For about 6 years now, the hospitality industry has been shaken by the disruptive peer-to-peer (P2P) accommodations leader: Airbnb. Airbnb has forced all the hospitality players from the smallest boutique hotel to the largest chain to transform and adapt to new standards. Let’s delve in and see how hoteliers can benefit from the Airbnb trends.
Founded in 2008 by Brian Chesky and Joe Gebbia, two roommates from San Francisco, Airbnb has become the market leader in the online peer-to-peer room sharing business. In just seven years, over 35 million people have found accommodation through Airbnb, and the company reports more than 1.2 million room listings in 190 countries all around the world. Airbnb ranks number one in the number of rooms available to clients, preceding Hilton hotels & Resorts and Marriott International, both approximatively offering 715,000 hotel rooms worldwide.
Concerned about this rising trend and the lack of established rules, hoteliers are asking for Airbnb to be subject to more regulations. In response, a new office was created to enforce rules regarding vacation and short-term rentals. The Airbnb and P2P industry would have weighed heavily on the hospitality industry if a regulative institution had not been created to collect taxes and make sure the competition is fair. Especially in San Francisco, where a real housing crisis is occurring, peer-to-peer rentals are a major problem and a shortfall of approximately $10 millions for the city of San Francisco.
However, there’s no real evidence that Airbnb has a negative impact on the hotel industry. Customers that frequent major hotel chains are primarily business travelers or luxury guests, a demographic that Airbnb currently does not appeal to. The peer-to-peer clientele is comprised of customers with lower budgets and different expectations. Airbnb attracts leisure travelers by incorporating the local culture and authentic experiences of the city they are located in, while major hotel chains have focused on all-inclusive services for a loyal clientele who want a comfortable and relaxing experience.
But faced with the challenges of expanding its clientele, Airbnb is pulling inspiration from the established hospitality industry to upgrade its offering. In 2014, Airbnb wrote “Nine hospitality standards” to serve as the basis for each accommodation. These included basic accommodations standards such as accuracy, availability, cleanliness, communication, support and welcome. This foundation, which has long been adopted by hotels, will help Airbnb meet a wider range of travelers’ minimum expectations.
While a customer will book a reputable hotel because he knows exactly what he’s getting, hotels are beginning to innovate to offer a more local and unique experience to their guests. Indeed, in ten years, millennials will represent 50% of US travelers, and they are expecting unforgettable experiences that include technology, customization and local activities. To face the demand, hotels need to adapt by mixing their guarantees and amenities with a memorable experience. Using connected services and platforms could be the best way to guide and recommend guests to local neighborhoods. A few hotels have already started their modernization by changing their big chain hotels into boutique hotels, such as the New York Hilton in Midtown, which recently opened unique eating establishments that celebrate local culture.
So right now, hotels are slowly trying to integrate more Airbnb-like services into their strategy, and at the opposite, Airbnb is trying to become slightly more hotel-like in its offerings and services. Even more, Airbnb’s fast growth could have benefit the whole hospitality industry by bringing a fresh idea of standards and experience that will help the hotels remain competitive and adapt to a new clientele. The hiring of Chip Conley, founder of the boutique hotel chain “Joie de Vivre”, as Head of global Hospitality for Airbnb corroborates and illustrates this blending. ”We want hosts to understand that the more we create unique experiences and the more localized experience it is, the more we meet the needs of guests,” Conley says.
Some of the hotel companies have been too scared of the success of Airbnb, that they miss out on taking advantage of some of these conclusions. Customization and technology, that’s the future of the hospitality industry.
Featured image: New York Hilton Midtown