There’s the real estate your hotel sits on and the real estate your hotel occupies on booking engines. One of those is about to get challenged in a big way.
I have a guestroom in my house. It’s nice—comfy bed, good sheets, plenty of pilfered high-end amenities that I take from hotels. Heck, I even have a luggage rack that I bought for $3 at a hotel liquidation sale. I’d call my guestroom upper midscale if it had an en suite bathroom, which it does not, so it’s probably more along the lines of design-forward-hostel-with-shared-bathroom.
It’s used probably eight nights a year, which is a pretty abysmal occupancy rate.
Now imagine if I listed it on Airbnb or HomeAway for $50 per night. That would be a nice little chunk of change. But then I’d have to clean it more frequently and invest in one of those key lockbox things and think about how to process payments and … start a business.
I could do that if I wanted to—nothing’s stopping me. But I already have a full-time job, and for me, it’s not worth the effort. But for plenty of other people around the world, it is. They started the wave of shared accommodations as a cottage industry and grew it into a behemoth of monsters with unheard-of market caps.
And that business—the one that so many hotel industry folks still like to dismiss as a little home-based cupcake shop—is about to get even bigger.
Last week on Expedia’s quarterly earnings call with analysts, CEO Dara Khosrowshahi shared some interesting information about how the company is progressing in its integration of HomeAway. Here’s what he said:
“What we are talking about is a much more fundamental integrated experience where someone who comes to an Expedia or Hotels.com and is searching for hotels, depending on length of stay, depending on weekday, weekend, et cetera, they are going to get a complementary mix of hotel search results and/or vacation rental results based on a number of different presentations and logic. We expect to be piloting that experience sometime in Q4, and based on the results of those pilots, I think we will be making it a bigger part of our experience late this year and certainly going to next year.”
That is competition for space on Expedia and, therefore, competition for revenue. Yes, yes, talk all you want about how you’re trying to encourage direct booking and rely less on online travel agencies. And talk about how hotel guests want different things than shared-accommodations guests do. There is merit and data backing up all those assertions, and the collective hotel industry needs to continue to support efforts to promote itself.
But at the end of the day, when a HomeAway house gets listed in the valuable Expedia search real estate that your hotel might have occupied, that’s business lost for you. And it’s business lost to a real competitor you should worry about, because make no mistake—no one-off casual homeowner is going to list their guestroom down the hall on HomeAway via Expedia. Those prime listing spots are going to go to serious multiunit owners for whom HomeAway renting is their primary business.
What’s more, this trend of integrating different types of accommodations into traditional hotel distribution portals isn’t going to stop. AccorHotels is doing it. Hyatt is on the verge. Someone will buy Airbnb (it’ll be a distribution company like Expedia, not a traditional hotel company), and this will snowball.
Yes, regulations need to standardize and tighten for shared accommodations. Yes, the industry and its partners are doing a lot to put data behind the impact of shared accommodations. Yes, brands are making great efforts and investments into encouraging direct bookings. These efforts are paying off and will continue to pay off.
But whatever you do, don’t dismiss the competition nontraditional lodgings will pose to you. That ship has sailed.
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