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8 months ago
 

Dear hoteliers: Six things you need to get right about Airbnb

As a road warrior who frequently stays in all sorts of accommodation around the world, I decided to analyze the allure of Airbnb and compare it to staying in hotels.

I conducted mini-focus groups with Baby Boomers, Gen X, millennials, and iGen to hear their thoughts. You can have access to all the back up content here. This article summarizes my thinking for hoteliers. You can also access the condensed podcast version here.

1) While it’s an apples-to-oranges comparison, both are fruits.

I, too, feel that a hotel experience is different enough from an Airbnb experience that it’s not fair to compare them. However, for hoteliers, the conversation should not stop there; it should begin there.

Airbnb isn’t so much new competition but a paradigm shift, which has the potential to do more damage than traditional hotel competitors.

My research finds that because of pricing, some travelers divide a hotel’s value into two distinct components: accommodation versus service. First and foremost, they think ‘I need a room with a bed.’ And if they feel they don’t need service, or read reviews about bad service, then these travelers are likely to look for something on Airbnb that is within their budget.

It’s an old advertising adage that people buy with their heart. Dear hoteliers, win hearts with good service! This is what makes you special. Based on the voice of your customers, winning hearts involves triangulating your service between competence, helpful attitudes, and proactivity, particularly when things go wrong unexpectedly for a traveler.

Airbnb hosts aren’t used to dealing with problems like your staff, and the peace of mind that this creates is worth a lot, but you have to deliver on that promise should the need arise.

2) Sure your hotel has services, but are those services meaningful enough to win hearts?

Part of the problem the information age introduces for hoteliers is that guests can google everything; now travelers often know more about the destination than your average hotel staff. I have heard such travelers not consider the concierge or guest relations at all not because their services don’t even enter into the mindset – googling is faster and less biased.

Also, a traveler can google their way to many local services that further dilute the convenience benefit offered by a hotel’s traditional services.

For example, Uber makes local transportation seamless – have you used Uber because you can get a car faster than your hotel bellmen? Also, local food delivery services make in-room dining seem superfluously expensive, particularly when there’s a mandatory service charge tacked on that’s more than the delivery service – and they have more distance to travel!

Minibars seem like relics of the past, and the ones that auto-charge after an item has been moved from its slot for more than a few seconds make guests feel they’re untrustworthy – is it worth the headaches and the bad will?

And even the best housekeepers cannot fix problems with poor maintenance or design: low water pressure, unpredictable hot water, no AC outlet, or hair dryers that whisper not shout and are permanently tethered to something… as if travelers don’t have a need for a powerful and mobile hairdryer.

Airbnb hosts have lower expectations to fulfill. Aside from a truthful description of their place, they just need to offer efficient check-in/out, and fast, reliable wifi.

Recently I stayed in a Singapore flat and the host said that airport pickup was included. I was so happy I told a lot of people (like you, now).

Dear hoteliers, the concept of convenience needs to be redefined. Some assumptions about what makes things convenient for travelers are outdated because travelers can find better, cheaper, and/or faster alternatives elsewhere. Their cleverness erodes the value of your service. The spirit of service is what you have to maintain; the manifestation has to be relevant for your customers today and tomorrow, not of yesteryears.

3) Airbnb isn’t just for leisure travelers; it cuts into MICE, corporate travel, and long-stays.

There’s a misconception that Airbnb is for leisure. Maybe in the past when it first started, but holding onto that view in 2016 would be like believing the world is flat.

People in the hospitality industry already stay in Airbnb for leisure, corporate, and MICE purposes, why would it be different for people in, let’s say, tech or finance?

Did you know that Airbnb has a program for business travelers? It also has a partnership with Concur allowing big companies to expense their Airbnb stays just like they can with hotels.

And people that are considering long-stay – even the Boomer luxury traveler in my focus group – would consider Airbnb for stays of longer than 1 week.

We can keep saying these people aren’t typical hotel customers, but that just proves that Airbnb is a disruptive paradigm shift: we’re admitting that the addressable market shrank because customers we could have had moved on to the new paradigm.

Sometimes hoteliers think about Airbnb like the way the music industry thought about records. The integrity of the hotel experience is analogous to the integrity of an album – the assumption is that people want the whole thing and are willing to pay for it all. But just as a record has some songs that you like, and some songs you don’t, so it is with hotel services.

It took the music industry a long time to figure out how to make money by song as opposed to by album; meanwhile they were losing young customers to Napster (some of whom were then sued by the record labels for piracy).

It turns out people, even youngsters, wanted to pay, they just didn’t want to pay for a whole album filled mostly with songs they didn’t care for and there weren’t any alternatives other than services like Napster.

Fast forward to today, other than Adele, when was the last time you bought a full album? Or even bought any music at all if you use a streaming service  such as Spotify? Yet we are all still customers of music.

So dear hoteliers, to make the Airbnb trend work for you, I would stop saying Airbnb customers aren’t hotel customers; instead, I’d say Airbnb customers are a new type of customers that we should be courting for our hotels, and have a plan for them just like there’s a plan for Chinese customers, Halal customers, and honeymoon customers.

airbnb
4) Invest in content marketing as hotels are becoming as distantly familiar as Airbnb flats.

Because what Airbnb has to offer varies so much from flat to flat, there are more filter options on Airbnb for users to customize their search. For example, I can filter by the inclusion of a washer or a dryer. However, the way flats are listed and displayed on Airbnb is similar to hotels in an OTA. Both user experiences commoditize the inventory – each listing has the same format as all others.

This works for Airbnb hosts because what they have to offer is largely location, hardware, and price. And reviews alongside the listings tell you the accuracy of the descriptions and whether previous guests felt the price was justified. You even get to look at the profile of a host to see if s/he is a psycho.

For hotels, OTAs do a great job of showing location, hardware, and price, but it’s difficult to get a sense of a particular brand or the people providing the service. You have to dig into the reviews to see what service is like, but it’s still not as personal as the profile of a host and pictures of his/her home.

This presents a new challenge for hotels – if the user is lazy (or thinks s/he has no reason to go to your website), where will you explain your brand of hospitality, which is the premium? Hoteliers need to invest in their own websites to ensure that their message is more clear and accessible than an Airbnb host’s profile.

Further, they should utilize social media channels to reinforce and promote their message frequently and direct traffic to their own website, something that a hotel can do which most Airbnb hosts cannot. This is why creating content that engages and leads back to brand.com is becoming even more important.

The top priority in hotel marketing in the last decade has been on distribution; now that the distribution channels are full, you can’t rely solely on a presence in the distribution channels to sell rooms. A great content marketing plan should be top priority if you want the USP of the brand to be anything but price.

A reference point: even though Coca-Cola is distributed inside convenience stores, you go there to buy it, not to learn about it. Coca-Cola has created your need for its product ahead of time so you use the store as a convenient point-of-sale; this is what your hotel marketing should focus on now that it is in all of the Tesco and 7-11 equivalents in the travel industry.

5) Female travelers question the safety and security of Airbnb.

Based on my conversations, most females have some concerns about safety and security whereas most males do not. A woman’s concerns may decrease if she’s traveling with at least one other person, but regardless of age and travel experience, I heard the same concerns many times.

One of my female employees told me she couldn’t sleep through the night the one time she stayed in an Airbnb flat in Tokyo even though she knew it was one of the safest cities in the world.

According to Airbnb, out of 17 million travelers it housed last summer, the number of calls received by their Trust & Safety team was fewer than 300. I don’t know what, if anything, Airbnb is doing to make its female guests feel safer and more secure. Maybe because the number they cited is so low they don’t perceive this to be an issue.

Surely the combined number of safety calls for a few large hotels would exceed all of Airbnb’s purported number, but reality isn’t perception: none of the females I talked to had an inherent issue with safety or security in hotels.

Also, returning to the first point about hotel staff being trained to deal with problems: should a safety or security issue come up, the resources of the hotel, from security cameras to the General Manager, can be deployed to identify and resolve problems quickly. Whether this can translate into perceived value for hotels or not, I don’t know, but I would consider this to be a meaningful service that hotels provide which Airbnb doesn’t.

6) Airbnb, and its hosts, are entrepreneurs; as such, they evaluate risks differently.

It’s difficult enough to compete against other hoteliers – who share similar backgrounds and experiences, and perhaps even used to work for you. Airbnb is a tech entrepreneur – so they think about the problem of ‘I need a room with a bed’ differently than hospitality people.

The last three times tech entrepreneurs came into the hospitality space, they changed the face of distribution, the value of editorial reviews, and B2C communication channels.

Furthermore, Airbnb hosts are service provider entrepreneurs. They already have to pay rent or mortgage for their home(s), and if they can rent it out and get someone to pay partially when they’re not using their place, why not?

Airbnb solves the issue of creating awareness, advertising their space, screening guests, communicating with guests, collecting payment, and exchanging foreign currencies, all for a nominal fee. There’s even insurance for damages. It’s a fantastic channel partner because it does the heavy lifting by providing financial, IT, marketing, sales, and communications infrastructures so hosts can innovate on their services if they choose.

If you think about it, hosts that are willing to let strangers stay in their place and operate in a grey area of law in some regions demonstrate that they aren’t averse to risk – very entrepreneurial!

This poses a different problem for hoteliers, because there are no rules to what Airbnb hosts may come up with – and they can adapt to customers with every visit and roll out changes quickly.

Entrepreneurs come up with things that don’t work all the time but what happens when you have millions of entrepreneurs – hundreds just in your area, who get to try often with no overhead or politics? Odds are pretty good that they’re going to come up with something that works and is disruptive; it’s only a matter of time.

I’m sure there are at least as many service provider entrepreneurs who work in hotels as Airbnb hosts in every city, but whereas Airbnb provides a platform for entrepreneurs to thrive, many hotels still have problems unlocking the potential that exists within a timely manner.

Dear hoteliers, you may need to change the process of developing service innovations. There’s still time for this to be self-initiated, but with that many entrepreneurs outside the hotel in your market, time is running out.

NB Image by Shutterstock.

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Morris Sim

About the Writer :: Morris Sim

Morris Sim is a contributing Node to Tnooz. During the day, he runs Brand Karma, a company he founded with his two best friends from Microsoft in 2006 which has since developed into the leading solution provider for hospitality and travel brands wanting to monetize more via digital media.

At night and on weekends, he serves as the executive director for Montara Hospitality Group, which owns and operates Boathouse Phuket and Trisara.

Morris came from the high-tech world, having worked at Microsoft for 10 years shipping products like Access, FoxPro, Visual Basic for Office, and Visual Studio.

He was also a senior director of marketing for the Windows Developer Platform. In-between his two stints at Microsoft, he was the CTO for RalphLauren.com and helped it become a profitable e-commerce channel for the retailer. He writes on Medium.

 

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  1. John Morgan

    HOME RESORTS – at the top end of the AirBnb market are private home resorts with their exclusivity and privacy. This is an area where hotels have no comparable offering.
    Do they still believe that customer are impressed with a dingy shoebox shaped room, with a toilet in the corner, and sharing facilities (like the pool/ gym/ dining etc..) with complete strangers?

    Hotels are Faux “luxury” and have hardly upped their game in the last hundred years or more.
    5 stars – really? On that scale I must have stayed at 10 star homes with AirBnB.

     
  2. Astrid Lindstrom

    The point about crowdsourcing a better travel experience is well-made: a huge group of only mildly connected people will innovate much more quickly than a hotel chain that has to convince every layer of management that a change is a good idea. Airbnb hosts can try something new on a whim, and if it’s successful, other Airbnb hosts will note it and pick it up – where a hotel chain might take literally years debating whether that change will be successful or not.

    We’ve seen the same thing in vacation rentals at our company – we manage nearly 2,000 owners’ property bookings and marketing for them, and we’ve been able to advise owners on tactics that make a huge difference much more quickly because we’re talking person to person. If an owner thinks a strategy sounds good, they can implement it that day and start seeing results that week. Huge advantage over a hotel.

    Hotels might need to start re-thinking their process for vetting new strategies. If they can’t stay nimble, they’re going to get outpaced by groups of individuals who can act more quickly.

     
  3. Avinash Udayakumar

    a) Airbnb can no longer be considered irrelevant to the success of independent hotel – in fact, hoteliers can learn a thing or two by analyzing their success
    b) Guests today have all the technology they need to breeze through their vacation without the sort of dependence that hotels have grown accustomed to. Modern GPS enabled smartphones were indeed game-changers

     
  4. Debi Hertert

    Thanks for this article, it clarifies the difference between a hotel stay and using an Airbnb. As a superhost with Airbnb, a veteran vacation rental owner and an avid traveler, I’m admittedly biased. My preference is always to stay in an Airbnb or vacation home instead of a hotel, unless my stay is for only one night. I prefer a neighborhood feel, a kitchen, a view if possible, and fewer people around me. As a host, we have many couples, families and business travelers who choose our properties. The safety comments we have had from single female travelers is that they feel safer if there is someone next door (which we are). We offer more amenities than a hotel, a secure keyless locking system, privacy, and a comfortable place to stay, away from the busy traffic of a hotel in a business/commercial area.

     
  5. christophe

    This my new favoriet blog about hotelmarketing! Thanks for all the good articles and keep up the good work!

     
  6. Douglas Rice

    Very well thought out and informative, Morris. Often, hoteliers get so wrapped up in their own worlds that they can’t look at guest requirements objectively from the standpoint of the actual guest. Or to the extent they do, they generalize from what they hear form the most loyal guests that have already found the product that suits them perfectly. It’s fine for a hotel to choose the segments it wants to serve and build its brand proposition around that, but disruptive change such as that from AirBNB tends not to respect traditional segment boundaries. As you’ve pointed out, it’s a risky strategy to assume that the segments you’re targeting won’t be affected, without really researching that question. And disruption may create new segments and opportunities, such as the security-conscious, heavily female one you mention. It’s only by challenging everything you think you know, that you’ll find ways to adapt and prosper.

     
  7. Jonathan Boffey

    For the leisure traveller, I can see the attraction of a cheaper or more interesting stay somewhere especially for a family trip where costs can escalate quickly.

    On a business trip, I don’t really need any surprises. My focus is the meetings, the client, the journey in/out. I may need a work area, internet, a bar, a restaurant, and depending on how I feel a gym, pool, spa or other amenities. If I don’t like the room I can probably switch to another . Of course, I don’t need a massive bill with excessive breakfast charges, $20 parking that cost more than the car rental and other ‘rip offs’. There would need to be a big price differential and a clear reason for me to want to save my employer a few pounds and risk jeopardising our business activities.

     
  8. Doug Johns

    Well written, informative and a perspective that I hadn’t looked from before..

    Thanks Morris !

     
  9. Rebecca Nixon

    When travelling, I know that if I get followed or harassed, I can go to the front desk of my hotel and find safety & security. (I can assure you that this happens to me more frequently than you likely imagine.) Airbnb cannot, on any level, compete with that. Any hotel that offers to keep tabs on me (within reason of course) would be of great value to myself and many other female travellers. It’s worth thinking about.

     
    • Morris Sim

      I think this is one of the greatest values that hotels already provide today — safety, security, and peace of mind are priceless to travelers. In my podcast you hear the females express their concerns about Airbnb versus ‘how nice it is to be cared for’ by hotels. As a male this isn’t something I consciously think about — I generally pay more attention to the safety of a city than of accommodations — but I’ve heard it now from females of all ages and travel experiences that Airbnb is viewed as being ‘questionably safe.’ However, it may be a double-edged sword for hoteliers to trumpet their safety and security features, because too much may beg the question — how unsafe is it that a hotel has to boast its safety and security features?

       
    • Sue E

      You might find less harassment and following if you stayed in a small bed and breakfast than a larger hotel. As a bed and breakfast owner we have a much more personal relationship with guests, live on site and provide a secure space. When I personally travel I prefer where possible to stay in a small bed and breakfast than a large hotel chain.

       
  10. Narayan Mallapur

    A very interesting article, very well written.

     
  11. diego lofeudo

    Great piece of article!. Paradigm shift is the exact difinition. Hoteliers need to look at the way they manage their P&L estructure. Internet at a charge, breakfast at €25, F&B outsourced, etc… there is room for a hotel to break its product into pieces and use the sharing economy marketplace to its advantage. I wrote an article in this regard on LI. If you want to know more here it is the link https://www.linkedin.com/pulse/third-revolution-travel-industry-next-big-thing-tnbg-diego-lofeudo?trk=prof-post

     
  12. Ron

    Very interesting and thought provoking piece. We have passed this on to the team and will be making some changes. Thank you

     
  13. Grischa

    well written Morris with good examples. Hotels need to rethink quickly their behavior and adapt to whats happening around them. Greetings from Berlin.

     
    • Morris Sim

      Berlin was the first place where I tried private accommodations. This was years ago before Airbnb was even a big thing. For the ITB Berlin in 2009 we, as a tiny startup at that time, had a really difficult time justifying the expenses of staying in hotels, particularly as the prices were all marked up really high. At that point there was an online apartment rental service in Berlin that I took a chance on. We ended up getting a huge, nearly new apartment nearby Checkpoint Charlie with heated wooden floors at something like 60 euros a night. Incidentally, Airbnb’s original vision was to provide affordable accommodations during the periods that hotels would mark up their rate because there was a conference in town… I see that as being an entry point for some business travelers.

       
  14. Bernie

    Excellent analysis Morris – thanks for sharing

     
  15. lennert de jong

    great article Morris! Saw a video this week of French taxi drivers throwing fireworks, burning tires and harassing people on the ringroad of Paris. I feel the hotel business has the same knee jerk reaction to Airbnb, where we as people should just witness the paradigm shift, and make sure up the ants to exceed people’s expectation.

     
    • Hedwig Wassing

      Hi Lennart, I’m with you. Morris, thanks for the great work and the enlightning metaphores.

       
    • Morris Sim

      Hi Lennert, great to hear from you and hope you’re doing well! I think it’s always good practice to try and exceed your customer’s expectation… all the more important when there’s a disruptive force competing against you.

       
  16. Susan Barry

    This is a great analysis of the very real areas in which hotels can make improvements/changes/innovations – and a good wake-up call to stop considering AirBnB guests as different from hotel guests. Really enjoyed it!

     
  17. John

    Hotel breakfasts at 18 to 25 Euros. Need I say more about the hotel experience…?

     
    • Patricia Jones

      Very interesting reading the article and comments. I have properties I manage listed on the short stay market with Stayz, Select Stays (Perth based company) and also Airbnb. I have townhouses and 1 very upmarket apartment in the inner city of Perth, Western Australia. Stayz was the No. 1 company in short term rentals in Australia for years up until around 12 months ago. This is where I received most of my inquiries and bookings, at a rate of over 80% occupied in all properties and also received payments promptly before arrival. Inquiries have dropped off considerably over this time due to Airbnb’s ease of booking accommodation, but no payment until after the guest arrives! One of the properties is very upmarket and on the best cafe strip etc etc in Perth, is priced at $AUD150 per night for 2 people, which should be priced at $AUD200, it has become more difficult to secure a booking through Airbnb, this is obviously due to pricing. This apartment is in a secured building of 8. The only way of entry is by swiping the entry and lift door so security is at a premium. Airbnb customers seem to focus on cheap budget accommodation!

      I know my properties are affordable and admit to be competing with hotels. But I am finding even Airbnb customers looking for accommodation seem only interested in paying $AUD30-50 per night per person which I can’t compete with. I have 1 townhouse priced at $AUD98 per night for 2 people and is fully booked through Airbnb. Only because this property is on the market to sell and has home opens every Saturday for 1/2 hour. Guests don’t seem to mind this disruption for the price, this property should be $AUD150 per night. The owner has financial problems and desperate to sell, so at least he is receiving his mortgage payments.
      If a booking and payment is made through Airbnb, the host doesn’t receive payment until 2 days after the guest has arrived, so this could be a matter of months before the host receives his payment. Classic example of a booking for accommodation which was made for April 2017 in Auckland (World Masters and 28,000 competitors looking for accommodation) thought it was a good idea to secure a booking for 10 people in a house last year in September 2015 in case we missed out. Full payment made of $AUD4000 but the host doesn’t receive their payment until 2 days after we have arrived!!! which is in April 2017.

      A bit long winded but had to voice my concerns also.

       
 
 

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