10 years of Airbnb!
What has been its impact on the industry?
It’s 10 years since Airbnb began, and whilst they weren’t the first company to promote private accommodation, they were the first to harness online technology and create a brand.
With a brand value of $5.5b which matches Marriot, and only second to the Hilton valued at $6.3b, Design Insider felt now was a good time to asses Airbnb’s impact on the hospitality sector. So, what better place to start than speaking to editors reporting on the hospitality sector and getting their take on how the industry is responding.
Since its launch 5 years ago, Skift has established itself as the one-stop resource for market intelligence in the travel sector. We asked Deanna Ting, Hospitality Editor at Skift what insights she could share on Airbnb’s influence, as there appears to be no limit to its ambition.
“To a degree Airbnb is replicating what the hotel industry has done in creating loyalty. It’s a hybrid of a traditional online booking agency, as it’s created a community within its distribution channel. And, wants to be a travel superbrand”
Explains Deanna. To achieve this, the business is evolving with the introduction of Airbnb-plus (tested as Airbnb-select) which is a curated collection, with plans to launch luxury accommodation and experiences through beyond-Airbnb. Additionally, Airbnb’s brand recognition and loyalty gives it the platform to promote soft hotel brands.
In a recent podcast Deanna and her colleagues discuss how Airbnb is targeting independent bed and breakfasts, boutique hotels and soft brands of larger operators with opportunity to promote their properties at cheaper rates than Expedia, booking.com and Online Travel Agencies. So rather than a threat, perhaps Airbnb can provide hotels with an opportunity to engage residents more than OTA’s allow.
Is Airbnb really a threat?
We’ve seen evidence of hoteliers copying the Airbnb model, Accor bought One Fine Stay and Hyatt has its Oasis Collection, but is Airbnb really a threat? “While Airbnb has undoubtedly had an impact on the hotel industry, the general consensus from the CEOs we’ve spoken to, is that it’s business as usual. You only have to look at the data to see that occupancies in Europe are 10% higher than what they were a decade ago, during which time Airbnb has grown exponentially” Reports Catherine Martin, Managing Editor at SLEEPER magazine.
“In many ways, Airbnb has had a positive effect on the industry, forcing hotel groups to think outside the box and come up with new ways to win over the guest. AccorHotels is doing a great job in responding to the rise of the sharing economy, with various acquisitions as well as the launch of Jo & Joe, designed to attract the type of guest that would perhaps otherwise choose an Airbnb property.
The shortcomings of Airbnb are in the quality and consistency of product, and this is where conventional hotel groups can really gain advantage – never underestimate the power of the brand. The hospitality industry needs to capitalise on its brand promise and the ability to provide a quality stay and reliable service wherever in the world a guest may be” adds Catherine.
Extending properties to include soft brands and boutiques hotels is one opportunity, but Airbnb’s brand is built on offering a variety of accommodation that is unique. So, could service apartments and purpose built private accommodation for rental provide greater growth? It seems so in the USA, as developers and vacation management companies are quenching the thirst for holiday/second homes.
“We are already seeing landlords, developers, and Airbnb working together to create a new model in Florida. The Niido powered by Airbnb property, will allow residents to share their apartment for up to 180 days each year. Tenants who share their home will be enrolled in Airbnb’s Friendly Buildings Program, which shares the revenue they earn with their landlord” explains Deanna.
“But developers need to ensure their tenants don’t feel blindsided by this opportunity”, she adds.
To get his overview, we caught up with Can Faik, Editor of SPACE and HOTEL SPEC magazines, to ask if he thought there is a role of Airbnb in today’s hospitality market. “Yes, there is a place for Airbnb within the hospitality sector, however there are key differentials which set the hotel industry apart, this is particularly evident in the top scale of hotel brands, which SPACE magazine regularly reviews. Whilst Airbnb has launched Airbnb plus which provides luxury accommodation, guests in this tier are looking for more than a bed in a nicely furnished room. Five-star hotels have built a reputation on service, creating destination restaurants and facilities which include luxury bathrooms and spa experiences. Their locations are unparalleled, and the interaction with other guests and staff all add to the experience and brand loyalty.
Airbnb will continue to attract those on a budget, those requiring a short stay and families wanting the freedom of renting a whole property. One of Airbnb’s differentials is the uniqueness of each property, which makes regulation in interiors unlikely, as consumers may look for a smoke alarm, but won’t be aware of contract interior specifications. Of course, this could change if developers are involved and running property rentals as a business within the Airbnb community”, he concludes.
So, to ultimately compete with the hotel interior standards will Airbnb need to create an Airbnb store which hosts can buy from? The idea of approved interiors products must be on Airbnb’s radar, as during pilot of “Airbnb-select” online Interior Design Service was offered through Havenly at discounted rate on items. Whilst this service isn’t currently listed as part of Airbnb-plus, it could be in the future, and could provide a real opportunity for our BCFA members.
*Published in Feb 2018, the Brand Finance Hotels 50 report, showed the Airbnb brand value rise by more than 51% to over $5.5b (£4b) in 2017, marking the first time in which Airbnb’s brand value exceeded that of all but one hotel brand valued in the Hotels 50. Although Airbnb isn’t included in the Brand Finance Hotels 50 league table, as it doesn’t own its properties, it’s still seen as a threat to hotels. For the third year in a row, Hilton was named the world’s most valuable hotel brand, with a brand value of $6.3b (£4.5b) with Marriott coming in second at 8% to $5.5b (£4b).
What do you think? is Airbnb a threat or a enhancer to the hospitality industry?
Share your thoughts in the comment box below, or follow the conversation on Facebook and Twitter.