The travel and lodging industry has evolved into an undeniably exciting space. Rife with new technology, aesthetically impressive social media pages acting as travel inspiration for millennials and a rise in boutique accommodations. This change and ensuing competition are continuously on the horizon.
This competitive landscape stretches between hotels brands as well as between hotels and non-traditional accommodation models, such as Airbnb. With both service models existing within the same industry and catering to similar guest demographics, there is a wealth of experiential knowledge to be shared/gained as they strive to evolve and improve their respective offering(s).
Our industry first welcomed the inclusion of Airbnb in San Francisco, California in August of 2008. The online marketplace and hospitality service for people to lease or rent short-term lodging including holiday cottages, apartments, homestays, hostel beds (and more) has surged in popularity over the last few years. Capitalizing on the modern travelers' desire for a more unique experience, affordability and sense of adventure, Airbnb soon grew into a $30 billion business. As of this year, the company has recorded 300 million check-ins by guests across 4.5 million rental listings. By comparison, the world's biggest hotel company, Marriott International, has 1.15 million rooms.
We also must pay tribute to the growing appreciation for start-ups and entrepreneurial ventures, a dynamic which is supported by the open market in which Airbnb thrives. This style of marketplace allows for lower accommodation prices (as compared to some local rates at hotels) which are generally dictated by the natural ebb and flow of supply vs. demand. Since Airbnb is not directly responsible for any physical real estate, this is entirely possible and gives the hosts' complete control of their offering price and guests a plethora of choice.
There's also something to be said about the unique ecosystem that Airbnb provides, as guests experience direct communication with the homeowner before, during and after their stay. This relationship allows for a more personalized experience — within a metropolitan city it might give the guest a sense of home, and in a more exotic location, it might give the guest a taste of local culture.
These factors all play a role in capturing the interest of a wide range of travelers, from millennials to families, bleisure guests and more — a realization that may have acted as a rude awakening for some hotels. After all, it would be difficult for most hotel chains to rival the affordability, unique style and personalized ecosystem offered by Airbnb accommodations. And yet, as the company celebrates a decade of operation, we're realizing that they likely have just as much to learn from the hospitality industry, as we have to learn from them.
While a primary argument for the widespread popularity of Airbnb is likely, it's unique accommodation experience, this element of the business model can prove to be a detriment as well. Where guests are seeking a more boutique, relationship-based and adventurous experience, they still crave a predictable service offering. In other words, they want to know exactly what they're getting when they book their stay. While the company screens their host applicants and offers user-generated reviews, guests might find themselves wary of newer properties that may not have adequate pictures or reviews for the vetting process. Where hotels deliver a standardized service structure applied to every room/location, Airbnb accommodation quality relies entirely on the host. Within this (more unregulated) model, some hosts may go above and beyond, while some might cut corners while using the platform as supplemental income. Guest complaints could include host to guest communication breakdowns, non-adjustable thermostats, undesirable bathroom amenities, location-related safety concerns and more. There is also the issue of hosts with higher cancellation trends, or who discriminate against specific guests (for seemingly unjust reasons).
This is where the trouble lies, leaving Airbnb to take notes from the hospitality industry as they roll out a new program, Airbnb Plus. The new program entices hosts to apply for better promotion and higher rates but also demands they meet a 100-point checklist of hospitality quality (as verified with an in-person inspection by an Airbnb contractor). Airbnb Plus launched with 2,000 listings in 13 cities (Toronto included) but aims to hit 75,000 listings by year's end.
After all, there's something to be said about knowing exactly what to expect when it comes to your travel accommodations. Hotels have traditionally excelled in this regard, but are striving to catch up in the realm of guest personalization and property differentiation. Expanding the traditional hotel framework to include different lodging formats (including communal spaces for the more seasoned, authentic traveler), unique amenities, more genuine hotel to guest communication, self-service technology, and mobile optimization will prove to be imperative in the success of the modern hotel.
As we work to envision what the hotels of the future will look like, we would be daft not to learn from the Airbnb model. By understanding the ways in which Airbnb excels (and suffers), hoteliers can better conceptualize the ideal balance between the boutique travel experience, and one which is still entirely controlled and guaranteed.
Puzzle Partner Ltd.
157 Cumming Drive
Barrie, ON L4N 0C8
Alan E. Young is the President of Puzzle Partner Ltd. and co-founder of Next Big Thing Travel & Hospitality. Previously, Alan has held executive sales and marketing level positions with startup companies such as Newtrade Technologies, (acquired by Expedia), Hotel Booking Solutions (acquired by IBS Software) and TrustYou. Alan is past Chair of the Board of Directors of The OpenTravel Alliance and has been very involved with other industry associations most notably AHLA, HEDNA, and HTNG. With over two decades of experience in the travel and hospitality technology world, Alan specializes in helping innovative companies achieve winning performance and dramatic growth.