Airbnb is here to stay
There’s been much hand-wringing in hospitality over the growth of Airbnb, VRBO, and similar services that let people rent their residences directly to travelers. Some, especially the larger hotel chains, are reacting by pressuring cities to pass laws that stymie these businesses’ growth—through tax strategies—or develop regulations to shut down these type of rental services.
But the sky hasn’t fallen. In fact, both hotels and Airbnb are doing well. Yes, some segments, especially extended-stay brands, have been harder hit (60% of Airbnb users stay a week or longer, 25% for a month). And when the economy slows—and it will—hotel occupancies will drop, and Airbnb, etc., will thrive.
What these businesses demonstrate is that hospitality is, at heart, a local business, and the market has geographic gaps that chains cannot fill quickly enough, if at all. Venice, Calif., for example, has the most Airbnb rentals per capita: 12.5% of all housing units as of March 2015. Why? Because Venice is a wonderful place to visit, but there aren’t many hotels there.
Airbnb etc., also show that travelers’ priorities are evolving. The things that make a hotel stay expensive—e.g., bed turndown, room service, upscale fixtures and finishes—are things that many, especially the all-important Millennial set, don’t care so much about. They’d rather be out having experiences and will make their own beds (or not).
There will always be business-focused travel needs that hotels satisfy best, but the hospitality world is learning how to evolve along with its customers. Some brands are expanding into management, partnering with condo buildings to offer an Airbnb-like option. Others are shrinking room sizes and expanding common areas, creating those third spaces for socialization that the plugged-in generation loves.
The hotel industry, from global chains to regional players, isn’t going away. But technology and demographics are combining to drive change at an ever-increasing pace. And those hospitality brands that don’t react quickly enough to understand these changes, how they affect their core business, and how they can address it, will become irrelevant.