Hotels vs. Airbnb: How hotels can get a leg up on the sharing economy

Krissie Callahan

The sharing economy is booming. Consumers, led by a Millennial generation that is flipping just about every aspect of daily living on its head, are gravitating toward finding ways to maximize their dollars and reduce travel costs. The rise of services such as Uber and AirBnb are evidence that the sharing economy is here to stay.

Is the hotel of today a dying breed? Not if you listen to what consumers are saying, experts believe.

In fact, to compete with this growing segment and be the choice preference for consumers, it is more important than ever before for hotels to understand where they may have a leg up on the sharing economy and refine their guest experience to appeal to a finicky and demanding public.

The impact of Airbnb and home sharing

Home-sharing services such as AirBnb, VRBO, and HomeAway have established loyal customer bases by connecting users with one another for home rentals for both short and long-term stays, gutting traditional travel accommodation models. These services eliminate the need for a travel agent, allowing users to quickly search property rentals around their globe that meet their needs.

The addition of short-term stays also gives consumers an alternative to hotel stays. Although estimates vary widely, a recent white paper entitled The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb, put together by professors and research fellows at Harvard Business School and MIT, showed that in 2014, in the 10 cities where AirBnB has the largest market share in the U.S., hotels experienced a drop in both occupancy nights and revenue: 1.3% fewer nights and 1.5% revenue, to be exact.

In the four years since that time, home sharing has only grown in popularity, further impacting the hotel and lodging industry

Consumer preference for hotels is still strong

Despite the popularity of home sharing, there’s some evidence that the sharing economy still has a long way to go to sway the majority of consumers. According to Allianz Global Assistance’s fourth annual Sharing Economy Index, more than half of those surveyed – 53 percent – said they are either “not very likely” or “not at all likely” to use sharing economy services for their 2018 travels in the summer season.

This survey reports that consumers find that traditional hotel services provide a better overall experience, have better booking functions, and better customer support when things go wrong.

Another survey, MMGY Global’s Portrait of American Travelers, interviewed nearly 3,000 U.S. consumers that have taken at least one trip over the past 12 months. MMGY found a big drop in travelers interested in home sharing services in just the last year – 33% of respondents in 2018, versus 41% in 2017.

MMGY reports that home sharing is falling out of favor because the majority of consumers prefer not to share accommodations with other travelers, find that hotels offer more convenient locations, and that overall quality still reigns in hotels.

Other mainstream media outlets have also reported security issues with home-sharing services, such as hidden cameras recording the actions of travelers. These types of news stories may also deter travelers away from home-sharing services.

How hotels can win against home-sharing services

It’s clear that hotels have a compelling reason to continue their efforts to win over customers: not all consumers are swayed by the financial discounts home sharing services offer. Quality, a consistent guest experience, and prominent location are still important decision-making factors for many consumers, and services like AirBnB haven’t yet figured out a way to deliver in these areas.

Here’s where hotels have an advantage: overall, awareness of guest experience issues is likely to be greater in hotels due to knowledge and compliance with public health regulations, which may not be required in home sharing environments.

Standards typically in place at hotels may not be required in home-sharing environments, particularly in the area of cleanliness, which is a major driver of guest satisfaction. For example, hotels typically have robust pest control programs in place that help eliminate or reduce the likelihood of problems, such as cockroaches, mice and rats, and more. These pests can bite, transmit dangerous pathogens, and create health concerns for guests.

Bed bugs in hotels vs Airbnb

In the event of an introduction of pests such as bed bugs, hotels are more likely to identify the problem quickly due to regular cleaning and inspections, which ensures a swift resolution. While most home sharing environments have responsible owners that take cleanliness seriously, they may lack the knowledge of how to inspect for these pests, how to identify them, and what to do to resolve the issue. Problems could potentially fester for weeks or months before they are rectified.

Guest experience in hotels vs Airbnb

Guest experience issues easily resolved at hotels are often more difficult to navigate in home sharing environments. In a hotel, if a guest has a problem with their room – air conditioning going out, cleanliness issue, pest problem, etc. – they can simply pick up the phone to call the front desk, and often relocated to another room quickly to resolve their problem. Not so in home sharing environments, where a bad experience may leave a traveler “stuck” with accommodations that don’t suit their needs – or worse. Resolution of problems may not always be easy, either, leaving some forced to pursue reimbursement for up-front payment, a process that can be lengthy and frustrating.

However, to remain the consumer choice, hotels must deliver in these areas. That entails having an active commitment to ensuring their cleanliness standards meet guest expectations, and continually working to keep staff trained and standards up-to-date.

Leveraging guest feedback to improve guest experience

Hotels can gain advantages over home sharing services by analyzing their online reviews and using the information consumers share to enhance their guest experience. In the joint white paper, The power of the online review: Mining feedback for impactful guest experience investments, Rentokil Steritech and Ambius, the leading provider of interior landscaping services, reveal some surprising statistics and five best practices that hotels can implement to elevate their guest experience right away:

  • Institute an online review monitoring program
  • Leverage your pest control partner to conduct staff training to enhance cleanliness
  • Invest in and enhance the lobby experience
  • Incorporate biophilic design
  • Consider an ambient scenting program

To learn more about these best practices, download the joint Rentokil Steritech and Ambius free white paper at:  http://get.protectenhance.com/hotelreviews/

Krissie Callahan
Krissie Callahan

As the Communications Manager for Rentokil North America, Krissie specializes in writing, editing, and shaping both internal and marketing messages for the company. When she's not at work, you can usually find her taking in a live music performance in her hometown of Charlotte, NC.

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