If hotel brands were in a chess game with Airbnb, they would now be in check position. According to Bloomberg, Airbnb Inc. was valued at $31 billion this past March and is looking to raise funds for expansion. With this kind of growth, hotel brands now consider them more like a rival than a business partner and as a hindrance for direct relations between hotels and their guests.
Recently eMarketer reported that Airbnb has the highest traffic of all travel sites – that includes the likes of Booking.com/Priceline Group and Hotels.com/Expedia – and it even eclipses the larger hotel chains.
At the base of this new standing is Airbnb’s resounding use by millennials. This group looks for more personal experiences in their travels that fit, what they believe, is the uniqueness of their lives. They find this in a home-based stay rather than in a more boxed offering from an average hotel.
But Airbnb is not taking a breather with just this demographic’s allure to their site. They are seriously looking into expanding their services with more personal recommendations, like connections to tour guides and special expeditions. They are even looking to expand beyond the core that gave them its current status by considering to market to business travelers – all through their platform. With the growing number of millennial business travelers who like to mix business with pleasure, Airbnb has already signed up 250,000 companies this year.
Airbnb vs Hotel Brands: The rivalry begins
According to Phocuswright , hotel online bookings through third-party travel sites grew to $31.4 billion in 2016. Hotel brands are now trying to claw their way to winning direct bookings and move away from the expense of commission hungry travel sites.
The response from large hotel brands was to offer lower rates and perks to loyal members that book direct. But these traditional approaches don’t sit well with younger travelers who are less likely to be part of loyalty programs. They prefer travel sites because of their package offerings like combining airfare or car rentals.
The sad part is that hotel brands are doing this by only operating through the old-fashioned wheel-and-deal: Offerings of all kinds from lowered special rates, amenities etc. If the deal is all the ammunition brands have, then they are going to be pushed off the chessboard.
So hotel brands need to get a bit more creative with their marketing. For example, Hilton allows points used toward Amazon.com purchases and Choice Hotels allows customers to redeem points at Starbucks. Or they allow certain services like free Wi-Fi if they book direct.
It’s definitely going to be a challenge and hotel brands need to carefully weigh all the possibilities of their next moves to get out of the check position, reconsider their marketing strategies to lure guests of all ages to book directly to avoid a checkmate – game over!