Airbnb made a lot of noise at its recent annual conference for hosts and guests. The announcements by Airbnb affect all hotel operators, marketers and revenue managers and should be the topic of discussion at upcoming marketing and operations strategy sessions.
1. Trips and Places
At its host meeting, the sharing economy site launched two new online products—Trips and Places—aimed at helping guests maximize their travel experiences, or as the company slogan says, “live there.”
Trips is a tours and activities planning function, while Places provides curated recommendations for restaurants, bars, events and meet-up locations near Airbnb host locations. The company also hinted at a future foray into booking of airlines, car rentals, restaurant reservations and more.
The new services cut into what has been a traditional role of hotel concierges: assisting guests in navigating the city or town they find themselves residing in for a day or two. And while Baby Boomer guests might still want real-live concierges to help them, millennials and the young-at-heart are happy to have the kind of digital assistance Airbnb promises.
2. Airbnb goes old-school marketing
Airbnb is a child of the Internet, but one of the company’s latest marketing move is decidedly old school. With the backing of publishing giant Hearst, the company launched Airbnb Magazine, a print publication that in conjunction with its Trips and Places initiatives could further position Airbnb as a lifestyle brand rather than just a website to book alternative accommodations. Revenues from ad sales is another presumed benefit of the venture.
Airbnb CEO Brian Chesky introduced the maiden issue at the company event, with two more planned for publication in 2017. The 32-page debut issue includes insider information curated from Airbnb hosts in southern California.
It’s not the first time Airbnb attempted a print publication. In 2014, it launched Pineapple, a similar magazine-style tool that might have been ahead of its time and was quickly and quietly abandoned.
3. Should hotels join the platform?
A small but growing number of hotels (mainly independent and small properties) have begun to list their inventory on Airbnb. For the most part, these properties aren’t using the site as a primary distribution platform but as a way to supplement their business.
The reasons are obvious: The 3% processing fee Airbnb charges hosts is much lower than any OTA commission; Airbnb continues to grow and is becoming viewed as a legitimate business model; and some hotel industry executives, including Best Western CEO David Kong, see the potential in partnering with the site.
Kong’s philosophy is that Airbnb could soon dominate the accommodations industry so it makes sense to join rather than fight. While he isn’t ready to become bosom buddies with the sharing economy, he believes there might be a first-mover advantage to aligning with this sector, if for no other reason than to blunt the costly relationship the hotel industry has with traditional OTAs.
It might make sense in the future for more hotels to place their inventory on Airbnb instead of OTAs. Someday, Airbnb could become the Walmart of travel, the store in which every retailer wants its inventory to be stocked.
4. An OTA in the making
According to Hitwise data, over the last three years visits to hotel aggregators such as Booking.com and Hotels.com are down 7.9% even as Airbnb visits have soared. The question is what happens to OTAs (and the hotels they represent) if Airbnb continues to surge and demand for all accommodations tumbles.
In that scenario, it’s easy for Airbnb hosts to slash their rates to attract customers. They don’t have the fixed and variable costs that hotels face and could become an even more formidable competitor to hotels, especially in markets like New York City that have high rates and high cost structures.
While Airbnb represents a major challenge for traditional hotels, its expansion into services beyond accommodations makes it more of a competitor to the OTAs and Google, all of which want to be one-stop-shop hubs for travel.
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