The Powerful Impact of Airbnb on the Hotel Industry

Hotels are fighting back against Airbnb's increasing dominance

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Hotel & Hospitality Renovation Insights
Cassandra Soto
Brand & Marketing Strategist

December 24, 2019

Airbnb has really been keeping the hotel industry on its toes. It has completely changed the lodging market by offering highly competitive rates for travelers around the globe, especially some of the most popular holiday destinations. They offer good rates at peak seasons while hotels tend to charge ridiculously high rates due to the scarcity of rooms.

From an economic standpoint, this has created quite a bind for hotels, which basically thrive on high margins, compelling customers to pay more. A fair example would be the pricing of hotel rooms in Manhattan during peak holiday seasons or New Year’s Eve. Airbnb rooms have become a reliable and cost-effective means for tourists looking to enhance their traveling experience without spending a fortune.

The Hotels are Putting Up a Fight

On the other hand, hotels are also trying to put a decent fight against Airbnb’s increasing dominance. While their efforts are modest at best – it’s worth appreciating the fact that Airbnb has forced expensive hotels to start offering value for money. This new shift of the traditional hotel industry is something that is going to be felt for years to come.

Airbnb rooms seem like they’re dominating the lodging market but it’s also vital to understand that many of their customers don’t choose this service because they prefer it to stylish and comfy hotels.  Often, they just don’t have any other choice. The fact remains that Airbnb is extremely successful in cities where room availability is a big issue: San Francisco, New York, Los Angeles, etc. are good examples. Similarly, in cities where this is not an issue, like Houston, Memphis or Atlanta, Airbnb listings are quite limited.

Furthermore, according to Elkus Manfredi architect, Elizabeth Lowrey, many Airbnb customers seek a homely, minimalistic and non-manufactured accommodation to get a home-away-from-home feeling that traditional hotels mostly fail to provide.

Hotels are realizing how scarcity of rooms have and will adversely affect them in the future. This is especially why big hotels are buying newer locations to book guests. Hotels are also investing in real estate that’s different from high priced hotel rooms, compatible with the types of rooms Airbnb provides. For instance, Marriott has launched its subsidiary called Moxy, which is a great place to book hotel rooms that are closer to the community with traditional amenities such as bars, gyms, etc.

The Holiday Season

Like it or not, we all know how frustrating it can be to find comfortable accommodation at low prices during the holiday season. It doesn’t matter if you prefer Airbnb or not. Nobody hates saving a ton of cash staying at a minimalistic yet comfortable room. The same goes for summer holidays, peak sports festivals, tournaments seasons, graduation season, etc. It is a simple case of demand and supply; as demand increases, the supply drops – and prices skyrocket when room availability drops.

On the surface, it really does seem like Airbnb is strong-arming the traditional hospitality industry into submission, and it won’t be wrong to assume that the company is the future of the hotel industry. Airbnb has and will continue to thrive by exploiting the critical weaknesses of the hotel industry, forcing hotels to fight back by providing more services and diversifying their subsidiary portfolios to match consumer demand.

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Cassandra Soto
Brand & Marketing Strategist

About Triple Crown Construction:

Founded in 1991, Triple Crown Construction built a reputation for itself as a reliable partner in the hospitality and commercial construction industry by understanding and delivering on its partners’ expectations. Based in Frederick, Maryland, Triple Crown Construction strives to approach each and every project with the goal to deliver quality, service, and value, and is committed to raising the standard of excellence in all areas of its work. The company operates with a family mentality, a commitment to the greater community, and a desire to work with those who aim to improve their customers’ experience.

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