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Hotel Industry vs. Airbnb: How Airbnb Has Changed The Hotel Industry

If you’re running a hotel, you’ve probably thought about how Airbnb has changed the hotel industry. You’re not alone – hoteliers across the globe are wondering how to keep up with the popular home-sharing platform. Airbnb has definitely had an impact on hotels. However, the effect is a bit more complicated than you might initially think. In this article,  we’ll explore the key differences between hotels and Airbnb, how those differences have affected hoteliers, and what hoteliers can do to keep up with the competition.


Key Differences Between The Hotel Industry And Airbnb

So first, let’s discuss the key ways in which the hotel industry and Airbnb differ. These differences are what have allowed Airbnb to make such inroads into hotels’ business.

  1. Lodging: While hotels offer rooms with public areas like lobbies, restaurants, and pools, Airbnb offers private homes and apartments. Though some Airbnbs only offer a room in a house shared with other guests or tenants.
  2. Location: Hotels are usually located in cities near tourist attractions, while Airbnb properties can be found in both city and suburban areas.
  3. Price: Because hotel rooms come with many amenities, they are typically more expensive than an equivalent Airbnb rental.
  4. Atmosphere:  Hotels tend to have a more corporate feel, while Airbnb rentals can provide a cozier, home-like experience.
  5. Guests:  Hotels usually have a higher percentage of business travelers, while Airbnb has a mix of pleasure and business travelers. Also, since hotels are public, they usually have hundreds of guests at once, while Airbnbs are far more private.


How Has Airbnb Affected The Hotel Industry?

As you can see, on paper Airbnb has much to offer travelers that hotels do not. So it’s no surprise that Airbnb has been growing in popularity, to the detriment of hotel bookings. In fact, a report by CBRE found that for every 1% increase in Airbnb listings, hotel revenues decline by 0.018%. Here are some specific ways in which Airbnb has affected the hotel industry:

Reduced ADR and Revenue

Airbnb has been a major force in reducing hotel Average Daily Rates (ADR) and revenue. In response to the threat posed by Airbnb, hoteliers have been forced to lower their prices in order to stay competitive. This price competition has led to a decline in hotel revenue of about 1% for every 2% increase in Airbnb listings.

A Shift From Pleasure To Business Travelers

People traveling for pleasure or on vacation are more likely to choose Airbnb over a hotel. That’s because Airbnbs are more private and offer a cozier atmosphere. This means that the hotel industry has been shifting from catering mostly to pleasure travelers to mostly business travelers. In fact, hotel bookings from business travelers increased by 5.7% in 2016, while bookings from people on vacation decreased by 3%.

A Change In Reputation

Airbnb has also affected the reputation of the hotel industry. That’s because when people stay in an Airbnb, they’re more likely to have a positive experience than if they stayed in a hotel. In fact, according to a study by Cornell University, people who stay in Airbnb rentals rate their experiences an average of 4.6 out of 5 stars, while people who stay in hotels only rate their experiences an average of 3.9 out of 5 stars.


How Airbnb’s Reputation Is Shifting

But it is important to note that in the past year or two Airbnb’s reputation has been shifting negatively. That’s primarily because of two factors:

Increasing Prices

As Airbnb has become more popular, prices have been rising. In fact, the average nightly price of an Airbnb rental in the United States increased by 19% from 2016 to 2017. In many cities, Airbnbs are becoming just as expensive as luxury hotels but with fewer features. And as prices continue to increase, people are becoming less satisfied with their Airbnb experiences.

Demanding Hosts 

Many people have reported their crazy stories about their Airbnb hosts on social media. Hosts are becoming increasingly demanding, making ridiculous requests such as asking their guests to act as housekeeping before leaving the property. And if guests don’t comply, they’re at risk of getting a bad review, which could affect their ability to book future Airbnb rentals. This is rarely a concern for guests that book hotel rooms.

Overall, while Airbnb has been a major force in the hotel industry, its reputation is beginning to suffer. And as hotel bookings increase and Airbnb prices continue to rise, we may start to see a reversal in the trend of people choosing Airbnb over hotel rooms.


How Hotels Can Remain Competitive Against Airbnbs

Knowing this, hotels can take advantage of the situation by focusing on the following areas:

  • Offering more unique experiences that cannot be replicated by Airbnbs, such as hotel spas, restaurants, and gyms.
  • Focusing on business travelers by offering more business-friendly amenities such as in-room desks and free Wi-Fi.
  • Creating a more personalized experience for guests by training employees to provide top-notch customer service.
  • Offering discounts and promotions to lure people back to hotel rooms.


Final Thoughts

While Airbnb has been a major disruptor in the hotel industry, hotels can still remain competitive by focusing on offering unique experiences and catering to business travelers. However, it is important to keep an eye on Airbnb’s reputation, as it has been shifting negatively in recent years. Hopefully, this article gave an insightful and educational view of how Airbnb has changed the hotel industry!