The impact of Airbnb on hospitality – Do hotels stand any chance against “shared-economy”?

Airbnb, an online community marketplace where people can list and book accommodation around the world, has rapidly changed the face of the hospitality industry since its entry into the market in 2008. Such platforms, also known as the “sharing economy”, have been enthusiastically adopted by customers but are some of the main risk factors for the traditional hotel sector.

This week in Graph of the Week, we look at how services, such as Airbnb, managed to drive better performance than hotels by comparing the costs of a stay in both of them. Across Europe, the average daily rate for a hotel room is far exceeding that of an entire home on Airbnb. It is evident that the rise of Airbnb is largely attributed to the higher ratio of price-value, making it harder for the business model of hotel establishments to duplicate.

Why do travelers choose Airbnb?
The alternative accommodation sector attracts both leisure and business travelers, who benefit from the widest choice of products and services in the hospitality market, ranging from mountain villas to high-end yachts. The increased demand for these “shared” platforms combined with a business model that has a near zero marginal cost and less strict regulatory conditions shake up the current market situation.

The peer-to-peer service has become a major competitor to traditional hotels, as travelers choose to book with independent hosts rather than established hospitality institutions. It is estimated that hotels lose approximately $450 million in direct revenues per year to Airbnb. Additionally, due to higher labor-intensiveness, hotel businesses are more vulnerable to massive job cuts and loss of additional revenue streams, such as that from food and beverage.

What is next for hotels?
To keep up with the competition hotels need to look at the founding pillars of their business models and identify room for further differentiation. This is why Aryxe is organizing an event on 30 May for hotel and restaurant owners who want to create additional value for their businesses. As part of our agenda, we are talking about the impact of Airbnb and similar services in the hospitality industry and how we can mitigate their impact.

Be sure to join us on the 30 May for exclusive insights in this and other topics.
Full agenda and sign up options here: https://bit.ly/2HYXAjr