Airbnb: Helpful or harmful to the hotel industry?
Airbnb: Helpful or harmful to the hotel industry?
06 JUNE 2019 8:55 AM

Airbnb has forced hoteliers out of their comfort zone a bit, which has led to soft brands and experiences at hotels. Has Airbnb helped the hotel industry?

There are only a few times in history when so many things we encounter every day are being challenged by new, dynamic technologies. An entire generation of people has never been to a Blockbuster or bought something out of a catalog, let alone called a reservation number to book a hotel room.

Airbnb, it seems, was inevitable. It was only a matter of time before technology touched the sleepy and largely unknown bed and breakfast network. It feels like the industry’s been talking about Airbnb for a decade, but the model is just getting started. And let’s be honest—Airbnb has forced us hoteliers out of the comfort zone of big-box operations and back on the street as innkeepers.

Airbnb’s mission is simple: to create a world where anyone can belong anywhere, using an end-to-end platform that serves everyone. Their acquisition of HotelTonight is an interesting move, as it says to the hotel industry not only, “we’re not going anywhere,” but also, “let’s be friends.” Even more recently, Airbnb announced that it will invest in Indian hotel start-up Oyo Hotels and Homes, a home-sharing company launched in 2013. This partnership will ultimately give Airbnb a greater presence in emerging markets such as India and China, providing more options to more travelers.

So why has Airbnb grown so much, so fast? Simply put: the genuine experience it offers. Airbnb options are typically in residential neighborhoods, allowing visitors to experience local establishments rather than large chains and curated “tourist areas” typically found around major metro hotels. Many younger consumers crave this ability to experience something new and unique while traveling. Hotels, by contrast, have and still mostly identify themselves as trusted and reputable places to stay.

The response to Airbnb’s growth is changing our industry in bold ways. From the onset, Airbnb positioned itself as a direct competitor to hotels. In reality, they inspired a new iteration for the existing consumer base. Lifestyle brands, soft brands, curated brands and affiliations have all been a direct hit back at Airbnb’s core of genuine experiences. Specifically built products like Hyatt Centric are completely focused around the local community, from furniture and décor to food-and-beverage options. Curio by Hilton is also designed and built to fit into the local community. Even legacy brands like Residence Inn by Marriott incorporate an evening social event that brings in a local restaurant or food trucks to allow guests to sample some local cuisine. By evolving in the model of Airbnb, some hotel brands are positioning themselves as genuine and local by evolving the product and guest experience and connecting into the neighborhoods they are based in. At the same time, they maintain the underlying consistency and quality that Airbnb simply cannot compete with.

Airbnb’s disruption to the industry brings both positive and negative changes to both hoteliers and consumers. On the plus side, Airbnb has forced hoteliers and brands to innovate and evolve legacy products to attract travelers looking for a communal space or a feeling of connection to the local community. Brands have become much more sensitive to the local communities they operate in, all the while keeping the quality and consistency intact. For instance, they offer the ability to book a room at your favorite and still pay with points or use your phone as a key while also staying in an up-and-coming neighborhood. Airbnb has also forced consumers to prioritize what they value when traveling. For example, a consumer who might look to Airbnb for a leisure trip with friends is not likely going to sleep on an inflatable mattress in a rented room for a business trip.

On the negative side, the industry has been forced to spend billions of dollars to reposition and reimagine itself. While the financial impact is what most hoteliers address when discussing Airbnb, the implications to the industry are much broader.

Ultimately, Airbnb has introduced a new layer to the hospitality experience, impacting what many consumers are looking for and delivering new options to their fingertips. The recent launch of Homes and Villas by Marriott further legitimizes this shift in the consumer hospitality experience. Homes and Villas seems to strike a perfect balance for those who may be trying a residential rental for the first time but aren’t exactly sure what to expect or may not be comfortable with the technology and logistics, potentially tapping into an older generation. The platform offers a more curated experience, with all the service, reliability, consistency and quality guests come to expect from the Marriott brand. Homes and Villas also has the potential to outperform Airbnb in situations where an end user is looking for predictability in execution of a product.

As our industry evolves, we need to allow ourselves to become more progressive, adaptable and flexible. We’re at a crossroads moment with a need to take the consumer intelligence that Airbnb has used to its advantage and allow it to better inform our products and experiences to level the playing field. Homes and Villas is a step in the right direction, and if it proves successful, I expect many more hospitality brands to follow suit.

Shreyas “JR” Patel is the president and COO of Helix Hospitality, a hotel group based in Chicago with properties throughout the U.S. An alum of DePaul University, with a dual degree in finance and management, Patel founded Helix Hospitality after learning firsthand the ins and outs of running a hotel property. Over the last decade, Patel has overseen the expansion of Helix’s network of hotels and has grown the company’s investment portfolio from $10 million to over $100 million. Outside the office, Patel is committed to helping the next generation of hospitality professionals. In addition to mentoring undergraduate students, where he offers relatable, real-world advice and hands-on practical knowledge of the hospitality industry, Patel also serves as a board member for the DePaul University School of Hospitality Leadership and co-chairs the Academic Program subcommittee, further developing DePaul’s Hospitality program.

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