Why Airbnb isn’t bad news for hoteliers
The majority of recent industry discussions about Airbnb talk about how hotels can combat the growth of the app and how they can compete with the industry’s newest and biggest threat.
The app, which moved from a gap-year traveller’s and backpacker’s secret to a go-to option for couples, families and business travellers, is at the forefront of the hotel and travel industry’s mind.
But recently Airbnb took a big hit from one of Europe’s most popular tourist destinations, when Berlin announced it was banning residents from renting out their flats to tourists through the app.
With the city in a housing crisis, city leaders made the decision to turn their back on Airbnb to make housing work for Berlin residents rather than short-term visitors. While this was a smart decision for the housing market, it may mean the tourism industry in the city takes a hit, with a drop in alternatives to hotels. It will be interesting to see if there’s a knock-on effect on tourism, or if hotel bookings increase instead.
The average price for Airbnb accommodation in Berlin is £42 per night, compared to around £62 for a hotel room. While this is a great example of why some tourists are choosing to book via the app rather than with a hotel, it’s also an example of how they benefit from cheaper accommodation that could have been offered to locals.
Our own capital is also facing an affordable housing crisis, and Airbnb is becoming more popular there too. The average price of a hotel room in London is £174, whereas Airbnb accommodation is around £99, putting London’s residents in a similar position to those in Berlin. So why don’t all cities follow Berlin’s lead and restrict tourist lettings? Because the bookings still bring in more tourism and increase local spend.
But here’s why the ban in Berlin isn’t necessarily good news for hoteliers in the city, and other cities’ reluctance to follow suit isn’t bad news for hotels either.
1. It boosts tourism
While Berlin’s ban shows loyalty to residents, cities like London make a lot of money from tourists, with around 10% of London’s income generated by tourism, and restrictions like Berlin’s put this income at risk.
Airbnb recommends and promotes certain cities, locations and types of accommodation to its 60 million users, therefore has the potential to influence popular tourist destinations. So while a ban on Airbnb bookings is far from a ban on tourism, there’s no denying it could affect the popularity of an area as a tourist destination. That would mean hotels losing out.
Dubai Tourism recently joined forces with Airbnb to help boost tourism in the city, by offering alternative accommodation and giving visitors more choice. The city hopes that if Dubai’s tourist numbers increase, then it’s likely that hotel bookings will too.
So while it’s hard to argue with Berlin’s logic when it comes to banning booking through the app, it’s far from ideal for cities that want to increase tourism or are heavily dependent on it.
2. The app isn’t monopolising the market
It’s easy to forget that Airbnb is very much a niche player when it comes to overnight stays.
Some people will always choose hotels over Airbnb.
And with any business that’s still in the early stages of popularity, any bad experiences can put users off for life. A quick Google search shows a few examples of this.
Also, customer loyalty doesn’t transfer well to Airbnb. A host is unlikely to have as many options, in as many different cities and locations, as hotel chains. Loyalty schemes may also play a part here, especially for business and regular travellers who benefit from numerous stays with one hotel group.
And let’s not forget package holidays are still a huge part of travel. It’s hard to steal business from this side of travel, and it’s always been one of the most popular ways for hotels to take bookings.
3. Hotels and Airbnb offer something completely different
One of the best analogies I’ve read is that Airbnb is to the hotel industry what budget airlines are to the airline industry.
Airbnb offers travellers their own private space, whether it’s a room or apartment, but renting someone else’s home often means there are rules to stick to and time-consuming aspects of the stay, such as arranging a meeting place to pick up keys. In comparison, hotels offer immediate check in, on-going customer service and extras such as on-site leisure facilities, bars and restaurants – qualities that are sought by many, especially those who aren’t on a strict budget.
While many are discussing how hotels can fight back and what they can do to market and promote hotels, the industry forgets that hotels are not the direct competitors for Airbnb – the app’s offering is actually more similar to villas and holiday apartments. It’s true it has the potential to steal business from some hotels, but improving customer experience and offering new packages and services can help prevent this.