Four ways hotels can better compete against Airbnb

four ways to competeThere has been so much debate over the impact of Airbnb to the industry following CBRE’s research reports showing $2.4Bn spent on lodging by the company’s users in the past year. Hotels have been quick to send out a mixed message, some re-affirmed and others denied the impact on their bottom line. 

While for some the jury is still out on whether Airbnb is truly a threat to the hospitality industry or not, there’s no question that with two million room listings in 34,000 cities across the globe, Airbnb has cemented a new category of hospitality for many travelling consumers. It is without question that the hotel industry could pay closer attention to the sharing economy and learn from this new category.

Typically disruption occurs when a new marketplace is created that has a lower cost base than the incumbent, and Airbnb’s story is no different. While the peer-to-peer lodging marketplace is certainly a value alternative when seeking lodging, hotels still provide better amenities, service and standards that are not matched by Airbnb. History (and most recently, a TrustYou study) has shown that consumers are more than willing to pay top dollar for a better  experience. While the traditional elements of hospitality are still where hotels can truly shine and offer service that Airbnb today lacks from its offering, hotels can still learn a tremendous amount from the giant technology unicorn. The problem is that the hospitality industry has been fairly staid and slow to adopt innovative technologies to improve the overall experience and operational execution.

In a mobile and technology-driven world, consumers demand a customized, personal experience that they can also manage through their smartphones, tablets and computers. A Magnani Caruso Dutton study found that 70 percent of travelers indicated that a hotel’s website, app and other digital tools impact their decision to book a stay. Only a small percentage of hotels offer digital tools. The gap can certainly close to enhance the guest experience.

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Equally important, when competing with this new market-place that has no fixed costs, is that hotels can also use technology to improve their operations. There is so much room to lower the cost of running a hotel. Interestingly though, most hotels hire a Revenue Manager whose sole goal is based on revenue return, leaving the bottom line management to the General Manager.

To remain competitive and continue to provide guests and staff an experience that will improve the hospitality experience, hoteliers can ditch some of their old-school ways for more digital, forward-thinking strategies.

Here are a two technical ways and two nontechnical ways hotels can better position themselves to compete against Airbnb.

Tech 1: Turn your hotel into a data platform – map the entire guest journey

While Airbnb is the third-party provider in the peer-to-peer exchange, they do an excellent job at keeping close tabs on the entire user journey on both the guest and Airbnb side. On their site, users go through the discovery phase, they book and complete the stay, and finally, the host and guest leave their reviews of the experience. Since every phase of the user experience is completed through Airbnb’s channel, they’re able to leverage the data to improve the guest experience, build their product and find new growth opportunities. Their effective usage of data has catapulted them to a $25 billion valuation, millions of users around the world, and has left valuable lessons for the rest of us for thinking about data.

Hotels are still running so many analog communications and fragmented technologies to manage their operations that this total data driven understanding of the entire guest journey is a pipedream for most. Some groups can spend hours simply downloading and compiling their data from all various sources while others recognize that half of the guest’s journey is a blind spot to them, relying on effective staff training to ensure a good experience.

Hotels need to be able to run a cloud based communication layer across every department, giving them a complete view of everything their guests are asking for irrelevant of the format of the ask (phone, email, web, in person). By unifying all guest to staff and staff to staff communication into one platform, hotels would be able to understand everything their guests are doing from booking to checkout.

Tech 2: Use this platform to gamify good behaviours through self-governance

What is incredible about Airbnb (and Uber for this example) is the ability to scale their supply side without such a big overhead cost in doing so. One of the primary reasons for this being possible is the notion of self-governance that exists due to the ratings system. As each host is rated after every stay by the consumer, a poor experience will very quickly be the death of a host’s ability to attract more customers. This ratings process creates a system-wide level of self-governance that leaves Airbnb with little work to do on managing the quality of their hosts.

Relating this to a hotel is currently impossible. Outside of a rude staff member whose name gets taken down and complained about, hotel staff currently perform an unrated service. We don’t see staff getting 1-5 stars on cleaning the room or delivering a burger. However, once Step 1 happens connecting all the services in a hotel, then Step 2 is a real possibility.

This microscopic level of reviews would gamify hotel employees to consistently outperform expectations. No longer would a General Manager see a negative trip advisor review and spend a few hours trying to understand the root cause. If this was enabled, a GM would know before the guest had even left a property how their experience was unfolding and be able to take pro-active action.

Non Tech 1: Be authentic – move beyond just marketing the hotel room and amenities

We asked a 26 Year Old Female Traveller – The Millennial – “How do you choose where to stay when you travel?”

Her answer: “I usually reach out to friends or family for recommendations. I don’t do hotels. I like to stay with friends, or friends of friends, couch surfing style. I do Airbnb only if I’m with a group.”

Every Airbnb experience always feels both unique and authentic. Every property, room and stay is unique to that specific area (as much as their local host is).

Hotels were traditionally built for consistency. A Hilton was a Hilton everywhere in the world. Consumer demand for this has shifted. They now want new experiences that make them feel part of a foreign culture. Hotels can be just as locally aware and authentic as an Airbnb apartment. Understanding your neighborhood and supporting it with everything from design and exceptional service offerings, to having staff who know what is around them and have actually experienced it firsthand, is paramount to  making a guest’s experience today.

Some hotels can use technologies to provide the local expertise. My suggestion, though, is to give your staff the time and recognition to try everything around your locale. Most restaurants I have come across in the Concierge Anonymous community would gladly offer a free meal if it meant a future recommendation to your guests.

Non Tech 2: Service – sell your strengths as an industry

We asked a 34 year old Hotel General Manager – The Hotelier – How do you choose between hotel and airbnb when you travel?

His answer: “I always go for a hotel. You have the service, the security, the ease of use. Really it’s the service. I like to have my room cleaned if I am paying for it.”

Hotels have full time staff working around the clock to make a guest’s experience what it is and until now they have been competing with each other and only each other. This is no longer the case. It’s time the industry starting selling itself and not just against each other but relative to the sharing economy.

It is no secret that a few hotels are testing selling their supply on Airbnb. It is actually my opinion that Airbnb, as a market place, has an opportunity to challenge all booking channels for actual hotel bookings (yes, not just rentals from others). Think about it. As a guest going on vacation, first you look at hotel prices and now second you look at Airbnb prices (or the other way around). Either way, you are looking at both markets for comparison, so why wouldn’t Airbnb allow this in the same marketplace to keep consumers?

The point is that hotels are competing as an industry against the sharing economy rooms, so it’s time to start selling what was previously unsaid. Tell your guests how you ensure their safety and security with your security staff. Highlight your cleaning policies that check for bedbugs (I know it is uncomfortable to say the word “bedbugs”, but that is exactly what might get you a booking bedbug-scared guest!).

Most of all, show off your staff. When someone books an Airbnb, they know their host. When someone books a hotel, they have no idea who their concierge is. The concierge role is similar to the hosts, so why not give them recognition and promote the individuals you are paying to be the local host.

We asked a 64 year old Male professional – The Businessman – How do you choose between a hotel and airbnb when you travel?

His answer: “Hotels are predictable in what you get and what you can expect, and in particular, they are staffed 24 hours per day if you need it. With Airbnb, you are left to sort things out as if you lived in the neighborhood, but of course you don’t, so finding things takes longer and there is no immediate recourse if something doesn’t suit.”

“I don’t relish living in the houses of people I don’t know, whose cleanliness I can’t judge, and where the neighbors might be troublesome. Does this make me old-fashioned?”

Our retort: “No sir, it does not. It makes you a valued hotel guest and one that the we hope the industry can hold on to for a lifetime.”

About the author

Alex ShashouAlex Shashou, President & co-founder of ALICE. He received his Bachelors Degree from The University of Pennsylvania, Wharton Business School with a dual concentration in Finance and Operations and Information Management. After graduation, he took a position with Goldman Sachs in the Equity Sales division in New York, leaving in Sept 2013 to pursue ALICE full-time. Born in London, Alex grew up in the hospitality industry with his family operating 90 hotels in the UK across three hotel chains. Follow him on Twitter at @ashashou.

Tags: 2016 in review, airbnb, technology


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