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Chains vs Independents vs Peer-To-Peer: How the Airbnb trend is impacting the market

   There are over 40,000 hotels and similar accommodation establishments in the UK (Eurostat) – more than any other country in the EU by some way (the next is Germany, at ~33,600 hotels). With pressure to fill 625,000 rooms, it’s important that brands and independents understand how consumers choose their hotel and communicate effectively with them, especially considering peer-to-peer accommodation continues to gain market share.

Source: PWC  

 

The threat of P2P accommodation:

Last year, Airbnb listings grew by 54% – 55% in London and 50% in outer London boroughs. 80,000 rooms and properties across the UK and two million worldwide are listed on the site.

PWC estimate that commerce generated across peer-to-peer platforms could rise to nearly £30bn by 2025 and anticipate the impact of the sharing economy may soon be felt more keenly by hoteliers as players diversify and innovate. For example, Airbnb’s recent announcement of a move into business and meetings is likely to have a significant impact on the hotel and hospitality industry.

Phocuswright, the travel research firm, noted that one in three leisure travellers in 2015 used private accommodations, up from one in 10 in 2011, and that 31% of travellers who used Airbnb in the last two years had used it for business.

The statistics certainly show that P2P accommodation is a threat to the hospitality industry – and will only continue to make headway into the market. So why is Airbnb so popular? And how should hotelier (both independent and brand) look to compete?

 

A case of cost?

Many hoteliers might think cost is driving the popularity of Airbnb – but is this true? Research by busbud shows that the average Airbnb is significantly cheaper in most cases.

(Hotels.com price index and Inside Airbnb for data collection. 218,980 Airbnb listings were analysed from Inside Airbnb. Hotel rates were an average of all hotel rates listed on Hotels.com through the first half of 2015.)

Although cost is undoubtedly a factor, there are other factors that have made Airbnb the success that it is today – and hotels are beginning to adjust and compete on these other factors.

 

“This is a more challenging event in the history of the lodging industry than almost any other… We’ve seen brands recognise guests want a more genuine experience and a place that’s more reflective of local culture.”

Bjorn Hanson, clinical professor of the Jonathan M. Tisch Center for Hospitality and Tourism at New York University.

 

As Professor Bjorn Hanson points out, a personal, ‘genuine experience’ that is ‘reflective of local culture’ (as well as price) has become increasingly important and is something that hoteliers can deliver to guests through the experience at the hotel itself and (crucially) communicate to them through marketing communications.

Alarmingly, PWC’s poll of hoteliers reveals that many continue to regard sharing economy platforms as a low to moderate threat to their traditional business mode, a view that contrasts with what experts are seeing on the ground. Almost 60% had not seen, or did not admit to seeing, new sharing models impacting their business.

Hoteliers’ attitude could be partly because P2P is a stealth competitor and hoteliers find it hard to accurately measure the impact on hotel performance, but in order to compete with Airbnb, it’s important to communicate to customers and potential customers that your hotel offers a unique, cultural experience that will add value to their holiday, as well as drive home what it is about your destination that makes it preferential to an Airbnb stay.

 

At AlphaGraphics, we specialise in helping hospitality businesses deliver data-driven, automated marketing campaigns that include direct mail to improve lead generation. To find out more, visit: https://hospitality.alphagraphics.co.uk/our-services/