Hotels Versus Airbnbs

Who will be the winner in the travel industry?

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As mentioned in previous blog posts, social media has made marketing much more complex for hotels. In addition, it’s opened many doors for hotel marketing. For example, it’s allowed hotels to utilize travel influencers to market their hotel and attract new customers.

It’s important to note that along with the internet’s and social media’s benefits, they also create some challenges for hotels. Specifically, the internet and social media has created a sharing economy.

According to “Investopedia”, “sharing economies allow individuals and groups to make money from underused assets. In this way, physical assets are shared as services” (Investopedia, 2018). An example of a sharing economy in the travel industry would be AirBnB.

So, why is the sharing economy, specifically Airbnb, so important? Also, could Airbnb potentially be a threat to hotels?

According to the article “Is Airbnb a Threat to the Hotel Industry?”, “While Marriott, Hilton, and Hyatt may all have global brand recognition, Airbnb has some very important cost advantages that those companies can never have” (Divine, 2016, para. 7). This means is that in order to increase profits, hotels need to buy new property in order to boost the amount of customers they hold. For example, the “Marriott paid $13 billion for Starwood, which owns, operates or franchises hotels with 375,000 rooms. The combined entity will have over 1.1 million rooms to its name” (Divine, 2016, para 9). In contrast, “what does it cost Airbnb to add a room to its inventory?A whopping $0” (Divine, 2016, para10).

In addition to a cost advantage, the article "Here's How Much Instagram Likes Influence Millennial's Choice of Travel Destination", states that "Airbnb is one brand that has done an amazing job of generating a huge following and plenty of engagement on Instagram. They start by sharing compelling snaps of beautiful destinations ranging from beaches to the Alps. They also share guest’s photos and stories as well"(Arnold, 2018, para. 15). As a result, Airbnb has created a "reputation for sincerity and creating great customer relationships" (Arnold, 2018, para. 15). Thus, Airbnb seems to do a better job of connecting with it's consumers than hotels. This means that consumers may begin to choose Airbnb over traditional travel accommodation, putting hotels of of business.

Despite this, it seems that Airbnb is not totally swallowing the hotel industry. This is because “for now, business travel appears to be relatively safe from the grips of Airbnb. Families and small groups of people, those are demographics that Airbnb tends to win from the likes of Marriott and Hilton” (Divine, 2016, para 24). So, if hotels are able to remain control of the business travel demographic, Airbnb should not be a threat . However, hotels should certainly watch their back. In addition, it’s more important now than ever for hotels to stay on top of trends and adapt to their consumers!

Sources

Arnold, A. (2018, January 24). Here's How Much Instagram Likes Influence Millennial's Choice of Travel Destination. Retrieved from https://www.forbes.com/sites/andrewarnold/2018/01/24/heres-how-much-instagram-likes-influence-millennials-choice-of-travel-destinations/#709f32fc4eba

Divine, J. (2016, November 2). Is Airbnb a Threat to the Hotel Industry?. Retrieved from

https://money.usnews.com/investing/articles/2016-11-02/is-airbnb-a-threat-to-the-hotel-industry

Investopedia. (2018). Sharing Economy. Retrieved from https://www.investopedia.com/terms/s/sharing-economy.asp