How hotels can use branding to win against Airbnb
By: Scott Burkhead
Hotel problems are about to get bigger. Google recently announced it is testing a similar concept to Airbnb in several cities. And while this probably concerns the Airbnb folks, it is the conventional lodging operators that should be losing sleep.
Three million travelers in the past year rented other peoples’ homes instead of staying in a hotel. With an average stay of three days, that is nine million room nights and at an average cost of say, $86 per night, the tab is approaching $1B. And even with the global accommodations market exceeding $555-billion annually, this is beginning to look like real money.
One hopeful sign for hotels is that while Airbnb use is growing among leisure travelers, the lodging industry, according to Susquehanna International Group (SIG). says that 70 percent of room nights sold in the U.S. are generated by business travel.
Probably though, the industry should not feel much comfort just because of their share of business travel. Morgan Stanley estimates that by 2018, overall lodging occupancy in the U.S. and Europe will fall to 66.8 percent from 67.6 percent in 2016. They also believe Airbnb will continue to be a drag on hotels’ revenues in the years to follow as hotels lower nightly rates in order to compete for customers.
The hotel industry’s first response to this threat is to fund research to support legislation to constrain shared lodging services like Airbnb. Their efforts include lobbying politicians and state attorney’s general to reduce the number of Airbnb hosts, arguing that Airbnb is building business with people who are quietly running hotels out of residential buildings.
Legislation may be a good idea but it does remind us of the story of the little Dutch boy with his thumb in the dike. The shared economy of which Airbnb is a leader is not a short-term trend, it is a worldwide paradigm shift in the business of lodging.
But, there are ways hotels can stop the erosion of revenues. In this position paper, you’ll learn two different strategies, either of which can be the foundation for branding your hotel to compete against any threat – not just to survive, but to thrive.
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