In recent years, Airbnb has emerged as a challenge to traditional hotels. It offers travelers unique and personalized accommodations in homes, apartments, and treehouses. This platform has transformed how people think about lodging. Its innovative business model, impact on pricing, and guest experiences challenge the dominance of hotel chains and ignite the question of the hotel industry's future.
Established in 2008, Airbnb has expanded among disruptive platforms that have revolutionized various industries. This online marketplace allows individuals to list and book short and long-term lodging accommodations across the globe. Much like Uber, Craigslist, and Spotify, Airbnb has secured its place as a force in the world of innovative platforms. Spanning across 191 countries, Airbnb has an impressive total of 4 million listings. Impressively, this number eclipses the collective listings of the five leading hotel brands.
In a study by HVS Consulting & Valuation commissioned by the Hotel Association, the financial impact of Airbnb on the hotel industry, specifically in New York City, was analyzed. The report highlights that approximately $450 million annually is lost in hotel direct revenue. Airbnb’s rapid growth had projections that from 2016 to 2018, rooms reached 5 million room nights per year. This has led to declining traditional hotel bookings and job losses within the hospitality sector. Beyond revenue, hotels are also experiencing a drop in ancillary income, such as food and beverage sales, due to guests choosing Airbnb accommodations.
The presence of Airbnb is also challenging hotel loyalty programs, leading to a 2-3% decrease in hotel revenue for every 10% increase in Airbnb market share. Regulatory disparities between Airbnb and hotels further complicate the situation, with significant tax revenue losses reported in certain cities with various taxes and lodging regulations. The rivalry between Airbnb and the traditional hotel industry highlights the need for adaptation and strategic planning in response to consumer preferences.
Despite its negative impact on the hotel industry, Airbnb has a positive and significant effect on the economy. In 2018, Airbnb’s host and guest network generated over $100 billion in estimated direct economic impact across 30 countries. AirBnb’s unique model means the money generated benefits the communities where hosts reside. Airbnb hosts have earned over $65 billion since the company’s inception in 2018. Located away from tourist hubs, small businesses benefit from Airbnb guests’ spending. The platform’s influence allows more travel to lesser-known destinations, significantly increasing guest arrivals globally. A survey of Airbnb’s global host and guest community reveals interesting trends, such as hosts often recommend dining and cultural activities to guests. This allows guest to continually allocate a portion of their expenses to local businesses, indicating a desire for authentic experiences.
While Airbnb challenges the traditional hotel industry, its economic impact should be noticed! Despite causing revenue losses and job displacement in the hotel hospitality industry, Airbnb’s model has resulted in substantial financial benefits for communities worldwide. The platform’s influence extends to increasing guest visits to lesser-known destinations, stimulating economic growth.
FAQs
Beyond revenue, hotels are also experiencing a drop in ancillary income, such as food and beverage sales, due to guests choosing Airbnb accommodations. The presence of Airbnb is also challenging hotel loyalty programs, leading to a 2-3% decrease in hotel revenue for every 10% increase in Airbnb market share.
What can hotels do in response to Airbnb disruption? ›
To cater to these changing guest expectations, however, hotels have begun to offer services and amenities that are markedly distinct from an Airbnb guest experience and, in some cases, well beyond anything the average Airbnb host can offer.
What are the disadvantages of Airbnb over hotels? ›
CONS OF AIRBNB
- You may not have access to the same amenities as you would at a hotel, such as a pool or fitness center.
- You may have to cook your own meals which will save you money but it will be time-consuming.
- You may have to clean the place before you leave.
Disrupting the Traditional Hospitality Industry
Airbnb disrupted the traditional hospitality industry by offering an alternative to traditional hotels and resorts. It opened up a whole new market of unique and affordable accommodations, allowing travellers to experience a destination from a local's perspective.
How disruptive is Airbnb? ›
Hence, the flexibility and reach of Airbnb are additional reasons to consider it as a disruptive innovation platform. In general, there are many regulatory hurdles and huge upfront costs in building new hotel properties. However, Airbnb does not need to build a new property to provide accommodations at a new location.
What is the biggest problem with Airbnb? ›
4. What is the biggest problem with Airbnb?
- Security and safety. ...
- Guests who are loud or disruptive, increasing traffic, and the commercialization of residential areas are some of the issues that some locals have taken issue with.
Pandemics and health crises, exemplified by events such as the COVID-19 pandemic, can have a profound and lasting impact on the hotel industry. These situations often lead to reduced travel, lockdowns, and heightened health and safety concerns, disrupting the normal flow of operations and guest expectations.
What are the two huge complaints Airbnb is addressing? ›
This story has been updated. One of Airbnb's most-derided features — fees that can cause rental prices on the platform to balloon from the figures initially shown in search results — will be hidden no more.
Are hotels worried about Airbnb? ›
Airbnb is considered public enemy number one by hoteliers all over the world.
Why do people stay in Airbnb instead of hotels? ›
Staying at an Airbnb gives guests a sense of adventure that you just won't find with a hotel. Sure, decisions about where to stay can depend on cost, quality, and accommodation type, but travelers love a unique experience, too.
Vrbo is commonly considered the biggest Airbnb competitor. It has over 2 million listings and vacation rentals in 190 countries. And because Vrbo is part of the parent brand Expedia Group, listing on Vrbo enables you to tap into this brand's 112+ million monthly unique visitors.
Which is safer, hotel or Airbnb? ›
The usual hotel room has many more security and safety features than your typical Airbnb holiday rental. There is 24-hour security, CCTV, and lock boxes for your belongings. While Airbnb homes can be entertaining, the truth is that you are staying in someone else's home or flat.
How are hotels responding to Airbnb? ›
Turning to consumers, we show that hotels in areas where Airbnb has an established presence have responded to increased competition by lowering their prices, which harms their revenue, but benefits travelers, even those who do not use Airbnb.
How does Airbnb compete with hotels? ›
While many guests prefer the service a hotel offers, Airbnbs boast perks that are sometimes hard to pass up, like additional rooms, non-shared amenities, full kitchens and more. There is often more attention to detail in the setup and cleaning of an Airbnb, due to the property belonging to a person rather than a brand.
How did Airbnb disrupt the housing market? ›
The answer is simple: people own more than one home and rent them out for profit, while others struggle to afford their first home at all. Being a renter through Airbnb allows the owner to make more money off these short-term stays than they would renting the property out as a home.
What impact did Airbnb have on society? ›
Airbnb has undeniably transformed the way people travel. The booking platform has had myriad ripple effects, too—from boosting the local economy to providing unique experiences for tourists to supporting health and cultural initiatives.
What is the controversy with Airbnb? ›
A 2021 study of more than 125,000 Airbnb complaints on Twitter found that 72% of the issues were related to poor customer service and 22% were related to scams.
When Airbnb entered the market, it acted as a disruptor in what category of the hospitality industry? ›
Airbnb has disrupted the hotel and motels industries by acquiring market share and putting pressure on hotel rates.
