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Airbnb Versus the Hotel Industry: A Business Traveler’s Comparison

February 16th, 2017 /

I swung wide the door, rolled in my carry-on, and immediately did a routine flop across the hotel bed. It always feels so good to relax after a long day of travel, and there’s something comforting about the crisp white of nice sheets, the over-abundance of pillows, and the cushioning power of a good mattress. Traveling frequently for business, you learn to appreciate the little things that a quality hotel has to offer.

But recently, there’s been a lot of talk regarding the hotel industry’s looming opponent: Airbnb. It’s fascinating how quickly this business is changing the hospitality industry that I’ve known for decades. The key questions of the moment (as far as I’m concerned) are these: how does Airbnb stack up for business travelers, what effect is it having on hotel revenues, and what does this mean for you, me, and our future business trips?

airbnb versus the hotel industry: are they really in direct competition?

The booming online lodging company is heavily impacting hotel revenues in cities worldwide. Image by Flickr user AirBnb e l’algoritmo di ricerca (CC BY 2.0)

What You Get With Airbnb

The uproar about Airbnb is occurring primarily because players within the hospitality industry are afraid that this new upstart is occupying the same market as hotels. Both options give you a room to stay in overnight, ease in booking, and comparable price points (depending on your room choice, of course). But upon inspection, differences loom large: Airbnb caters to leisure travelers (especially millennials), while hotels cater largely to business travelers and older professionals. To understand why this matters, all you have to do is boil down the benefits.

Rooming in residential areas, for instance, lets you spend the night where hotels can’t build, often much closer to your end destination. You get to meet locals and experience what daily life is like for residents. Depending on your choice, you might get access to a full kitchen, bedroom, and bathroom—or have an entire flat to yourself. You can briefly experience life in the lap of personalized, high-design luxury—a completely unique setting that you’d be hard-pressed to find in most hotels.

With a hotel, however, you get reliable benefits that are exactly what you expect. Cookie-cutter rooms with amenities you can count on, a hotel bar and restaurant to hang out in, a concierge to handle your cab hailing or reservation requests, and room service or housekeeping if you desire. You’re a cog in a very well-oiled machine. A hotel stay is much less of an adventure, but it’s also much less of a risk. Particularly if you’re staying at four- and five-star hotels, you’re getting a guaranteed level of luxury that you can look forward to without having to worry about whether the listing was misleading or if you’ll have trouble even finding the right location.

Different target markets affect the outcome of the airbnb versus hotel industry struggle

With Airbnb you get a healthy amount of risk with your stint at local living. Image by Flickr user Airbnb (public domain)

So What Will Happen to the Hotel Industry?

Despite the one-sided target market, Airbnb has had an undeniably large impact on the hotel industry. Founded just nine years ago, this leader of the “sharing economy” is now valued at over $30 billion. For reference, that’s more than Hilton ($23 billion) and Hyatt ($6.8 billion) combined. A handy report by CBRE Hotels has even created an “Airbnb Competition Index” to calculate the company’s impact on city revenues, with NYC coming in at first place with the highest level of competition from the peer-to-peer lodging king.

When we’re talking such massive figures, Airbnb is definitely affecting hotel profits. A recent Boston University study estimates that the company directly impacts around 10% of hotel revenue in the cities where it’s most prevalent. Another evaluation states that the city of New York lost over $2.1 billion in revenue during one calendar year to Airbnb—including room costs, ancillary charges such as room service, and tax revenue. Additionally, over 2,800 hotel jobs were lost directly to Airbnb’s frictionless service. Demand for hotel rooms is dropping.

But, according to the same Boston University study, “lower-priced hotels and those hotels not catering to business travelers” are the most affected (emphasis added). So, for business travelers, these changes can be read as a good sign: prices may start falling as demand continues to drop, and I predict that we’ll soon be the most significant target market for hotel chains. In other words, the needs and preferences of business travelers are becoming increasingly important.

In fact, in response to the Airbnb effect, hotels are already starting to revamp their customer experience to include more personalization, more local flavor, and a stronger sense of community. Properties are becoming more involved in suggesting activities on and off site for travelers to experience, with some offering attractions like local indoor markets for guests to enjoy. The tides are turning, if slowly.

business travelers are likely to be increasingly important for the hotel industry in the face of airbnb competition

Not all hotels are impacted equally by Airbnb–the low-cost and leisure markets are hit the hardest. Image by Flickr user Brent Moore (CC BY 2.0)

The Business Traveler’s Choice

My opinion is this: I might choose to stay in someone’s spare bedroom if I were to ever take a leisure trip abroad and wanted to experience life in a Parisian neighborhood. But for routine business trips, I’ll stick to the consistent quality and impeccable service of four- and five-star hotels.

When you’re traveling often, you ultimately come to rely on regularity and routine to maintain your sanity. Why stress over waiting for a local to get off work to hand off your apartment key when you could already be checked into your hotel room and catching a nap before dinner? And for me, personally, cleanliness is another expected luxury—I have no desire to navigate someone else’s dirty dishes in the sink.

When you’re up for an adventure, and your performance and peace of mind don’t matter as much, booking via Airbnb is fine. But for business travelers working in consistently high-stakes situations, you need a way to guarantee that you’ll be at the top of your game—and that means opting for dependable accommodations. I personally rely on JetLux Hotels to make sure I’ve got the best rooms and the best service at my pick of hotels across the country. My personal reservationist takes care of the details, and I can focus on prepping for my morning round of meetings and not on making small talk with new apartment-mates.

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