TRAVEL & HOSPITALITY

The Sharing Economy, Hotel Industry Disruption and the Changing Travel Landscape

May 19, 2017 / By Vanessa Horwell

Since Airbnb’s debut in 2008, the home-sharing startup has gone from nuisance to nemesis for the hotel industry.

For nearly a decade, hospitality executives largely dismissed the impact Airbnb would – or rather, could – have
on their businesses. As recently as 2014, two industry leaders played down the threat (or perceived lack thereof)
posed by the disruptive startup:

“Our guests don’t want the Airbnb feel and scent,” said Christopher Norton, EVP of global product and operations at the Four Seasons, in remarks to Fast Company.

“We have not seen a direct effect [from Airbnb] in any of our hotels,” Richard Jones, senior VP and COO of Hospitality Ventures Management Group, told HotelNewsNow. “We don’t feel it’s having any impact on our results or that it has hit our radar as of yet.”

Fast forward to a state of a hotel industry in 2017, and Airbnb’s impact is definitely being felt – and not just by the hotels.

According to the company, about 150 million travelers have now stayed in three million of its listings in more than 191 countries.
As Airbnb creeps deeper and deeper into the bread-and-butter market of most large hotel brands, i.e., the loyal
and profitable business traveler – the hotel industry is sounding high-volume alarms and inciting industry action.

Hotel Industry & Airbnb’s ‘Offensive’ New Business Travel Strategy

When it launched, Airbnb’s model focused on providing short-term, low-cost rentals to leisure travelers. In other
words, business travelers were not the target customer segment and the hotel sector felt confident that their
corporate travel-related business lines were safe from Airbnb’s wrath.

Not so in 2017. Not only has Airbnb debuted new branding for its Business Travel arm, in early May 2017 the
company launched an aggressive campaign designed to position the company as a business-friendly lodging
option. According to AdWeek, the campaign relies heavily on video and out-of-home ads in locales targeting
frequent-flyer and freelance professionals (such as Chicago, Boston, New York and Portland, Oregon).

Airbnb also just announced a new search feature that makes it easier for professionals to see which listings are
most relevant to their needs. Once business travelers register with a work email, they’re able to filter listings
designated as “business travel ready.” These “BTR” listings come equipped with desks or other workspaces, are
located near prominent business districts, and offer reliable Wi-Fi. Everything that a road warrior like yours truly
needs.

These recent changes to Airbnb’s model are likely the first of many targeting the lucrative corporate travel
sector, (more than 250,000 companies across 230 countries are apparently using Airbnb for work-related
accommodations) – and hotels are fighting back in full force.

Hotel Industry: The Latest ‘Defensive’ Moves & Measures

As the hotel sector arms itself for a battle with Airbnb, it’s wielding some powerful bats. Thanks to longstanding
relationships with regulators, lawmakers, and government officials, hotels are using laws at the local, state, and
national level to thwart the upstart competitor.

Similar to the challenges facing Uber as it expanded into key cities, Airbnb has had a notoriously difficult time
combating regulatory restrictions on lodging in major cities such as New York, San Francisco, Boston, and
elsewhere. And the hotel industry has had more than a little to do with that: A recent article in the New York
Times highlighted how the American Hotel and Lodging Association – a trade group advocating on behalf of
industry giants such as Marriott International, Hilton Worldwide, and Hyatt Hotels – is “working with a broad
coalition of affordable housing advocates, community groups, neighborhood associations, labor, and other
progressive entities” to ensure a “level and legal playing field within the lodging sector.”

(For now, let’s put aside the question of how “level” a playing field can be if it’s stacked up against the most
disruptive force in the hotel industry.)

Hotels are also using other business tactics to claw down Airbnb in the consumer travel space. Some are
launching new brands focused on providing more “authentic” local experiences, such as Hyatt Centric, or with
communal working or lounging spaces, such as Marriott’s expanding Moxy Hotels line.

Whether for business or leisure purposes, most travelers remain focused on price, availability, and convenience –
meaning the battle between hotels and Airbnb will be waged in the war of supply, demand, and opportunity in
heavily restricted markets. And with Millennials almost three times as likely to use Airbnb vs. those aged 35 and
older (according to eMarketer), only time will tell which victor wins the spoils in the next era of hospitality. I’m
placing my bets on Airbnb.

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Vanessa

Horwell

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