By: Larry Mogelonsky
Member of Laguna Strategic Advisors
Despite what many have dismissed as a mere blip on the radar, Airbnb is a force to be reckoned with and we have yet to see just how widely it will impact our livelihoods. But before we discuss this disruptive company and its effects on the hospitality industry, let’s look to Uber and how it is changing the way we utilize vehicles for hire.
Starting out as a niche taxi service provider reliant on smartphone geolocation technology, it’s now far more than just a trendy accessory for millennials living in San Francisco or Brooklyn. Founded in 2009, it has already expanded into over 200 cities across the globe and a $40 billion valuation to boot. Even with an abundance of controversy pertaining to its surplus charges at peak periods or its purported disregard for user privacy, the fact remains that Uber is now a household name across multiple demographics.
Uber is entrenched in our minds as a viable alternative to the traditional taxi service and many see it as an outright industry usurper. Moreover, its business model fits the chic modern social currency dynamic whereby users can rate drivers and, vice versa, drivers can rate users. With this transparent system, it’s easy for consumers to be ‘converted’ and use Uber for all their transportation needs. This explains why the company has grown so quickly and why it will continue down this path.
The vehicle for hire industry underestimated Uber by not adapting to the new paradigm of internet and mobile-based transactions, and my fear is that we are making the same mistake with Airbnb.
It is not only a hotel service for backpackers or those looking for esoteric accommodation experiences. Not anymore at least. As new listings come online, the doors are opening for more and more key population groups to find something they want on its website, even in areas previously deemed ‘off limits’ like traveling for business or the ultra-luxury market.
True, Airbnb has been a household name for awhile now, but it is only just starting to supplant its ‘millennials only’ image. Along with the bargain hotel prices provided by the OTAs, this online service has the worldwide demand for travel by making it more accessible, but soon it will target all of the same consumer types that we depend on to stay in business.
And it may already be too late to stop it! But before you go back into a defensive stance, let’s gather our forces and see what we can learn from Airbnb. From this, maybe we can fashion a suitable approach both from a macro (i.e. brand) and micro (i.e. property) perspective as to how we can best fight back.
Airbnb’s Website Bests Any Hotel
I know you love your website, and I suspect that you’ve spent tens of thousands on it. But, frankly, it sucks compared to Airbnb’s web venture. Not only does it have a booking engine that shows you all upfront costs, but it also fluidly integrates comments from its own user data. The commentary and description of the rooms being sold reads like a storybook by people who truly care. They are not selling; they are trying to make your travel more interesting. Moreover, the presentation is seamless on mobile, tablet or a laptop computer.
Social media was meant for Airbnb, or is it the other way around? When you are contemplating booking a room, you don’t research your options through some third-party gateway such as TripAdvisor, but directly with members of the Airbnb community – both the users and the purveyors of the product. This provides a level of confidence in the buying decision that is very difficult to match. The site even reports on how long it took for the buyer to post the rating. Confidence is assured.
Ever visit a city for the first time? Not sure of where you are staying relative to where you want to visit? Airbnb integrates a map function directly into every search. You can see all participating properties and instantly select based on availability and location. This makes Airbnb both intuitive and logical. You end up searching the full range of accommodations just for the fun of it, especially when you browse in the $1,000+ range.
Lastly, Airbnb reveals the complete rate breakdown: room, cleaning fee and commission. We all like to feel we are getting a bargain and with AirBnB you see the net price along with all add-ons. Imagine if your hotel site showed the net rate, then the housekeeping fee and the third-party commission.
Dispelling the Myth
Worrisome for the luxury market is Airbnb’s wide range of product offerings. Yes, you can still find some low-end rooms to book. In fact, the low to middle ranges – the supposed ‘bottom feeder’ customers – comprise most of what’s available. But Airbnb’s accommodations stretch up to multi-bedroom homes and into some of the world’s most exclusive locations. Heck, you can even book luxury treehouses on the site!
It is their premium segment that will eventually make significant inroads into the luxury hotel market. If a cardinal rule of the upper echelon of travel involves the creation of vibrant and exceptional experiences for guests, then Airbnb has it in spades. Each selection is in essence ‘unique’ as it isn’t a part of a branded hotel but contains the personal styling of each individual landowner or renter.
Along these lines, consider the baby boomer market. Airbnb might be a table name for them, but it still holds the perception as a forum for said bottom feeders. As this demographic looks for more profound experiential vacations to satiate their ample free time made possible by retirement, Airbnb offers a ‘badge-generating’ alternatives to hotels. Why stay where everyone else stayed? Airbnb not only provides a truly unique travel experience, but also bragging rights to boot.
So What Can We As Hoteliers Do?
First and foremost, study Airbnb’s website and business model. Learn all you can about it in a general sense and, more specifically, the properties that are being offered in your vicinity. Understand the price points that you are competing against and see where you stand. I am not advocating that you change your pricing structure or your amenity packaging. Rather, I am encouraging you to understand this new competitor and treat it with the same respect and acknowledgement as other properties in your comp set.
Second, take a good, hard look at your own website. Try to understand how it ‘talks’ to your audience and the convenience factor. See how friendly it is to use and navigate as well as how many clicks it takes from arrival to confirmation of booking. Torture test it on a mobile device. Additionally, ask the same from your web agency. Encourage them to learn from Airbnb and make recommendations as to how you can enhance your site’s profile and sociability. Then run, don’t walk, to properly fund the necessary work to make your site more user friendly. This may not be a quick fix, but it is definitely worth it.
Next, get involved with your local hotel association and make sure all the other hotels in your constituency are participating as well. The issues pertaining to Airbnb are very political, meaning that tax dollars are at stake. Hoteliers really want a fair share: why do individuals checking into your property pay local and state taxes, yet those checking in with Airbnb do not? What about local tourism levies, health, insurance, fire and safety code issues? And does the Airbnb location(s) being offered violate any municipal codes? Meet with your local representatives. Calculate then identify the losses in tax revenues; ditto job losses. Remember, you’re not arguing for some sort of tax reduction or special favor, only an equal treatment for everyone in the accommodations sector.
Airbnb is Going to Improve
It ain’t going away so deal with it. They’ve brought aboard Chip Conley as an advisor. Best known for founding Joie de Vivre Hotels, expect much more from them in terms of their product offering, public relations catered to the boutique luxury consumer. They already have some outstanding rooms available and will increasingly become an important factor in all markets and segments.
This push for the high end is compounded by the launch of the Airbnb’s quarterly magazine, Pineapple, which released its first issue in November 2014. Edited by acclaimed art curator, Hans Ulrich Obrist, printed with barely any distracting advertisements and showcasing only three prime cities to focus its awareness profile, this new venture will soon be a strong adjunctive to the company’s luxury-seeking strategy.
With all this, it’s all but impossible not to view Airbnb as a somnolent hospitality giant about to scarf down its first coffee of the day. Sure, it’s not for everyone. While you may be appalled by the concept of buying your hotel room in this fashion, millions are finding it increasingly acceptable. And these are the people who will not only encourage others to give it a try, but they will make it part of a habit-forming behavior.
Aside from what I’ve addressed above, there are still numerous ways to fend off the growing Airbnb tide. If you’re interested we can discuss them further.
Originally published in Hotel News Now