The “writing is on the wall,” as they say, for the Airbnb competition in the world. A few years ago, few would have believed the big OTAs would start to lose out to a glorified vacation rental agency. Today, the online brokerage dreamed up by schoolmates Brian Chesky and Joe Gebbia has apparently eclipsed Expedia’s booked room nights.
According to a report from the Wall Street Journal, Airbnb’s first-quarter also shows the San Francisco company with $9.4 billion in gross bookings. In addition, according to the calculations of Skift’s Dennis Schaal:
“Despite Airbnb’s considerable regulatory issues in places such as New York City, San Francisco, Barcelona, Paris, and Singapore, for example, Airbnb’s revenue growth of more than 30 percent in the first quarter far outpaced that of Ctrip (21 percent), Expedia Group (4 percent), and Booking Holdings (-3 percent).”
From my perspective, the fact Airbnb spends a lot less on marketing than Expedia or even the hotels spells “BOOM” for somebody in my business. If I wanted to be filthy rich, I’d abandon all paid and free promotion of hotels, and switch to charging 1-2 percent for promoting villas and other Airbnb properties. For there is a market there, trust me. What if? It’s an appealing idea, I’ll admit.
John Smallwood at HospitalityNet, brands must fight back by “helping travelers identify with your brand on an emotional level,” which is absolutely the only good advice for hotels. John’s advice delves into things like the experience and deep guest data metrics, but the bottom line has to be hotels beating Airbnb hosts at hospitality. But, there’s a problem.
Travelers had rather feel at home. And Airbnb Super Hosts like my pal VanGos Tsourlakis (Insta above) are like welcome stay superheroes in this regard. There is no way in hell a paid front desk manager or clerk will EVER beat VanGos at his brand of courteous caring. And since he’s a brilliant architect too, the property he lets to vacationers is stunning. So, imagine the choice, if you will. When I first met VanGos back in 2014, his Grotto Home rented about (I think) 60% of the time. Now, you cannot book that amazing Cretan villa. And VanGos is not the only Superhost on Crete.
The really bad news for a lot of independent hoteliers I know is that the corporate brands may be the only survivors of the Airbnb onslaught. This New York Times story backs up my assertion. What’s taking place is like an earthquake of preference and experience. A crevasse is being created where all-inclusive and big brands like Hilton and the others are on one side, and very small operators like Airbnb hosts are on the other. The rift is getting wider. It’s all about marketing power, basically. Hilton cannot advertise the same down-home experience VanGos can, and small independent hotels don’t have the resources or budget to gather in more brand allegiance.
Unless a hotel has a distinct differentiation point, most of the independents will be dead, sooner or later. Here on Crete, there are notable exceptions in this regard. Fodele Beach & Water Park Holiday Resort is the most differentiable small hotel chain I can think of. Location combined with superb leadership and an immutable brand reputation makes the company rock solid. And their profitability makes them viable marketing and sales-wise, as well. Nobody on Crete does it better than GM Grigoris Petrakis – that’s the end of the story. But every independent hotel on Crete does not have it so good.
All along the beaches in the north of Crete, small hotels lay and wait for the Summer glut of tourists hunting cheap sand, sea, and sun vacations. Some, like the huge all-inclusive resort, rely almost exclusively on big guarantees from TUI and other agencies. The dilapidated small hotels get by because Cretan beaches are that wonderful – and that is about it. The all-inclusive resorts get a huge chunk of capital from TUI, and they “economize” their expenditures and offers, to end in black ink at season end. I call this “surviving” and nothing more. Now factor in some entrepreneurs expanding the supply of Airbnb offerings! Please remember what I said about “place” and think about offerings like Domus Renier Boutique Hotel. What about stays without such an atmosphere?
I won’t get into the property market in Crete or Greece in this report, but bookings are all about beds and what experiences surround them. At the end of the day, hospitality businesses just “surviving” will soon drown if they don’t start thinking outside the box. I am thinking of a “break-even” hotel losing 2% of its bookings next year on account of new Airbnb listings.
We are doing research with EyeWide Digital Marketing and Plarino Hotel Management Services in order to provide some viable solutions. To be honest, I am not enthusiastic about the potential for hoteliers here to overcome. Crete, Greece, and Europe overall tend to be resistant to new ideas. And this is, in part, the reason Airbnb is crushing traditional booking methods. A great friend of mine, Thomas Magnuson of Magnuson Hotels, tried to convince the industry almost a decade ago, of the need to reinvent the hospitality wheel. Few listened, and some fought Tom tooth and nail until he abandoned Global Hotel Exchange. Today, the industry desperately needs leaders with the acumen of Tom Magnuson.
To be continued…
[…] support for a “free economy,” the hotel expert also laid down the gauntlet for Airbnb and the “distortions” hotel competition […]