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How Airbnb Is Forcing Global Hotel Brands to Up Their Game

 

On September 18th, 2017, Hilton Hotel’s chief of marketing Geraldine Calpin had some choice words to say regarding the relatively new hospitality company Airbnb. Calpin called Airbnb a “lodging company,” then went on to say how at the Hilton, “we are in the business of people serving people. We’re in hospitality, which is in some ways a little different than some of the newer entrants that are more into lodging. We offer consistency in the brand, we offer security.”

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Calpin’s argument is that when you’re going to stay at a Hilton hotel, you know exactly what you’re going to get every time because of their brand-wide standards. Airbnb does not offer that same sense of security. Indeed, there may be much less in the way of hospitality when choosing to stay at an Airbnb lodging. Calpin later goes on to point out that at every Hilton hotel, customers are greeted by “the beautiful smile” that every team member provides those they serve, and that this is very different from the experience you get from staying with Airbnb.

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While it’s true that you may never know what you’re going to get when you choose to stay at an Airbnb, there are a few things Calpin may have overlooked in her statements from 2017. It’s clear that even the biggest names in hospitality may feel threatened by the huge surge in popularity that new lodging services like Airbnb have recently experienced.

The truth of the matter is that Airbnb has revamped the hotel industry as a whole, and as posited in another article from July 20th, 2017, it’s time for hotels to innovate or get left behind. Roseanne Luth, marketing expert and founder of Luth Research, wrote that, “Hotels need to evolve and adopt practices and technologies to better compete with services like Airbnb.” She then goes on to explain a few different ways that hotels may up their game to keep up with the new players.

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The first thing hotels should do is to invest in data. Just as Airbnb collects user data to better shape their services to their customers and their needs, hotels should be doing the same. Airbnb tracks each user’s journey from the finding a listing, to booking their stay, to leaving the Airbnb. They pay particular attention to reviews left by customers and will adjust based on feedback received. Or rather, they’ll force their Airbnb hosts to do some adjusting or put them on suspension.

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This review feedback system serves one purpose; to ensure that each and every Airbnb meets the customers’ standards. These standards may be different based on the demographic of people who typically stay there, and the necessary adjustments are different too. While hotels are sure to implement this strategy in some measure, it’s usually to a far lesser degree. They’re comfortable in their brand, and if a customer has a complaint, there’s a whole customer service division to handle the complaint and make it go away. Airbnb doesn’t necessarily have the same system in place, which is why it’s up to each host to take feedback and make improvements if they want to keep operating as a host.

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Airbnb also has a remarkably fast feedback loop, incentivizing its customers to leave feedback and reviews soon after they’ve had their stay at an Airbnb lodging. In fact, around 75% of customers and Airbnb hosts leave reviews for each other within the first two weeks, whereas only a meager 10% of hotel guests bother to leave reviews.

As you can guess, this is a major missed opportunity for hotels to get valuable feedback from their customers. It’s difficult to know how to innovate when you’re under the impression that you’re already doing everything most of your customers could want. A better feedback loop between hotel staff and customers, specifically, could help build trust between the two. Airbnb doesn’t necessarily need to worry about this factor, as one of the draws of the service is that you can find lodging without the need to interact with any host or hospitality staff. Oftentimes, guests can be in and out without ever having to interact with anyone if they don’t want to.

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Nice as is this for many people, it could be a downside for some. This is where hotel hospitality comes in. Yes, hosts can make their Airbnb nice and cozy and warm for their guests, but it’s usually a far more hands off process than staying at a traditional hotel. At the Hilton, for example, you’ll be greeted by hotel personnel at the front doors, again at the front desk while checking in, and you’ll have other people like bell hops and room service giving you a warm smile (hopefully).

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Regardless of which experience you prefer, it’s undeniable that Airbnb is making a splash in the hospitality industry. In 2015, it was estimated that Airbnb pulled around $2.1 billion in profits away from the larger hotel industry. While this is only a fraction of what the hotel industry brings in each year, it’s still a considerable sum to lose out on. That’s over $2 billion that hotels all over the world could have brought in, but instead lost out to Airbnb. This doesn’t even account for other Airbnb clones that have cropped up in recent years to capitalize on the personal lodging market.

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Despite the disparity, hotels and newer companies like Airbnb don’t have to be enemies. As we said earlier, this is the time for hotel brands to step up and innovate to keep up with the likes of Airbnb. Hotels have a lot to learn from the newer players, and they have equally as much room for improvement. Such healthy market competition should serve to stoke the fires of innovation and help hotel brands capitalize on the strengths of traditional hospitality.

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Airbnb is a force to be reckoned with, and as hospitality continues to evolve and change to adapt to modern market conditions, it’s going to be interesting to see how global hotel brands innovate to keep up.