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 recent trend has emerged in the beverage industry that pinpoints a change in attitude and behavior in consumers. Want to find out what this new trend is? Next time you are at a grocery store, walk down the wine aisle and look for something out of the ordinary. Between all of the wine bottles, something different will pop out: wine cans. It now seems that beer is not the only alcoholic beverage sold in cans. Within the past year, the creation and consumption of canned wine have greatly increased. In fact, canned wine sales have more than doubled in the past year, according to a Business Insider study. The study showed that sales of canned wine reached up to a revenue of $6.4 million in 2015 and so far to $14.5 million in 2016. Although canned wine currently only makes up about 1% of the market, the growth rate is rapidly climbing, comments Sommelier, Andrew Jones.
The idea of canned wine only began a few years ago. Andrew Jones, who started Field Recordings winery in Paso Robles, Ca…
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Additional discussions for consideration: Repla…
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