The hospitality industry is a tradition-focused, slow to move behemoth that for centuries has been providing an undeniably necessary service: beds for travellers. Most hoteliers even today will argue that it is an art, rather than just business.
Hotels have always been resistant to change and to globalisation. The arch-enemy of the 90s were the online travel retailers, all hotels had to have their own-managed web-booking engines. It was hotels against the traditional travel agents of the 80s all over again, only, this time in the virtual space.
And just as the dust had finally settled at the beginning of the century, and Expedia, Travelocity and the likes officially became part of the booking landscape, Tripadvisor arrived to democratise the way travellers shared information. We’re entered an economy dominated by the rise of the Millennial generation, who instead of buying, rent, borrow, and share everything online, Tripadvisor became an instant success.
The next logical step: a combination of Expedia, lastminute.com, and funky social media like, Facebook, Instagram, and Google+; everything by the individual for the individual. Power to the people and a peer-to-peer sleeping service – that is the space that Airbnb came to fill. With all the high tech and more than 10 million nights booked, it soon became the new talk around town.
The war started as always with pricing in the big urban hubs, people were happy to compromise a bit, if they were going to pay less for a great location in the middle of New York. Airbnb did that and more. It created additional opportunities. It is perceived to be cheaper than a traditional hotel in the same location, and perception counts.
However, where it mostly built its customer base is through the offering of a more personalised stay (it is someone’s home after all) and the local experience, everything that the art of hospitality has been claiming as its own for centuries.
Where does that leave hotels and especially the small independent, boutique or mom-and-pop properties that face their biggest challenges on distribution? Expedia is too expensive for small hotels, and associations like the Leading Hotels of the World are not always the right option. Everybody knows it, going online is not only unavoidable, it is essential, but just having a website does not a customer base create.
Growth hacking (basically new and innovative ways to market the same product) is a cheaper and more effective way of getting visibility and customers. Airbnb, does exactly that. It operates on a brokerage model, and acts as the intermediary between the demand and the supply.
What is then stopping supply, such as small and niche operators from signing up with Airbnb instead of complaining about it? Airbnb takes a 3% cut from the renter and a 6% to 12% cut from the traveller, this is much cheaper for hotels than any other booking platform with equivalent worldwide reach.
Airbnb is here to stay, and it has a lot to offer to everyone. Small boutique hotels around the globe, Airbnb is not a new competitor to worry about, it’s your new virtual friend! Embrace it and join the viral revolution, who knows, you might even like it.
About the author
Alexandra Charalampidou is the Managing Director of the Bridge.Over Group, a boutique strategy consulting firm dedicated to solving business challenges for hospitality visionaries across the globe.
