Protect Neighborhood

Airbnb vs Hotels. How Aware can be the silver bullet in this battle royale.

Airbnb vs Hotels
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These days travelers have a tough choice to make. Should I stay in a hotel or in an Airbnb?  That question is at the heart of this new rivalry. How it plays out will determine the future of travel for years to come.  

 

So, who’s winning the bout right now? You could argue that Airbnb has already won the match as it has disrupted how the market works.  The fact that there are other alternatives to hotels means that the hospitality industry has been disrupted in benefit for the consumer. While that is a narrative Airbnb likes, it’s not completely true. The reality is that the mayor hotel players have been using the same strategy used by Airbnb decades before them.

 

Since the 1980’s, hotels have switched their business model from asset heavy owner operated to light asset platform strategy. This means hotels don’t actually own the hotel, they just run operations, lend their name and charge a fee. Even Donald Trump got in on the action of the light asset platform strategy selling his stake in most of the hotels and golf courses and only lending his brand in exchange of fees. Hilton only owns 2% of their hotel rooms. Hyatt owns 5%. And Wyndham owns 0%.  If this sound familiar, it’s because it’s exactly what Airbnb does. 

 

Airbnb’s innovation and leverage in tech has allowed them to grow the model at scale and achieve unprecedented growth. As of 2022, Airbnb has amassed over 6 million rooms available for their users. By comparison, all mayor hotel players (Hilton, Marriot, IHG, Hyatt, Wyndham) have less than 4 million.  However, quantity is not quality. In terms of gross revenue, Airbnb is third behind Marriot and Hilton.  

I would say Airbnb is winning right now, but it’s likely because they are fighting with a handicap. Regulations are quickly catching up to Airbnb and soon they’ll be taxed like hotels. When that happens, Airbnb will not be able to leverage and position themselves as a more affordable option.  Other competitors like Vrbo and Homeaway should erode their monopoly as well .  

 

When the playing ground becomes level, and price becomes equal across hotels and Airbnb, safety & service will inevitably become a competitive advantage. Whoever edges out the competitor in these arenas will claim the prize.   

 

Why service and safety? Because they are the only shared variable common denominators in a travelers’ consumer profile.  The consumer profile of a traveler primarily includes the following criteria.  

 

Their respective bases are clear. Business travelers mostly 68% favor hotels over Airbnb’s. This makes sense, considering that business travelers are there to work and are more conservative in their risk approach that a brand provides them.  While millennials and more adventurous travelers, 60% favor Airbnb’s over hotels. Again, this checks out since millennials ae not swayed by brand loyalty and focus on the experience and price.  Check more consumer stats here.

 

The battle ground for consumers is in the middle. Consumers look for value in these 4 criteria: Service, Location, Price, Security.  Airbnb currently has the advantage because it has (or had) lower prices, and dynamic locations. Airbnb’s Achilles heel has always been convincing travelers to take a risk and stay in an unknown place.  That is why the number one concern of Airbnb users is privacy and safety.   Also, they can’t compete with the service aspect of a hotel. Hotels in general can’t lower prices and can’t do much about their location. They got no choice to focus on service and safety as a difference maker. 

 

This is where a platform like Aware becomes extremely valuable for both. Safe travel is paramount to all tourist. By providing free usage of the app to their guest during their stay, they can reinforce both safety and service. Leveraging this technology can be the difference maker for a traveler making their decision. It also protects the brand from the bad publicity associated when a guest is a victim of a crime.  If the focus is giving the guest a great experience, shouldn’t it start by making sure they are as safe as can be. That is the power of Aware.

 

If you are a hospitality player and want to make sure your guest feel appreciated and safe, drop us a line. It’s simple and we’ll even set you up with a pilot program for free.  

 

 

 

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