Airbnb: What You Need to Know to Stay Competitive

The travel industry is always evolving, and as advertisers, we must keep up with those changes and strive to stay innovative. We aim to do that by not only staying up to speed on industry research but also by implementing various strategies based on that research.

In a recent research publication by the International Journal of Hospitality Management, titled “Airbnb’s Effects on Hotel Sales Growth,” the authors explored Airbnb’s impact on hotel performance in the San Francisco market. Below we’ve outlined a few key takeaways from this research.

1. Total Airbnb inventory does not impact the growth trajectory of RevPar (Revenue Per Available Room). However, the article does point out that even though total inventory might not have an impact, it could pose some threat to properties that have lower rates or are better rated. We definitely agree that this hypothesis could depend on several different factors such as quality of inventory, market conditions, and rate variances as you’ll see in the following points. This potential overlap could happen in any given market and therefore, this particular proposal is possibly nuanced.

How can you take advantage of this potential upside?
Since it has been proposed that Airbnb could be a supplemental product offering, we could potentially be looking at a growing audience and a larger market. This means that there could be an incremental opportunity for us to target that expanding consumer base and gain market share.

2. The average price that an Airbnb listing offers is positively associated with RevPar and overall hotel performance. In other words, if an Airbnb listing has a higher than average price, the hotels in that market will also likely be displaying a higher price and/or will have higher occupancy.

So if pricing is affected, how can we stay prepared?
Knowing that there is a positive correlation between Airbnb and hotel product pricing, it’s important to monitor your property’s rates and ensure that these rates are in line with the marketplace. For instance, luxury brands will need to maintain competitiveness with other luxury brand properties in their niche market to capitalize on the higher rates.

Airbnb's Impact on Hotel Industry

3. Airbnb’s effects vary across different hotel segments. The research shows that lower end hotel brands and bed and breakfast/inn type properties will feel the direct effects of Airbnb inventory more directly than higher end hotel brands.

If I am a smaller hotel, how can I be successful?
With the effects differing across various hotel segments, we realize that the landscape is indeed becoming more and more competitive, particularly for smaller hotels and B&Bs. Utilizing the auction marketplace to its fullest extent in this situation is imperative to capturing these guests that are attracted to that niche market.

4. The overall guest satisfaction of Airbnb service is negatively associated with RevPar and overall hotel performance. The increase in the quality of Airbnb service does indeed directly impact hotel performance in a negative manner. In other words, the more satisfied a guest is at the Airbnb property, the more likely they are to rebook with Airbnb.

Just another reason to monitor guest satisfaction…
The importance of guest satisfaction further proves that consumers are paying close attention to the level of service they are receiving. Highlighting any positive reviews and guest experiences on your websites is going to be key to retaining existing customers while also attracting that incremental customer.

In conclusion, advertisers should be evolving to keep up with the ever-changing industry, particularly with regards to their metasearch strategy. We’ve continuously seen vacation rental inventory make it into the metasearch space, so differentiation among suppliers is going to be crucial to be a competitive player in the auction marketplace. This point is also particularly true as Airbnb offers up its latest product offerings, such as boutique hotel rooms.

With all of this being said, it’s more important than ever that you have a strategy in place that will keep you competitive and in top position to capture bookings and reach a growing audience. If you need help getting started, download our free whitepaper, Metasearch at Scale.

New Airbnb Research: What You Need to Know to Stay Competitive

Marketing , Travel