Seat 2B By Joe Brancatelli
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Why Airbnb Is Innovative, Not Disruptive
January 28, 2016 -- Uber, the ubiquitous ride-sharing app, is laying waste to the traditional ground-transportation industry from coast to coast, driving taxi companies into bankruptcy in San Francisco and stealing subsidies from subways, buses and commuter trains in New York. Yet Uber's fellow travel disrupter, Airbnb, clearly isn't having the same deleterious effect on the hotel industry. Despite Airbnb's explosive growth and gripes from hoteliers around the world, there's little to show that the home-and-apartment sharing service is harming traditional lodging options. That's especially true for business travelers, who tend to be short-term visitors and clearly prefer the ease of using conventional hotels, which, after all, were purpose-built for road warriors. Contrary to the trail of destruction wrought by Uber, Airbnb is growing even while the hotel industry is experiencing an historic global expansion, record-high occupancy rates and rapid increases in nightly rates. Consider these tasty tidbits from the lodging front:
Those heady numbers are arresting when you consider that Airbnb generated about $4 billion in bookings in 2014 covering 40 million room nights, virtually all in apartments and homes rather than traditional hotels, motels and resorts. Considering that Airbnb's handle was expected to grow to 74 million room nights in 2015 and 100 million nights this year, the continued resilience of the traditional lodging market is remarkable. So the obvious question: Why is Uber the Ubiquitous disrupting the taxi industry while Airbnb and the old-line lodging industry co-exist quite nicely? For one thing, apartment- and home-sharing isn't quite the revolution that Airbnb would have you believe. Although the creation of Airbnb revolutionized its execution, apartment- and home-sharing as a concept has been around practically forever and the hotel industry has been competing with it all along. For example, my first business travel house rental dates to (yikes!) 1976. My employers at the time rented homes for entire staffs of trade newspapers so we could produce on-site daily editions at major trade shows. I regularly wrote about home-swapping services when I was an editor at Travel & Leisure in the 1980s. I've been renting homes and apartments on leisure trips in Europe from sites such as VRBO.com since at least the late 1990s. And I remind you that "The Holiday," a star-laden extravaganza directed by Nancy Meyers, revolves around renting someone else's home. It was shot in 2005 and released in 2006, two years before Airbnb hit the Internet. Another reason why Airbnb hasn't swamped the traditional lodging industry? Convenience. Business travelers drive lodging — we're 40 percent of the rentals and pay substantially more per night — and Airbnb-type accommodations aren't always a good fit. For starters, business travel stays tend to average less than two nights. Who wants to search for an owner and look for a key when you arrive after a long flight and will be gone just a few days — or even a few hours — later? Checking in and checking out at odd hours is a hotel specialty. Hotels offer at-your-fingertip services — room service and restaurants, on-site laundry and dry cleaning, meeting rooms and fitness centers — that Airbnb rentals can't. A recent Morgan Stanley report highlights this dichotomy. About 25 percent of traditional hotel stays last just one night. Only 7 percent of Airbnb rentals are as short as one night. And unlike Uber, which presumably offers business travelers a faster, cheaper, more convenient alternative to taxis, Airbnb still isn't in the business-travel sweet spot. In fact, the Morgan Stanley report says that very few Airbnb users were actually considering traditional hotels or resorts. Thirty-six percent would have otherwise used a bed-and-breakfast accommodation, 31 percent chose Airbnb over staying with friends and family, and 20 percent switched to Airbnb from another vacation-rental option. None of which is to say that Airbnb will never be a threat to traditional lodgings. Airbnb is making a concerted effort to woo us and our bosses. The company also sees itself as a platform for rentals of all kinds, so you'll already find smaller hotels and boutique properties offering accommodations via Airbnb. Some hoteliers tell me they'd rather rent via Airbnb than online travel agencies because Airbnb charges less than the so-called OTAs. (Ironically, Airbnb's largest competitor, HomeAway.com, was purchased last year by Expedia, one of the most powerful OTAs.) A couple of years from now, of course, none of this will be an issue. Airbnb will be selling to us. We'll be buying from them and regular hotels simultaneously. Hotel chains, Airbnb and the online travel agents will be selling each others' inventory with abandon. And this entire column will seem as quaint as arguments about whether airplanes would supplant zeppelins or Superman could best Batman in a movie.
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