Should hotels worry about Airbnb?
Or what about its competitors that allow homeowners to rent out their properties to travelers, such as VRBO and FlipKey?
It all depends on who you ask.
In 2015, as Airbnb’s value had begun to surpass hotel chains like Hilton, Hyatt and Marriott, Hilton CEO Christopher Nassetta took pains to reassure investors, arguing that the online vacation rental service couldn’t compete with hotel chains in terms of amenities.
“I strongly do not believe that they are a major threat to the core value proposition we have,” he said at the time, in a piece reported by CNN.
Hilton’s research, Nassetta told analysts, found that Airbnb users tend to stay longer, taking “staycations where customers are willing to accept inconsistent product with very limited services. I think it’s very hard for them to replicate what we’re doing.”
But not everyone was as confident. As reported by Business Insider, LaSalle Hotels CEO Mike Barnello told investors that the rise of Airbnb was “a growing concern on a number of levels.”
At that time, Airbnb had achieved its highest market penetration in the same cities where LaSalle had its properties: New York, Chicago, San Francisco and Washington, D.C.
Should hotels worry about Airbnb? Maybe they can learn from them
That was the fall of 2015. Nearly three years later, hotel experts are still talking about – and feeling – the Airbnb effect.
A study published last month by Chiara Farronato of the Harvard Business School and Audrey Fradkin of MIT found that Airbnb was keeping hotel rates down and giving customers greater options during peak travel periods.
“That’s bad news for hotels,” Forbes contributor Dina Gerdeman noted, as they typically earn their greatest margins during times when rooms are scarce. But it’s good news for travelers: they can score a place to stay in a busy city during a busy time of year and not exhaust their travel budget.
“The benefits to travelers and the reduction in pricing power of hotels is really concentrated in particular cities during certain times,” Farronato told Forbes. “When hotels are fully booked, Airbnb expands the capacity for rooms.”
This isn’t to say the hotel industry is suffering. As Hotels magazine Jeff Weinstein told The Atlantic last month, hotel revenue has grown along with the global middle class in places like India and China.
A local experience
At the same time, hoteliers “recognize that an alternative is emerging,” Weinstein said.
“Not only is there Airbnb, but in the luxury space, there’s a site called One Fine Stay and another called Oasis, and people who have second and third houses can rent them without having to undertake the effort themselves.
“So, the industry has to figure out, ‘Okay, how do we offer the same type of local experience that one would have in a home?’
Hotels are doing that, Weinstein said, by putting local products in their rooms, whether it’s locally sourced soap in the bathroom or local food and drinks in the minibar that are “a little more interesting than just a Snickers bar,” but at a reasonable price.
Should hotels worry about Airbnb?
We can’t say for certain. But what we can do is make the same argument Weinstein makes in the Atlantic interview:
“Really, at the end of the day, the hotel stay is about a night’s sleep and a good shower, and maybe some good food.”
Let InnStyle help you give your guests that experience. We’ve spent more than 60 years helping hotels – and bed and breakfasts and vacation rentals – give their guests the best overnight stays by providing top quality bedding, pillows, mattresses and other amenities.
Contact our sales team today for help in finding products that will keep your guests coming back.
