Dear hoteliers: six things you need to get right about Airbnb
As a road warrior who frequently stays in all sorts of accommodation around the world, I decided to analyze the allure of Airbnb and compare it to staying in hotels.
I conducted mini-focus groups with Baby Boomers, Gen X, millennials, and iGen to hear their thoughts. You can have access to all the back up content here. This article summarizes my thinking for hoteliers. You can also access the condensed podcast version here.
1) While it’s an apples-to-oranges comparison, both are fruits.
I, too, feel that a hotel experience is different enough from an Airbnb experience that it’s not fair to compare them. However, for hoteliers, the conversation should not stop there; it should begin there.
Airbnb isn’t so much new competition but a paradigm shift, which has the potential to do more damage than traditional hotel competitors.
My research finds that because of pricing, some travelers divide a hotel’s value into two distinct components: accommodation versus service. First and foremost, they think ‘I need a room with a bed.’ And if they feel they don’t need service, or read reviews about bad service, then these travelers are likely to look for something on Airbnb that is within their budget.
It’s an old advertising adage that people buy with their heart. Dear hoteliers, win hearts with good service! This is what makes you special. Based on the voice of your customers, winning hearts involves triangulating your service between competence, helpful attitudes, and proactivity, particularly when things go wrong unexpectedly for a traveler.
Airbnb hosts aren’t used to dealing with problems like your staff, and the peace of mind that this creates is worth a lot, but you have to deliver on that promise should the need arise.
2) Sure your hotel has services, but are those services meaningful enough to win hearts?
Part of the problem the information age introduces for hoteliers is that guests can google everything; now travelers often know more about the destination than your average hotel staff. I have heard such travelers not consider the concierge or guest relations at all not because their services don’t even enter into the mindset – googling is faster and less biased.
Also, a traveler can google their way to many local services that further dilute the convenience benefit offered by a hotel’s traditional services.
For example, Uber makes local transportation seamless – have you used Uber because you can get a car faster than your hotel bellmen? Also, local food delivery services make in-room dining seem superfluously expensive, particularly when there’s a mandatory service charge tacked on that’s more than the delivery service – and they have more distance to travel!
Minibars seem like relics of the past, and the ones that auto-charge after an item has been moved from its slot for more than a few seconds make guests feel they’re untrustworthy – is it worth the headaches and the bad will?
And even the best housekeepers cannot fix problems with poor maintenance or design: low water pressure, unpredictable hot water, no AC outlet, or hair dryers that whisper not shout and are permanently tethered to something… as if travelers don’t have a need for a powerful and mobile hairdryer.
Airbnb hosts have lower expectations to fulfill. Aside from a truthful description of their place, they just need to offer efficient check-in/out, and fast, reliable wifi.
Recently I stayed in a Singapore flat and the host said that airport pickup was included. I was so happy I told a lot of people (like you, now).
Dear hoteliers, the concept of convenience needs to be redefined. Some assumptions about what makes things convenient for travelers are outdated because travelers can find better, cheaper, and/or faster alternatives elsewhere. Their cleverness erodes the value of your service. The spirit of service is what you have to maintain; the manifestation has to be relevant for your customers today and tomorrow, not of yesteryears.
3) Airbnb isn’t just for leisure travelers; it cuts into MICE, corporate travel, and long-stays.
There’s a misconception that Airbnb is for leisure. Maybe in the past when it first started, but holding onto that view in 2016 would be like believing the world is flat.
People in the hospitality industry already stay in Airbnb for leisure, corporate, and MICE purposes, why would it be different for people in, let’s say, tech or finance?
Did you know that Airbnb has a program for business travelers? It also has a partnership with Concur allowing big companies to expense their Airbnb stays just like they can with hotels.
And people that are considering long-stay – even the Boomer luxury traveler in my focus group – would consider Airbnb for stays of longer than 1 week.
We can keep saying these people aren’t typical hotel customers, but that just proves that Airbnb is a disruptive paradigm shift: we’re admitting that the addressable market shrank because customers we could have had moved on to the new paradigm.
Sometimes hoteliers think about Airbnb like the way the music industry thought about records. The integrity of the hotel experience is analogous to the integrity of an album – the assumption is that people want the whole thing and are willing to pay for it all. But just as a record has some songs that you like, and some songs you don’t, so it is with hotel services.
It took the music industry a long time to figure out how to make money by song as opposed to by album; meanwhile they were losing young customers to Napster (some of whom were then sued by the record labels for piracy).
It turns out people, even youngsters, wanted to pay, they just didn’t want to pay for a whole album filled mostly with songs they didn’t care for and there weren’t any alternatives other than services like Napster.
Fast forward to today, other than Adele, when was the last time you bought a full album? Or even bought any music at all if you use a streaming service such as Spotify? Yet we are all still customers of music.
So dear hoteliers, to make the Airbnb trend work for you, I would stop saying Airbnb customers aren’t hotel customers; instead, I’d say Airbnb customers are a new type of customers that we should be courting for our hotels, and have a plan for them just like there’s a plan for Chinese customers, Halal customers, and honeymoon customers.
4) Invest in content marketing as hotels are becoming as distantly familiar as Airbnb flats.
Because what Airbnb has to offer varies so much from flat to flat, there are more filter options on Airbnb for users to customize their search. For example, I can filter by the inclusion of a washer or a dryer. However, the way flats are listed and displayed on Airbnb is similar to hotels in an OTA. Both user experiences commoditize the inventory – each listing has the same format as all others.
This works for Airbnb hosts because what they have to offer is largely location, hardware, and price. And reviews alongside the listings tell you the accuracy of the descriptions and whether previous guests felt the price was justified. You even get to look at the profile of a host to see if s/he is a psycho.
For hotels, OTAs do a great job of showing location, hardware, and price, but it’s difficult to get a sense of a particular brand or the people providing the service. You have to dig into the reviews to see what service is like, but it’s still not as personal as the profile of a host and pictures of his/her home.
This presents a new challenge for hotels – if the user is lazy (or thinks s/he has no reason to go to your website), where will you explain your brand of hospitality, which is the premium? Hoteliers need to invest in their own websites to ensure that their message is more clear and accessible than an Airbnb host’s profile.
Further, they should utilize social media channels to reinforce and promote their message frequently and direct traffic to their own website, something that a hotel can do which most Airbnb hosts cannot. This is why creating content that engages and leads back to brand.com is becoming even more important.
The top priority in hotel marketing in the last decade has been on distribution; now that the distribution channels are full, you can’t rely solely on a presence in the distribution channels to sell rooms. A great content marketing plan should be top priority if you want the USP of the brand to be anything but price.
A reference point: even though Coca-Cola is distributed inside convenience stores, you go there to buy it, not to learn about it. Coca-Cola has created your need for its product ahead of time so you use the store as a convenient point-of-sale; this is what your hotel marketing should focus on now that it is in all of the Tesco and 7-11 equivalents in the travel industry.
5) Female travelers question the safety and security of Airbnb.
Based on my conversations, most females have some concerns about safety and security whereas most males do not. A woman’s concerns may decrease if she’s traveling with at least one other person, but regardless of age and travel experience, I heard the same concerns many times.
One of my female employees told me she couldn’t sleep through the night the one time she stayed in an Airbnb flat in Tokyo even though she knew it was one of the safest cities in the world.
According to Airbnb, out of 17 million travelers it housed last summer, the number of calls received by their Trust & Safety team was fewer than 300. I don’t know what, if anything, Airbnb is doing to make its female guests feel safer and more secure. Maybe because the number they cited is so low they don’t perceive this to be an issue.
Surely the combined number of safety calls for a few large hotels would exceed all of Airbnb’s purported number, but reality isn’t perception: none of the females I talked to had an inherent issue with safety or security in hotels.
Also, returning to the first point about hotel staff being trained to deal with problems: should a safety or security issue come up, the resources of the hotel, from security cameras to the General Manager, can be deployed to identify and resolve problems quickly. Whether this can translate into perceived value for hotels or not, I don’t know, but I would consider this to be a meaningful service that hotels provide which Airbnb doesn’t.
6) Airbnb, and its hosts, are entrepreneurs; as such, they evaluate risks differently.
It’s difficult enough to compete against other hoteliers – who share similar backgrounds and experiences, and perhaps even used to work for you. Airbnb is a tech entrepreneur – so they think about the problem of ‘I need a room with a bed’ differently than hospitality people.
The last three times tech entrepreneurs came into the hospitality space, they changed the face of distribution, the value of editorial reviews, and B2C communication channels.
Furthermore, Airbnb hosts are service provider entrepreneurs. They already have to pay rent or mortgage for their home(s), and if they can rent it out and get someone to pay partially when they’re not using their place, why not?
Airbnb solves the issue of creating awareness, advertising their space, screening guests, communicating with guests, collecting payment, and exchanging foreign currencies, all for a nominal fee. There’s even insurance for damages. It’s a fantastic channel partner because it does the heavy lifting by providing financial, IT, marketing, sales, and communications infrastructures so hosts can innovate on their services if they choose.
If you think about it, hosts that are willing to let strangers stay in their place and operate in a grey area of law in some regions demonstrate that they aren’t averse to risk – very entrepreneurial!
This poses a different problem for hoteliers, because there are no rules to what Airbnb hosts may come up with – and they can adapt to customers with every visit and roll out changes quickly.
Entrepreneurs come up with things that don’t work all the time but what happens when you have millions of entrepreneurs – hundreds just in your area, who get to try often with no overhead or politics? Odds are pretty good that they’re going to come up with something that works and is disruptive; it’s only a matter of time.
I’m sure there are at least as many service provider entrepreneurs who work in hotels as Airbnb hosts in every city, but whereas Airbnb provides a platform for entrepreneurs to thrive, many hotels still have problems unlocking the potential that exists within a timely manner.
Dear hoteliers, you may need to change the process of developing service innovations. There’s still time for this to be self-initiated, but with that many entrepreneurs outside the hotel in your market, time is running out.
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