How Airbnb Is Changing Today’s Hotel Business Model
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The rise of Airbnb and similar services is sparking innovations in the hotel business model, as companies adapt to appeal to new demands of travelers.
The rise of the sharing economy, coupled with technology and consolidation, is obvious, even if the degree of its influence isn’t clear yet. It comes with a business model that hotel operators are watching closely to learn from as consumer preferences shift.
How can hotel operators keep up with the sharing economy and the changing marketplace? Here are some examples hoteliers can learn from.
The Sharing Economy
In June 2017, eMarketer estimated that 56.5 million people would use a sharing economy service at least once last year. That’s a higher figure than previously projected due to a stronger-than-expected uptake of both home- and ride-sharing services like Uber and Airbnb. The number of sharing-economy users is expected to continue rising, with Airbnb and Uber being the most significant drivers of growth.
Airbnb isn’t the only home-sharing site, but it’s no doubt one of most popular. It was founded in 2008, and more than 200 million guests have arrived at Airbnb listings worldwide since then. The company currently has four million listings across more than 191 countries.
A 2016 study by CBRE Hotels found Airbnb’s presence in key U.S. markets growing rapidly, with lodgers spending $2.4 billion.
People aged 60 and over are the fastest-growing demographic of “hosts,” with more than 200,000 of them listing accommodations on Airbnb.
How Hotels Respond
The alternative model and shift in consumer preferences make a clear mark on the traditional hotel business model.
“Some of the executives in the industry aren’t sure if Airbnb is really hurting the industry too much, because the industry has been performing so well,” said Jeff Weinstein, editor-in-chief of trade publication Hotels, to The Atlantic. “But at the same time, they recognize an alternative is emerging.”
Weinstein noted hotels are becoming more experiential in the design of the space and the localization of amenities, such as locally-sourced food for the restaurants.
One such example is the debut of Moxy London Excel, a boutique-hotel concept for the next-gen traveler. The hotel joins eight global destinations — including Munich, Milan, Berlin and New Orleans — and is a part of Marriott International’s experiential hotel brand.
Communal engagement is at the center of the experience. In the lobby, guests are invited to relax, pick up a book from the Moxy library or catch up with friends. They’re also encouraged to take a selfie in the photo booth-inspired hotel elevators, complete with props.
- Many consumers value experiences over traditional accommodations. Airbnb offers activities led by locals and lists more than 3,100 experiences in more than 40 cities.
- Millennials and foodies are leading the charge, with strong participation from people under 35 and guests who express interest in the “food & drink” category.
- Hoteliers need to “learn from what we’re seeing evolve,” said Mark S. Hoplamazian, president and CEO of Hyatt, which has invested in Airbnb rival Onefinestay.
By understanding the rise of the sharing economy and the shift in consumer preferences to services like Airbnb, hotel groups will be better equipped to effectively tailor their services to a new age of consumers and tourists.
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