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Helping Hotels Compete in an Airbnb World

Helping Hotels Compete in an Airbnb WorldIn 2017, Airbnb recorded an estimated 100 million “guest arrivals.” Not too shabby for a company that’s only 10 years old.

Airbnb’s success is bad news for the larger hospitality industry. The aforementioned number represents 100 million potential travelers who could’ve — but didn’t — stay with conventional hotels and motels. 

Admittedly, not everyone who stays at an Airbnb home is in the market for traditional lodging. Like Couchsurfing.com, the platform largely caters to budget travelers who go abroad only because affordable accommodations exist in their destination cities. This explains why for every 10 percent increase in Airbnb guests, there’s only a 0.35 percent decrease in hotel revenues.

Although one can debate the extent of the impact, the long-term trend is inevitable. Slowly but surely, Airbnb will continue to gain market share as hotel profits dwindle. 

Why Hotels Have a Hard Time Competing With Airbnb

The new sharing economy has many things going for it — whether we’re talking about taxi services (such as Uber ), freelance staffing (such as TaskRabbit), or lodging (such as Airbnb). 

In most cases, these emerging business models offer advantages that established rivals don’t, including: 

  • Greater capacity. Companies such as Airbnb don’t have to keep or maintain inventory. This allows it to scale up its capacity without taking on outsized expenses. 
  • Superior pricing. As a result of the example above, Airbnb is able to pass on greater savings to its customers. It also helps that companies in the sharing economy are often able to avoid expensive regulations. 
  • Unlimited variety. Frequent business travelers who stay at chain hotels often feel like they’re stuck in some Every room, business center and continental breakfast is essentially the same. With Airbnb, each location in its enormous inventory is unique. The same is true of Uber’s global fleet of “taxis.” 

Given these advantages, how can a traditional hotel possibly compete?

Check out our list of integrated hospitality and registration software programs.

Taking the “Air” Out of Airbnb

Trying to compete on capacity, pricing and variety is a losing strategy for most hotels. Airbnb already has an unbeatable advantage in these arenas. But with the right approach, it’s possible to compete on slightly different terrain.

Already, the hospitality industry has started to explore some of the following strategies: 

  • Investing in better on-site business services that cater to the “co-working” crowd. These are usually shared spaces that business travelers and freelancers can use on a temporary basis. 
  • Improved technology such as free Wi-Fi, premium streaming channels and smart TVs. Airbnb can’t always guarantee such amenities. 
  • Integrated experiences such as guided tours, exercise classes or cooking courses. Airbnb travelers can always explore these things on their own. By contrast, hotels can remove this friction and do all the heavy lifting for their guests. 
  • Social spaces and mingling opportunities. With Airbnb, each guest is an island, and it is incumbent upon them to go out and meet people. Meanwhile, hotels have a ready-made network of fellow travelers. Hosting events, luaus and conferences is a natural fit. 

How ISVs and VARs Can Benefit from the Changing Hospitality Landscape

In coming years, the aforementioned innovative strategies will help hotels differentiate their offerings and allow them to compete in an Airbnb world. 

As an independent software vendor (ISV) or value added reseller (VAR), these improvements could create unprecedented demand for your services. Over time, lodging preferences and amenities will only become more sophisticated — and hotels will increasingly need cutting-edge applications to handle this growing complexity. 

This is particularly true of payment processing. As your clients expand their offerings, they’ll require flexible, secure and integrated solutions to help them manage a diverse range of transactions. 

That’s where BluePay’s hotel and lodging payment processing can help. 

To learn how our integrated payment solutions can give you and your hospitality clients a competitive edge in the sharing economy, learn more about our partner team today. 

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Topics: ISV/VAR, Software and Payment Integration

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