By Margaret Mastrogiacomo and Max Starkov
Background:
Recently Airbnb announced the formation of a technology partnership with SiteMinder, a cloud-based channel management platform used by more than 28,000 hotels around the world. Now, hotels that use SiteMinder and meet certain criteria from Airbnb can easily list their inventory on Airbnb.com. This includes real-time availability, rates, and content on Airbnb thanks to this new partnership.
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.com and Expedia, they need to be laid to rest immediately.
Why is Airbnb Entering the OTA space?
The lure of higher commissions from hotels in the range of 15%-20% vs. the lesser 3%-6% from private accommodations is the main reason why Airbnb is venturing into the OTA space. Another reason is that hotel accommodations are typically instantly bookable while most of the private accommodations on Airbnb are listed on a reservation request basis. Indeed, out of more than 4.5 million private accommodations listed on Airbnb, less than 45% are instantly bookable.
Will travel consumers embrace this recent move by Airbnb?
Airbnb has established itself as the purveyor of unique private accommodations. However, what’s the added value for consumers when many of the hotel accommodations are already available on a zillion OTA and meta search websites?
Further, hoteliers have to maintain rate parity on Airbnb since all rates are publicly available and Expedia is already monitoring Airbnb. Travel consumers will be seeing the same hotel inventory and rates that are available on every other OTA and meta search website, including Google Hotel Ads.
We have to ask ourselves, why do travel consumers use Airbnb to begin with?
When people want to book a hotel, Airbnb typically does not come to mind. We have clients on Airbnb that report they are getting occasional bookings from this site. The main reason for this is that consumers do not go to Airbnb to book hotels but to find and book unique private apartments and houses at a reasonable price. TripAdvisor learned the hard way with its Instant Booking feature the truth about entrenched travel consumer purchase behavior. Instant Booking was a major flop since consumers simply did not accept TripAdvisor as a hotel booking channel.
Overall, travel consumers will not be easily accepting Airbnb as a hotel booking channel and hoteliers should not expect an avalanche of bookings through this channel.
How should hoteliers handle this new move by Airbnb?
Hoteliers need to understand that Airbnb is not an ordinary OTA.
On the one hand, hoteliers may experiment with Airbnb as an OTA distribution channel. Although due to the reasons outlined above, we do not expect this to become a significant source of bookings. On the other hand, hoteliers must learn how to combat Airbnb and win the booking which would otherwise go to private accommodations.
There is no doubt that Airbnb has drastically disrupted the travel industry and positioned itself as a unique online travel agency for travel consumers. Yet while Airbnb paves the way for a new niche in travel, this industry player is disrupting hospitality and affecting a hotel’s bottom line in a major way.
Airbnb has “hijacked” 10%-15% of the travel demand in many major metropolitan areas and leisure destinations, forcing hoteliers to fight for every guest. Example, Airbnb is taking 10-12% of travel demand in New York City, Paris and London.
The impact affects overall occupancy and hotel room pricing which has lead hotels to be unable to raise ADRs in periods of traditional peak demand. In fact, according to Morgan Stanley Research, 49% of survey respondents in the US, UK, France, and Germany reported that they booked an Airbnb in place of a traditional hotel.
Even more concerning, the research predicts this number will remain steady throughout 2018 and Airbnb’s cannibalization of hotels’ business will hover at approximately 50% for both business and leisure travelers. The impact affects ADR leaving hotels unable to raise prices in periods of peak demand, and ultimately, affects overall occupancy.
According to HVS, it is estimated that the hotel industry loses approximately $450 million in direct revenues to Airbnb each year. In light of this, hotels must take action with a unique value proposition on the hotel website and a strategic marketing strategy in order to combat the negative effects of Airbnb on their bottom line.
Here is an action plan to take on Airbnb and win the direct booking.
The Value Proposition on the Hotel Website:
To combat the effects of Airbnb on your hotel’s bottom line, hoteliers should promote features and amenities that Airbnbs lack. Here are a few value propositions to consider promoting on the hotel website:
Guest Services
Hotels offer services that guests cannot get when staying in an Airbnb rental. These services include room service, concierge and information, and luxuries such as plush robes. Hoteliers should highlight guest services throughout the hotel website. They can also showcase their employees that are dedicated to making stays comfortable and convenient.
Amenities
Hotels also offer amenities that are typically unavailable in Airbnb rentals, including spa services, onsite dining, and a fitness center. The hotel website should highlight these amenities with rich imagery and descriptive copy.
Inspiring Communal Spaces
Many hotels now offer spaces for guests to gather and socialize, including inviting lobbies, lobby bars and cafes, executive meeting rooms, and more. This can be a place to meet other guests or just a place to relax and work. Airbnb options lack this communal space, as many Airbnb spaces are just rooms within apartments or an entire space to a guest. In addition, Airbnb guests do not have the same opportunity to socialize and mix and mingle with other travelers. Hoteliers can highlight this on the website with images of guests enjoying communal spaces and socializing.
Security and Safety
Airbnb is not always a safe option for travelers. Accommodations are booked through property owners that are unknown to the guests. If the guest is unfamiliar with the area, they may be staying in an unsafe neighborhood or use unsafe transportation to/from the Airbnb rental. Hotels, however, have 24/7 front desk and security. Hotels can highlight this on their website by listing their security measures under FAQs or amenities.
ADA and Accessibility
Very few Airbnb accommodations are ADA compliant. Hotels are ADA compliant by law and offer ADA-compliant accommodations and access for disabled guests, such as wheelchair accessible bathrooms and elevators, which cannot be said for most private accommodations.
Baggage Storage
Travelers often arrive to their destination earlier than expected, or leave later in the day after check-out. Hotels often offer luggage storage so guests can explore the destination without having to carry around heavy bags. Airbnb hosts typically do not offer this service. They expect the guest to arrive at the time of check-in. Hoteliers should provide their baggage storage information under amenities and services.
Guest Appreciation Program/Loyalty Program
Many hotels offer guest appreciation or reward programs for repeats guests. They are free to sign up and reward guests for staying at the hotel to increase guest retention. Currently, Airbnb does not offer a loyalty program. Hotels can highlight their loyalty programs by putting a call-out to sign up directly on the homepage of the hotel website. They can also dedicate a portal on the website for members-only discounts to loyalty members.
Pricing
While Airbnb is seen as a more cost-effective option to travel consumers, this is not always the case. Hoteliers should stay aware of Airbnb pricing in the property’s neighborhood and emphasize the value and additional services guests will experience by booking the hotel at a comparable price. Featuring a dynamic rate on the hotel website homepage will also allow the property to highlight competitive rates.
Marketing Strategy to Combat Airbnb:
To combat the effect Airbnb has on the hotel industry, hoteliers will need an effective digital marketing strategy. Here are some digital marketing tactics to help protect your bottom line:
Experiential Packages
Hotels can offer packages that provide guests with the ultimate destination experience. For example, a New York based hotel can offer guests complimentary museum passes, Uber credits, and free walking tours. Hotels in warm destinations can provide poolside beverages and complimentary sunscreen. Tailor experiences that are unique to your destination.
“Live Like a Local” Messaging
A big appeal of Airbnb is that guests feel like a local with a unique experience of staying in a resident’s home. Hotels can combat this by delivering “live like a local” messaging. They can launch campaigns that promote a more unique, local experience such as promoting discounts at local restaurants, a map of hidden gems and local hangouts, and complimentary passes for public transportation.
Smart Data Marketing
Through top travel ad networks such as ADARA and Sojern, a hotel can target travelers based on the dates they are researching. Travelers likely have already searched for flights and may even have searched for hotels before turning to Airbnb. ADARA and Sojern can target these potential guests with ads that appear at multiple touchpoints throughout the online travel planning journey, and ultimately drive traffic to the hotel website to win direct booking.
Blog Posts
Hotels can create blog posts with itinerary ideas in the hotel’s destination that appeals to all types of travelers, including history buffs, art enthusiasts, and foodies, which will also help combat the local appeal of Airbnb. Blog posts will come up in search results when travelers are searching for things to do in the destination and will drive traffic to the hotel website to assist in driving direct bookings.
Social Media
Social media outlets are one of the most popular places travelers get inspiration for their next vacation. Therefore, hotels should have an active social media presence and post rich imagery showcasing the hotel’s guest rooms, amenities, and services. They can also invest in video and Facebook Canvas Ads to allow the traveler to experience the hotel before ever setting foot on property and inspire them to book. Additionally, social media platforms such as Facebook and Twitter offer many targeting opportunities which allow hotel marketers to target potential guests who are interested in Airbnb.
TripAdvisor Reviews
Travelers often turn to TripAdvisor when planning travel. Having positive reviews on TripAdvisor is important, as this may encourage travelers to choose the hotel over Airbnb. Hoteliers can prompt guests to write a review in a post-stay email, or ask people who have left reviews on other channels such as Facebook and Google. When prompting guests to leave a review, hoteliers can also encourage them to mention their favorite local activity in their review to really help drive home that guests can stay at a hotel and still get a local experience.
TripAdvisor is also a great opportunity to advertise your hotel through destination targeted display or a TripAdvisor business listing on your property page. This will help ensure you drive traffic to the hotel website while potential guests are researching hotel options and price comparing to Airbnb options in the same neighborhood.
Following this strategy will allow hotels to stay competitive with Airbnb and combat the effects on the hotel’s bottom line.
