What Hotels Can Do to Compete with Airbnb?

Airbnb’s Effect on the Hotel Industry

What changes has Airbnb made to the hotel business? The short-term rental market has undergone a revolution thanks to home-sharing websites like Airbnb, which has led to a tremendous increase in availability in almost every market. The creation of thousands of competitors near their hotels was guaranteed to increase competitive pressures and lower the amount of revenue hotel assets could earn for the hotel sector, which has historically profited from the limited supply of lodging.

In the near future, it now seems inevitable that short-term rentals will play a significant role in the accommodation sector. When scheduling leisure travel, younger generations are increasingly choosing short-term accommodations over hotels, and Airbnb has even begun to erode traditional hotel profit centers like business travel.
The number of nights reserved for short-term rentals in the United States has been increasing over the past few years, and short-term rental reservations as a share of all lodging reservations have also been continuously increasing.

How Do Hotels React to Airbnb?

So, how do hotels react? How can the hotel sector attempt to rival Airbnb? We’ve talked to a few of our hotel clients and compiled a list of the most typical tactics they’ve been doing.

Going Contactless

Many hotels are currently transitioning to a contactless check-in process, largely in reaction to COVID-19. With hotels substituting room service for dining, requiring reservations for amenities, and limiting access to public hotel spaces, this trend has expanded to seek for less engagement in general. It’s about time hotels caught up to short-term rental hosts who are increasingly providing contactless entrance to their properties through vacation rental host apps like KeyCafe.

Competitive Pricing

Pricing methods have been one of the more blatant ways hotels have reacted to the competitive challenge of Airbnb. Even if it isn’t ideal, operating an empty hotel is still preferable to having some minimal level of occupancy at reduced rates.

Another important tactic has been to raise hotel rates on special occasions and compression nights. Hotels are now measuring their prices more closely against short-term rental rates to ensure they still provide value for guests rather than charging 4 or 8 times the average room cost when a big event is in town and demand is strong (compression nights).

Rivalry for Rewards

It’s nothing new for hotels to provide rewards programs to visitors, but it’s one of the few areas where the short-term rental sector still lags behind the hotel sector. The magnitude and scope of Airbnb’s own rewards program still leave a lot to be desired for frequent users of the platform, despite the fact that the company has begun to investigate it.

Hotels have consequently been focusing more on reward programs as a potential source of competitive advantage. In order to make their awards more meaningful and transferable to more places, a number of the hotel clients we spoke with have been growing their alliances and enhancing the prizes their programs offer.

Focus on Amenities

Short-term vacation rentals can’t compare to the level of service, convenience, security, and comfort that hotels offer. Hotels have prospered for years by adhering to these principles of hospitality, therefore there is no time to change them today. Room service, round-the-clock security, and immaculate cleanliness are just a few examples. Excellent examples of how hotels may use these features to compete with Airbnb include Locke Hotels.

Cooking isn’t always an option for hurried business travelers or tourists who want to sample local fare. Hotels that have a restaurant or bar on site are therefore already in a better position. Showcase menus for food and drinks that feature regional specialties and give visitors a sense of place.

Some hotels have been emphasizing in their marketing campaigns the features that typical Airbnbs don’t offer, such as swimming pools, sauna rooms, gyms, parking garages, and free valet service.

Rebranding the Business

Changing tastes exist. Travelers are choosing to stay in hotels that provide genuine experiences and uncommon chances more frequently. They want to stay like locals, which is sometimes at odds with the corporate, generic branding that traditional hotels are sadly forced to adopt.Hotels should concentrate on positioning their establishments as regional, unique, historic, or in some other way representative of their surroundings. Hotels should provide helpful suggestions on things to do in the neighborhood, much like the finest Airbnb hosts do, but not in a fancy brochure, but in a straightforward, approachable email that reads more like individualized counsel.

In the same manner, hosts might gain from customizing their concierge assistance. When a customer books an Airbnb, they can check the host’s profile and some of the ratings. Currently, when someone books a hotel, they do not have access to such information about the hotel staff. Consider designating ‘hosts’ to receive automated welcome emails from visitors and operate as their dependable point of contact.

Enhance Guest Experience

The ability to track the complete guest journey on a single, integrated platform sets Airbnb apart from many hotel businesses.

Hotels frequently continue to use antiquated protocols that cover the channels of telephone, email, chat, and websites, in contrast to Airbnb’s users who perform everything from searches to communication, payments, and reviews through a single central hub.

The hotel business should think about streamlining the areas for client engagement and utilizing the data collected if it wants to effectively compete with the sharing economy. 

Create A Community by Using Common Areas

Although Airbnb takes pride in being a member of the sharing economy, the firm has evolved its hosting techniques away from the market for individual self-service homes and flats and toward the market for full homes and apartments. There is a very good chance that guests will never engage with the host thanks to Instant Book and access codes for entry and leave (much less other travelers).

Prior to COVID, one of the advantages of the hospitality sector was the upkeep of communal areas. Hotels may resume creating areas where visitors — and even residents — can interact, do laundry, utilize a common office, and enjoy a cup of coffee when the virus subsides. As life returns to normal, the trend of introducing co-working areas to hotels is likely to come back.

Hotel Rooms Can Be Used for Short-Term Rentals

According to some hotels we’ve spoken to, hotel rooms are now being used for short-term rentals. The room may need to be changed for this conversion, as by adding kitchen amenities. Even entire areas of some hotels’ physical footprints have been set aside to manage reservations for short-term rentals.

Some of the larger firms in the hotel sector have gone one step further and established short-term rental subsidiaries with specially constructed properties.

Airbnb Hotel Inventory Distribution

Should hotels advertise on short-term rental websites like Airbnb? Advertising hotel rooms on these websites, which offer the chance to improve awareness and booking volumes as well as bring hotel inventory in front of audiences that might not have seen it otherwise, makes more and more sense for hotels as monthly traffic to websites like Airbnb continues to rise.

Software for managing rental properties in the hospitality industry ranges from no-frills, free services to comprehensive packages that take control of the entire process. Features include platforms for guest communication, payment processing systems, channel management with third-party providers, and more. The ability to post your listing on hundreds of the most significant websites is, arguably, the most crucial. While direct reservations ought to come first, adopting hospitality software that enables you to distribute rooms on short-term rental websites is probably a good option since exposure is essential to staying relevant.

Regulation and Lobbying

While a complete ban on short-term rentals appears to be off the table, hotels have been attempting to regain some competitiveness by assuring that Airbnb and other short-term rental platforms are upholding occupancy tax laws and implementing short-term rental regulations. Hotels can at least be confident they are competing on a fairer playing field if hosts and visitors abide by these laws.

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