The Airbnb effect on tourism and hospitality industry
In the hospitality industry, today, competition not only exists between hotels. Indirect competition is increasing with the inception of third-party travel systems (OTAs) and tech-based company like Airbnb.
Airbnb is disrupting the travel and lodging industry with its intrigued business model ‘Sharing Economy.’
Investopedia defines this business model as “The sharing economy is an economic model often defined as a peer-to-peer (P2P) based activity of acquiring, providing or sharing access to goods and services that are facilitated by a community based on-line platform.”
As lodging industry is concerned, Sharing Economy is an accommodation business model that helps consumers ( also referred as peers) to rent out their free or underutilized home spaces via the internet to the one who seeks rooms in the locale.
By renting out these unused or underutilized home spaces, peers can generate revenue. At the same time, guests can find accommodations at normal prices, even though the demand for hotel rooms is high.
Airbnb, a behemoth, with a revenue of over $ 1 billion in the third quarter of 2018, is playing a major role in the hospitality industry.
Airbnb: Is a big threat to hotels?
As guests are drawn towards this platform, it poses a significant threat to the hospitality industry. A new study finds that, in the United States, the entry of Airbnb resulted in 1.3 percent of fewer hotel nights booked and a 1.5 percent loss in hotel revenue. Source: Forbes.
The success behind Airbnb
Started as a small bed and breakfast company, Airbnb’s founders forecasted the potential of this new way of providing accommodation, and the quest for experiential travel in the hospitality marketplace.
The carve for local and cultural experience is growing uncommonly among guests. As Airbnb presents accommodations in the locale, guests those who stay can gain different perspectives about the destinations directly from the local people.
Online booking trends and technology development are also major significant factors that make Airbnb successful.
Airbnb, by leveraging technology properly, it connects the peers who want to rent out their rooms and the people who are in need of it.
Airbnb, with a better understanding of the changing guest expectations and supporting technology, has captured the travel and hospitality marketplace.
Where traditional accommodation provider lags behind
The one who adapts quickly to meet the changing market demands is the one who gets succeed.
It is a bitter fact that hoteliers were slightly back in implementing latest technologies than its competitors.
Airbnb in India
After China, India has been considered as the fastest growing market by Airbnb. Airbnb India is fully focussed on building a community based on the Indian’s belief ‘Atithi Devo Bhava’ (Guest is equal to God).
Last year, Airbnb listings in India went up to 150%. Airbnb is very eager to tap on the millennials market in India.
Airbnb sees India as a great market to go for which is yet untapped.
How hotels can compete with Airbnb
As a hotelier, competing with Airbnb is a must as it is turning out as a big threat.
Firstly, hotels need to have a clear understanding of the needs and wants of their guests and their expectations over the trip. To achieve this, hotels need to convert their raw guest data collected across various touch points into helpful information.
Based on these insights, hotels can segregate their guests in interest with their demands and take effective steps to meet their guest’s unique needs.
Secondly, hotels need to provide local and cultural experience to their guests. In this modern age, guests seek to gain information about the historical and cultural background of the destinations. In simple, guests are desired to learn new things on every trip.
Thirdly, hotels also need to be dynamic to meet their market demands. Whether it is leveraging the right technology or employing new methods to fit the changing guest's preferences, hotels need to adapt swiftly.
Finally, the power of hotels lies in their guest satisfaction. Even though Airbnb provides local experience to their guests, it cannot provide all the luxuries, assistance, and other amenities that a guest can enjoy in a hotel.
Strive to provide exemplary services to your guests. Win their hearts and make them a loyal customer. No one can beat you.