The growth of Airbnb has made a significant negative impact on hotel business, even though the hotel industry has also been enjoying a steady long-time growth since 2009, as measured in almost all performance indicators including occupancy, average daily rate, revenue per available rooms and number of new hotels open for business.
For hotels, it is a loss of revenue (or uncaptured income) when a traveler chooses to stay in an Airbnb listing rather than a hotel room. Hotels have been trying hard to fight with Airbnb, but it does not seem any of their strategies can actually stop the growth of the room-sharing website.
Besides hotels, Airbnb also makes a negative impact on online travel agents (OTAs), such as Expedia and Priceline, especially when Airbnb is aiming to become a true full-service travel enterprise. Because a large portion of OTAs' revenue comes from the commissions on hotel sales, it is also a loss of revenue for OTAs when a traveler books a room elsewhere, either on Airbnb.com or directly on a hotel's website.
Hotels, OTAs and Airbnb are basically fighting for the same type of business — accommodation services for travelers. One strategic move of any player can substantially shift the dynamic relationships among the competitors in the market.
Last year, for example, several hotel chains announced the "book direct" campaign to fight with OTAs, where hotels guaranteed travelers the lowest price in the market for their stays if they made the reservations directly on the hotels' websites.
When this battle was still in full swing, I was wondering if hotels' book-direct strategy would push OTAs to work closely with Airbnb or at least get more involved in the short-term residential rental business. Now, Expedia and Priceline, the two OTA giants, are bidding big on the short-term residential rental business, according to a recent report in The Wall Street Journal.
How big is the short-term residential rental business?
If measured in revenue, the residential rental market is only about one-fifth of the size of the hotel market in the U.S. Yet the growth of residential rentals has outperformed the hotel industry since 2015.
The U.S. hotel industry grew 5 percent in revenue to $151 billion last year, and its growth is predicted to remain the same this year; whereas the private accommodation market, including short-term residential rentals, grew 11 percent last year, and the market is expected to grow 8 percent to over $34 billion this year.
What are OTAs doing in the short-term residential rental market?
Soon after its acquisition of HomeAway, Expedia integrated the listings of short-term residential rentals into its OTA websites. With a few clicks, travelers are now able to rent a home or a room in a residential area on websites like Expedia.com as well as Priceline.com, which is another giant OTA in the global market that operates Priceline.com, Booking.com, Agoda.com, Kayak.com, and others.
What is the current landscape of the short-term residential rental business?
Airbnb took the lead last year, with 15 percent of the market share. Expedia came the second at 12 percent, followed by Priceline at 9 percent. Airbnb now has more than 3 million listings, including 1,400 castles, in 65,000-plus cities in over 190 countries.
After its acquisition of HomeAway.com, Expedia has about 1.4 million listings of short-term residential rentals available for reservations. HomeAway saw a 48 percent increase in bookings as compared to the year prior to the acquisition, to nearly $2.7 billion after Expedia rolled out the HomeAway listings on OTA websites. Priceline Group's Booking.com also had over 2.5 million listings last year.
What do you think of the strategic move of OTAs entering the short-term residential rental market? As travelers are now able to search hotel rooms and short-term residential rentals in one place, do OTAs possess more competitive advantages over hotels and Airbnb in selling accommodation services? Note: This article was also published at MultiBriefs.com - the leading source for targeted, industry-specific news briefs. The picture was downloaded from PebbleDesign.com.
"A second chance is all hoteliers need to get back in the game." By saying that, I am referring that the staggering numbers hotel websites get from the horrors of booking abandonment, which can be better understood as "cart abandonment." There could be various reasons why guests decide to leave a hotel website during the booking process. For example, a consumer may feel unnecessary to continue browsing in the hopes for a better price later; or the hotel website lacks the information that the customer is looking for. If your hotel has ever experienced book abandonment by consumers, remember that a second chance does exist! That is, with the help of 'retargeting'.
Why and where is the abandonment?
No business wants to be abandoned, especially when it was over something as small as a payment issue on the website. It has been found that about 81% of guests desert the travel booking with the following reasons:
39% - Browsing around and wanting a wider variety thro…
What can managers do to shut down bad online reviews? Here is a real example:
It started at the Broadway Oyster Bar in St. Louis this February when Mary S., a Yelper, left the business with a one-star rating and a description of the negative experience she received in the restaurant. As a reference, the restaurant is now being monitored by Yelp for any content related to media reports, meaning some reviews have been or would be removed from the business's page on Yelp, but the restaurant has an overall 4.4 star rating from more than 900 Yelpers in March. Mary went there for a birthday dinner. She claimed that she had a reservation for a party of nine people, but the party waited for two hours before they were finally seated. To make it even worse, because there were three additional people joining the party and the manager was unwilling to work with them, they would have to wait for longer to be seated together or be split up. She then took the group of 12 people with her to a nearb…
Kickstarter provides the ability for companies to begin and build a successful start-up by developing an alternative that is based on people’s contributions to the business. Every entrepreneur and business developer understands the hardships of financial issues that arise in creating a business which can hinder progress in several fields. Financing companies view start-up companies as an advantage as it allows them to raise their prices on loans and provide other overpriced services. Kickstarter tries to eliminate that step by giving the donator the ability to determine which company should be helped based on future revenue and growth predictions. It allows for add-ons between companies therefore pushing the drive to seek new ideas while creating new markets, developing certain domains and preventing the saturation of others. Within the hospitality industry, the development of new ideas that can push the industry forward need financing. Therefore Kickstarter can be a good start. Contr…