Skip to main content

Expedia, Priceline join battle against Airbnb


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?

Expedia just spent $3.9 billion in 2015 to purchase HomeAway.com, a rival site of Airbnb. Expedia is one of the largest OTAs in the world, with a portfolio of 17 online travel platforms, including Expedia, Hotels.com, Trivago, Orbitz, Travelocity, Hotwire, and CarRentals.com.
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.comwhich 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

Comments

Popular posts from this blog

United Airlines pushes economy-class travelers away with a new frequent flyer program

United Airlines just revealed massive changes to its MileagePlus Program. How much a traveler spends on the tickets is the only thing that matters in the airline’s new frequent flyer program.

Not long ago, United quietly switched from a distance-based reward program to a fare-based frequent flyer program. Since 2015, people earn mileages based on how much they spend on the air tickets instead of how far they fly. 

For example, I typically earn about 4,000 reward miles for a round-trip ticket between Los Angeles and Asia, even though the distance of the trip usually ranges from 10,000 to 12,000 miles. Nevertheless, the distance I fly still matters because it will be counted towards the “qualified miles” for elite status. 

Now, the airline wants to take a big step further to (only) reward those top-spending travelers as their elite customers.

The terms used in the current MileagePlus Program

There are four elite statuses in the United Airlines MileagePlus Program, including Premier Silver, …

Promoting student success in the STR Student Market Study Competition

I was in New York City (NYC) over the Veterans Day weekend for the HX: The Hotel Experience 2019, one of the most important trade shows in the lodging industry. Similar to last year’s trade show, the HX 2019 also entailed four components, including HX: The Marketplace, HX: The Conference, Boutique Design New York, and the STR (Smith Travel Research) Student Market Study Competition.  

STR is the leading data analytics provider for the lodging industry. Since its debut in 2015, the STR Student Market Study Competition (the STR Competition hereafter) has received significant attention from the hospitality programs around the world.

This year, over 20 students from the Collins College of Hospitality Management at Cal Poly Pomona traveled to NYC for HX 2019. Moreover, six of them also participated in the STR Competition for the first time.

In the end, the Cal Poly Pomona team won the 2nd Prize among the 25 competing colleges and universities. The other winning teams include Michigan State …

Want a job at McDonald’s? Now, it is as easy as talking to Alexa

McDonald’s Corporation introduced the world’s first voice-initiated job application process called McDonald’s Apply Thru. Now, job seekers can initiate the job application process through McDonald’s Apply Thru by taking to either Alexa or Google Assistant.

How McDonald’s Apply Thru works
The job application process begins with the applicants saying:
Alexa, help me get a job at McDonald’s.” 
or
“Google, help me get a job at McDonald’s.”
Then, the job applicants will need to answer a few basic questions, including their name, job of interest, and the location where they want to work.
Afterward, the job applicants will receive a text message with a hyperlink that will take the applicants to continue the rest of the application process.  
Where McDonald’s Apply Thru serve
McDonald’s Apply Thru is now available in nine countries, including the U.S., U.K., Canada, Australia, France, Germany, Ireland, Italy, and Spain. It will be made available to other countries in the coming months.
Why McDona…