Keeping an Eye on Airbnb
When I heard the recent announcement by Marriott International CEO Arne Sorenson regarding their PILOT in London with Tribute Portfolio Homes offering private accommodations as direct competition against Airbnb, my first thought was why? Why get involved with an “extended stay” product when Marriott already has strong brands such as Residence Inn, TownePlace Suites, and Element that serve this segment of our industry?
This prompted me to do some research to look for trends and strategies within our Industry to compete with Airbnb. Here’s what I found regarding the growth and evolution of Airbnb, specifically in the Leisure Market:
- Hotel performance continues to show strength while more hosts than ever are renting their residences on Airbnb, according to STR and Airbnb data.
- While Hotel occupancy was significantly higher than Airbnb, Airbnb’s occupancy was the highest in the same markets where hotels generally had high occupancies.
- Airbnb guests stay for a longer length of time than a hotel guest.
- Airbnb is currently capturing Leisure travelers more than Business travelers. But keep in mind, this is how OTAs started as well. Now Business travelers have surpassed Leisure travel bookings on OTAs per 2017’s Think with Google study.
- Hotel ADR is generally higher than Airbnb rates by $16 than the average in the US markets.
- Hotel inventory is fixed; a hotel room tonight is a hotel room tomorrow. Airbnb inventory can flex, based on the hosts making their privately-owned units available to the public for rent.
- Airbnb offers an alternative to traditional meeting space environment with a more relaxed setting to get creativity into action: Airbnb for work. This is a move to give a Business Travelers a reason to look into Airbnb when searching for a venue to host their next brainstorming meetings.
- Per Brian Chesky CEO of Airbnb, they have been working on enhancing the experience of the traveler by offering a service for “what to do once you get there” as of June. This shows that they are aggressively going after OTA and 3rd Parties and also Hotel Brands that offer similar services to their Loyalty members.
After my research, I concluded that hotel companies such as Marriott International might be on to something and, more than ever, it is smart to keep a close eye on Airbnb. The Marriott PILOT that started in April with Tribute Portfolio of Homes comes to an end in October. It will be interesting to see the results of the pilot and whether they will expand to any other markets outside of London.