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The Impact of Airbnb on Hotel and Hospitality Industry: 5 Strategies for Hotels to Stay Ahead in 2024

Over the past decade, the hospitality industry has undergone a transformation in the hospitality industry driven by the rise of Airbnb.  What started as a concept of renting out an air mattress in someone’s living room has now expanded rapidly.

The impact of Airbnb on hotel and hospitality industry has led to significant changes in guest expectations, pricing models, and the very essence of what defines a memorable stay. This impact also brings the challenge of meeting the evolving demands of travelers who seek authentic experiences.

In this article, we will explore the impact of Airbnb on the hotel and hospitality industry. Provide recommendations, for hotel owners on adapting to this evolving landscape.

Understanding the Market and The Impact of Airbnb On Hotel and Hospitality Industry

Founded in 2008, Airbnb is a digital platform that allows individuals to rent out their accommodation. The genius behind Airbnb was not just in creating another accommodation platform, but in fostering a community-centric approach.

Hosts can share their spaces and, often, their lifestyles, giving guests a more personal, localized experience compared to traditional hotels.

Airbnb’s rapid growth wasn’t about providing a place to stay—it was about redefining the concept of “staying”. 

Through its platform travelers had the opportunity to immerse themselves in destinations like locals rather than mere visitors. This shift had an effect on the hospitality industry. Traditional hotels, once seen as the choice for accommodation now faced a digitally savvy competitor. 

Furthermore, the impact of Airbnb on hotel and hospitality industry went beyond competition; it altered customer expectations by introducing a desire for genuine experiences. Although this transformation posed challenges it also opened up possibilities for innovation and expansion, within the hotel sector.

Read more: Discover the Ultimate Hotel Growth Strategies To Increase Your Hotel Booking in 2024

Why Do Some Travelers Still Prefer Airbnb Over Hotels?

Do you know that approximately 60% prefer Airbnb over comparable hotels when going on vacation? Despite reporting similar levels of satisfaction with both types of lodging, Airbnb emerges as the preferred option for several reasons.

According to our analysis, there are 3 major reasons why travelers still prefer Airbnb over hotels for their stay : 

A Shift in Extended Stays Preference 

According to Boston.com, while a significant 73% of the 75 readers expressed a preference for hotels, there was an interesting nuance in their choices. Hotels, according to the respondents, are often chosen for shorter solo trips. 

On the flip side, for extended stays, especially those involving family, friends, or pets, Airbnb emerged as the preferred choice. The home-like ambiance, the possibility of having an entire place to oneself, and the flexibility offered by many Airbnb listings seem to cater better to these longer, group-oriented stays.

Airbnb’s Commitment to Enhancing User Experience 

This might be different in certain areas or countries, but despite some travelers leaning towards hotels for specific trips, Airbnb’s commitment to its users is undeniable in many places.

In an era where transparency is highly valued, Airbnb has introduced changes to make the booking process even more user-friendly and straightforward. A noteworthy feature now allows guests to view the total cost of their stay, inclusive of all fees (excluding taxes), right at the onset. 

an ui ux designer is designing the airbnb user experience because one of the impacts of airbnb on the hotel and hospitality industry is that airbnb has a pretty interesting user experience

This approach not only eliminates unpleasant surprises at the checkout stage but also aligns with Airbnb’s shift in its search algorithm. 

Instead of merely focusing on nightly rates, the platform prioritizes total price, ensuring guests receive value-for-money options.

Affordable & Authentic Experience

Travelers associate words like “authentic” and “affordable” with Airbnb, indicating that these are perceived strengths of the platform. In fact, a significant 77% of surveyed travelers believe that Airbnb provides a more authentic experience compared to hotels. 

Additionally, price is also mentioned as one of the top reasons why travelers prefer Airbnb. 

Affordability and authenticity would be the biggest factors contributing to the preference for Airbnb among travelers, even though they report similar levels of satisfaction with both Airbnb and hotel stays.

Read more: 9 Expert Tips for Exceeding Guest Expectations in Hotels to Create Unforgettable Stays

3 Major Impact of Airbnb for Hotel & Hospitality Industry

a man with orange hair is welcoming guests at a guesthouse, two women, one with black skin and curly hair wearing a pink dress and the other wearing a black and white polka dot dress, are talking about the impact of airbnb on hotel and hospitality industry

Since its inception, Airbnb has made waves in the hotel and hospitality Industry. Initially perceived as just another startup, it quickly grew to become a significant disruptor in the hotel and hospitality industry. But how exactly it’s impacting the hotel & hospitality industry?
Find out below : 

Competition and Market Share

When we discuss competition and market share, it’s evident that traditional hotels, which once enjoyed nearly unchallenged dominance in accommodation, have had their revenue streams disrupted. 

Especially in sought-after tourist locales, the traditional rhythm of hotel bookings has felt the pulse of Airbnb’s growing presence. This shift isn’t just about numbers; it’s about variety. With Airbnb, travelers can opt for anything from a cozy room in someone’s home to an opulent villa overlooking the sea. This extensive range of choices has somewhat diluted the unique selling point hotels once held solely based on the type of accommodation.

Pricing Pressures

The intricacies of pricing in the hospitality industry have also undergone a transformation. Unlike the fixed tariffs of yore, many Airbnb hosts have embraced the concept of dynamic pricing. This means adjusting rates based on demand, often leading them to offer competitive prices that can sometimes undercut traditional hotel rates. 

This pricing challenge has further implications. When travelers can access entire homes on Airbnb at the price of a single hotel room, it exerts pressure on hotels to enhance their overall service quality and amenities to justify their price tags.

Evolving Customer Expectations

With Airbnb setting new standards, customer expectations in the hospitality industry have evolved. Modern travelers, driven by the desires of millennials and Gen Z, are on a quest for genuine, local experiences. 

The ability to ‘live like a local’, which Airbnb markets brilliantly, has nudged hotels to re-strategize their guest engagement. Moreover, the personalized touch that many Airbnb hosts seamlessly offer, from invaluable local insights to delightful homemade meals, has raised the bar in guest-host interactions.

Read more: How to Optimize The Effective OTA Strategy for Hotels in 2024?

5 Essential Strategies for Hotels to Counter the Airbnb Wave

a female receptionist wearing glasses and a light blue shirt is giving the room key to a guest and is greeted by a man wearing a suit one of the impact of airbnb on the hotel and hospitality industry

As the popularity of Airbnb continues to grow, hotels are facing increased competition in the travel industry. 

However, when it comes to business travelers, hotels still remain the preferred choice. In fact, a survey found that 68% of business people prefer staying in hotels when traveling for work. This presents a great opportunity for hotels to capitalize on the business travel market and counter the Airbnb wave. 

Find out 5 essential strategies that hotels can implement to attract and retain travelers: 

Strategy 1: Focus on Providing Unique Services and Accommodations

Hotels have a distinct advantage over Airbnb when it comes to providing services and accommodations tailored to the needs of business travelers. Features such as 24/7 front desk services, on-site fitness centers, room service, and complimentary breakfasts are highly valued by business people. 

By emphasizing these amenities, hotels can create a unique selling proposition that sets them apart from Airbnb and other vacation rental services.

Strategy 2: Build Trust and Reliability

Business travelers prioritize reliability and trust when choosing accommodation. Hotels have an advantage in this area as they have established a reputation for providing consistent quality and service. 

By maintaining high standards of housekeeping and ensuring a seamless check-in experience, hotels can build trust with business travelers. Additionally, offering free WiFi, which is a top priority for 85% of business travelers, can further enhance the perception of reliability.

Strategy 3: Cater to Business Travelers Needs

Understanding the specific needs of business travelers is crucial for hotels to attract and retain this customer segment. Apart from reliable accommodation, business travelers are looking for amenities that allow them to focus on their work or unwind after a busy day. 

Hotels can consider offering business centers with printing and faxing facilities, comfortable workspaces in rooms, and quiet areas for relaxation. By catering to these needs, hotels can create a conducive environment for business travelers.

Strategy 4: Emphasize Convenience and Efficiency

Efficiency is key for business travelers who are often pressed for time. Hotels can differentiate themselves by offering convenient services such as free parking, which is a priority for 70% of business travelers, and express check-in/check-out options. 

Additionally, providing shuttle services to and from airports or business districts can further enhance the convenience factor. By streamlining processes and minimizing any friction points, hotels can make the stay of business travelers hassle-free.

Strategy 5: Leverage Online Presence and Reviews

In the digital age, online presence and reviews play a significant role in influencing travelers’ decisions. Hotels should invest in search engine optimization (SEO) and digital marketing strategies to ensure their visibility in online searches. 

Encouraging satisfied business travelers to leave positive reviews on platforms such as TripAdvisor or Google can also help in attracting new customers. By actively managing their online reputation, hotels can showcase their strengths and build credibility among business travelers.

What We Can Learn From This?

The impact of Airbnb on hotel and hospitality industry is undeniable, and it emphasizes the need for traditional hotels to adapt and innovate in response to changing guest expectations. While Airbnb has presented challenges, it also offers opportunities. Hotels can learn from Airbnb’s approach by focusing on personalization, providing unique experiences, and utilizing tools to enhance guest satisfaction. 

Embracing change, understanding the evolving needs of travelers, and maintaining a commitment to exceptional service are crucial for traditional hotels to not only coexist with platforms like Airbnb but also thrive in this dynamic marketplace.

One notable correlation that has emerged is the relationship between Airbnb’s rental prices and luxury hotels’ revenue per available room (RevPAR). 

It has been observed that for every dollar increase in the average Airbnb rental price, luxury hotels experience a $0.651 rise in RevPAR. This trend suggests that as luxury Airbnb units become more expensive, luxury hotels benefit, possibly due to guests perceiving greater value or returning to traditional luxury accommodation.

Frequently Asked Questions

When clients require assistance, Airbnb provides quick and cutting-edge communication channels through an omnichannel experience.

The analysis shows that Airbnb plays a dual function in the accommodation market. While it complements the demand for hotels, it competes with residents in the housing market and increases rental prices of apartments of all sizes.

Since its launch in 2008, Airbnb has disrupted the traditional hotel industry by offering travelers a cheaper and more authentic alternative to traditional hotels. However, it has also faced numerous legal and regulatory challenges in many cities and countries around the world.

Compete with Airbnb by designing unique experiences for your guests! 

Connect with our hospitality consultation team today

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