. Airbnb pricing can vary for similar reasons to hotels. However, these rates have become increasingly competitive as the Airbnb platform continues to thrive. The chart below, highlights hotel vs. Airbnb average rates in some select U.S. cities.
In some cases, such as New Orleans, Airbnb rates have shown to exceed the ADR of local hotels. As a result of this, the New Orleans City Council has temporarily "banned new whole-home-short-term rentals in residential neighborhoods." This action subjects temporary STR's with a 90-day limit until new regulations can be introduced to ratify short-term rentals.
This is a common outcry amongst popular second and third tier destination cities. And further supports the call for updated hotel performance reviews and potential program revisions. It's essential to know where the opportunities exist to recalibrate new pricing structures and tactical planning.
Spa and Wellness Inclusivity
Wellness inspired themes are stirring global demand, in life, work and travel. Hospitality initiatives focused on well-being are becoming a high-demand property feature. This includes healthy food, restaurants tailored to alternative and/or restricted diets, as well as activities and spa and wellness services that promote well-being. An increasing number of guests look to the spa and wellness components of a property seeking services that authentically enhance the quality of their stay.
Unlike Airbnb, hotels and resorts can offer an inclusive experiential stay. Despite the rising variety of activities offered through Airbnb, these often lack the luxury amenities of a hotel or resort spa. People seeking upscale spa and wellness experiences will find these features to be a particularly motivating component of their stay. These programs can also represent strong and unique selling points for a hotel property.
Developing programs that extend spa and wellness services more actively to outside guests, can increase the occupancy of the spa overall. Creating new opportunities to collaborate with local Airbnb hosts can add experiential value for the hosts as well as the hotel. In the short term, this can upsurge spa engagement and in the long term this can form lasting, beneficial new partnerships. Furthermore, this provides more visibility for the hotel with new considerations for use in the future.
Packages and Promotions
Hotels have some clear advantages when it comes to marketing and promoting hotel engagement. Unlike a single hosted Airbnb deal, a hotel has the ability to create unique guest packages and modify or expand these as necessary. They also have the media reach and market advantage of brand recondition and loyalty programs.
Creating special guest incentives in conjunction with the unique selling points of the property presents a full experiential package. Exploring new variations of these, by combining packages with cooking classes, wine pairing, or different class types, can enhance standard offers and traditional hotel packages. Being creative and exploring new value propositions and local partnerships is another way to boost hotel and spa and wellness engagement.
Branded loyalty and membership programs can entice commitment. However, depending on the number of stays or level of points, these can often have lackluster benefits. Formulating these with more inclusive paybacks for a wider spectrum of members, can have distinct appeal. Consumers are seeking authenticity and value. They are seeking substance in the brands they believe in, where they stay and where they choose to travel.
New Guest Type
The last decade has created a new dimension of travelers. Remote business is a common factor, allowing people to work while traveling and exploring the world. These newfound freedoms have transformed the way people perceive doing business and how that intersects with their lifestyle. Heading to the office may mean sitting in a coffee shop, a hotel lobby or on a lounge chair by the beach. These aspects have evolved into a new travel sector that has elevated guest expectations and altered conventional stay preferences.
To improve competitiveness as a business, it's key to include healthy diversity and boost the quality and scope of services ongoing. Today's guests are savvier than ever, and they have a plethora of options at their fingertips. Capturing their attention and spend, requires constant review, responsiveness and relevance.
Hotel and Resort Program Tips
If the hotel lacks the staff to initiate these programs, reach out to local people who can supplement these services as special guests. This can effectively rotate new events, and special programs in conjunction to guest packages and add new energy to the activities calendar.
Hotel Stability and Growth
Most companies are not designed for rapid growth or swift change. The global growth of Airbnb has had an enormous impact on the hotel and travel market. Airbnb has revealed new travel trends, increased the demand for versatility and enhanced the mode of modernization.
The upside is that this has created ripples of timely innovation throughout the hospitality sector. In many ways, this is a great thing! This makes way for new perspectives on programming, amenity investments, and creative solutions to increase capture. This has also produced a new type of guest, opened a new dialogue of predilections and added healthy diversity to the mix of travel and stays.
Hotels will continue to thrive. The ones who are prepared to evolve and adapt will have stronger legs to stand on. These businesses will know where they are, understand the challenges before them and be better able to protect their investments. Meanwhile, properties who witness fluctuations in occupancy and property performance without the agility to respond, may be subject to fragmented stability and persistent challenges. There are unlimited ways to improve the fundamentals of any business, given the right lens. Exploring effective ways to integrate them, can result in powerful strategic plans.
Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.
mia a. mackman,
Mia Mackman, HVS Managing Director of Spa and Wellness Consulting, leads the spa and wellness aspects of our consulting engagements, encompassing market studies, feasibility studies, strategic planning, valuation, and forecasting. Mia has predicted some of the leading shifts in the transition of the spa and wellness market since 2004. Known for her agility, leadership, and intuitive insight, she works with Fortune 500 companies, private clients, industry groups, and global networks. She is recognized for her unique ability to predict and identify future value propositions and how to navigate, adapt, and excel in a fast-changing market. Contact Mia at (928) 284-8503 or email@example.com.
Many Hotel Sellers Won Big in 2018
Possessory Interests in Hotel Real Estate
Hotel Cap Rates Hold Steady - Values Under Pressure
Are Colorado Ski-Resort Hotels Posed for a Rebound?
HVS Market Pulse: Dallas, TX
HVS Market Pulse: Oklahoma City Rising
HVS Market Pulse: Baltimore Ascending
HVS Market Pulse: Chicago Suburbs
2019 United States Hotel Industry Outlook
Interviews With Leaders - Mr. Carlos Khneisser, Vice President of Development Middle East North Africa & Turkey - Hilton Worldwide
HVS Market Pulse: Boston, MA
HVS Market Pulse: Kansas City
HVS Market Pulse: Fort Lauderdale, FL
HVS Market Pulse: Washington, D.C.
HVS Market Pulse: Hawai‘i Convention Center
HVS Market Pulse – 4th Quarter 2018
Airbnb Delivers Opportunity, Not Direct Threat, to South African Hotel Industry
2018 HVS Performance Report: Spa Department
HVS Hotel Development Cost Survey 2017/18
HVS Interviews with Leaders - Mr. Ludwig Bouldoukian, Regional VP of Development, Middle East and North Africa, Hyatt Hotels
Please login or register to post a comment.