The real threat to hotels from Airbnb lies ahead
 
The real threat to hotels from Airbnb lies ahead
09 MAY 2017 7:09 AM

Airbnb might be trying to get in favor with business travelers and travel managers, despite the scuffle between the hotel industry and home-sharing companies.

Last month’s media kerfuffle pitting the hotel industry against Airbnb generated a lot of buzz within the hotel industry and among travelers. Media reports spotlighted the American Hotel & Lodging Association’s alleged game plan on how to combat Airbnb. In response, the home-sharing company launched its own salvo against the hotel industry.

And while it was a good story for a couple of days, it didn’t really shed any light on the real issues the hotel industry faces when it comes to Airbnb and other sharing economy accommodations services.

So far, Airbnb’s primary impact on the hotel industry has been felt in traditional beach and mountain vacation spots, as well as major gateway cities. Airbnb also feasts on special events that in times past created compression periods for hotels that might otherwise enable them to raise rates appreciably. For example, according to media reports, 20,000 attendees at this spring’s Jazz Fest in New Orleans stayed with Airbnb hosts. Many, if not most, of those guests would have stayed in hotels if Airbnb didn’t exist. 

Hotel owners and operators with business travel-heavy clientele have been ho-hum about the subject of sharing economy. If you operate a 200-room full- or limited-service branded property in suburban U.S., Airbnb isn’t necessarily making much of a dent in your business.

That could change and it could change relatively quickly. A recent study by the GBTA Foundation found 37% of business travelers believe Airbnb or other home-sharing services are allowed under their corporate travel policies. The reality is only 17% of companies allow their employees to use Airbnb. 

The study was full of inconsistencies that seem to leave the door open for possible changes to some corporate policies. Travel managers at two-thirds of companies that don’t allow Airbnb said they’ve investigated alternative accommodations as an option for their employees. About half of those companies have rejected the option—for now—and 13% are still reviewing the situation.

Corporate travel managers cite employee safety and security as the primary reasons for not allowing employees to use Airbnb and its cohorts. They’re also concerned about onerous cancellation policies of many home-sharing services and the lack of business-friendly amenities offered by most Airbnb hosts.

Airbnb has listened to some of these objections and is taking steps to attract business travelers and—more importantly—address the concerns of travel managers. The company recently introduced a Business Travel Ready search tool that allows business travelers to filter homes and apartments that have the amenities and services they require—everything from self-check-in to Wi-Fi to desks and bathroom amenities. Airbnb says it has 150,000 locations that meet these criteria and that 10% of its business comes from business travelers.

Airbnb says more than half of business trips made on Airbnb last year included a Saturday-night stay, implying a blurring of the business and leisure travel, and leaving the door open for more business travelers to test the product.

Should the U.S. or global economies slip into recession or worse, many business travelers will seek lower-priced accommodations. Because of high fixed costs and break-even points, hotels aren’t realistically able to slash rates very quickly or very steeply, even in times of economic turmoil. Airbnb hosts, on the other hand, aren’t encumbered with these challenges and can easily cut their rates to levels at which hotels can’t compete.

Another issue corporate travel managers have with Airbnb, as reported in the GBTA Foundation study, is the inability to easily track or contact their employees who are staying in shared accommodations facilities. If Airbnb was integrated into the global distribution system, about half of travel managers said they would consider the service as an approved option for their employees.

Despite the best efforts of the AH&LA and others, it’s difficult for the hotel industry to stop the march of disruptive progress symbolized by Airbnb. The company is bound to break through some of the barriers keeping more business travelers from using the service. Still, an Airbnb condo, apartment, house or room in a house mostly likely lacks the ambience, service and facilities most business travelers want.

It’s imperative, then, that hotels focus on the guest experience—everything from facilities to service—to make sure their customers know the sharing economy is no match for the hospitality that only hotels can offer.

Email Ed Watkins or find him on Twitter.

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