When someone decides to take a trip and needs somewhere to stay, their options vary greatly from those available 10 years ago. Now there are big chain hotels, boutique hotels, Airbnb rentals, and single rented rooms.
The travel accommodation market is big business and a challenging marketplace with huge industry competition. Thanks to their online marketing presence and huge advertising campaigns, Airbnb and similar companies seem to be all we hear about today. However, their market share isn’t as high as people once thought, but this is predicted to increase drastically over the next few years.
Airbnb is currently on course to take a significant percentage of the market share away from hotels in the near future. Goldman Sachs found that when people booked via Airbnb were surveyed 36% stated they preferred to stay in an Airbnb rental, while 40% said they would prefer to stay in a hotel and 24% said they had no preference over one or the other. With 36% of people preferring Airbnb over hotels, this shows that Airbnb has taken a significant share of customers away from hotels.
This research reveals that while people do choose Airbnb often and in huge numbers, many individuals still prefer to stay in hotels over the alternative options. A study from Pew Research Centre revealed that 89% of Americans have never used Airbnb.
Hotels need to fight back against Airbnb rentals while they aren’t taking a high percentage of market share, as they are set to become a strong menace for hotels in the future.
Airbnb Isn’t The Only Problem
It’s not only Airbnb that is taking on the hotel world, OTAs such as Expedia and booking.com are changing the way hotels receive bookings. Large numbers of people log on to these hotel comparison sites everyday to compare their favourite brands, find the cheapest or best located options.
While this helps with user interaction, hotels can be left with a large hole in their profits once the OTAs have taken between 15% and 30% commission on each booking. The effect of this on a large scale can leave a sour result on hotel’s profile margins.
What Can be Done?
Hotels need to begin fighting back against Airbnb and OTAs, which can be done in a number of ways including:
1. Increase Direct Bookings
Hotel companies have a large number of options to ensure their profits stay high and healthy. One of the biggest changes hotels can make is to focus on direct bookings. While this takes effort and management, a direct booking doesn’t entail any hidden fees and results in a significantly lower cost per booking. The direct booking method is the best way to achieve sustainability and increase profits. While direct booking is an ongoing commitment of resources and time, it has a large number of both short and long-term benefits as well as returns.
Time and money spent on giving users a friendly website experience, an easy to use booking interface and other simple adjustments to websites can help to increase direct bookings. For instance, SEO driven content optimization can allow webpages to rank highly in google and on other search engines.
2. Identify Target Audience
To attract users to book directly, independent hotels and hotel chains need to first identify their target audience. This can be done by analyzing past data and researching data on spending patterns and personal preferences. This information can be used to create tailored promotions.
Promotions through social media or other methods can be easily targeted to the desired audience and even at a specific time (when the most target users are online). For example, millennials tend to be the generation of the Airbnb culture: a generation looking to travel the world on a budget and often ‘live like a local.’ This tends to be the generation that desires hostels over hotels, so cost cutting millennials probably aren’t the ideal audience for a boutique hotel.
3. Provide Unique Services
While many often choose Airbnb rentals or other services for a unique or local experience, a large number of hotels are latching onto this theory in a different way. Many hotels are thinking about unique changes to make in order to direct potential guests away from Airbnb. These hotels are providing and focusing on a curated experience, a neighborhood feel, while using companies such as Arrivedo to provide Neighborhood Guides to share their local knowledge with both current and future guests.
Hotels are doing this in addition to rewarding customer loyalty, by providing a service or points system and rewarding customers with free night stays along with other discounts or free items. This change in hotel culture is enabling them to cut into the Airbnb market and improve on it by providing a local experience whilst retaining long-term hotel favourites such as utilities, facilities, room service and cleaning services.
3. Arrivedo Stock Image
Travel writer, journalist, editor and blogger. Anny has travelled to 28 countries, worked in Greece, France, America and Colombia. She created her blog Anny’s Adventures to help people discover the beauty of Colombia and other countries around the world.