The new Airbnb innovation project is a great opportunity for boutique hotels to increase the projection of their service offerings and position themselves as a highly sought after service in any destination.
Small to medium-sized independent hotels have a great opportunity to increase the visibility of their service offerings and boost their sales through the new services of a key tourism industry player who continues to revolutionize the market.
Ten years ago, this important company initiated its operations with the mission of making its clients “feel at home” while also enjoying a unique experience absorbing the culture and customs of the place where their accommodation is located.
And now, after a long journey, said company Airbnb’s innovation has conquered 65,000 cities in 191 countries.
These new alternatives of shared economy or disruptive innovation, like Airbnb or Uber, have arrived to cover a need that existing products in the market were not fulfilling. Airbnb’s new project, OTA, arrived to offer hotels a massive window to
reach a mass of clients that boutique hotels didn’t previously— some still don’t—have the resources to cover.
When you ask users why they chose to use the services provided by companies like Airbnb or Uber, their answer is simple: they offered a service which wasn’t covered by traditional channels. Quality service with diverse alternatives, for all different types of clients and their needs. They sell an experience.
These companies’ looming success is a reality that speaks to us everyday. They’re here to stay and continue to grow. So, when looking at the figures of Airbnb and their OTA platform, I don’t think the question we should be asking ourselves is how to fight against them. Rather, it is easier, and less costly, to follow that trend without taking extremist positions.
Why You Should Be A Part of Airbnb’s Innovation and Participate in its OTA’s Platform
If I am a small to medium-sized independent hotel, my focus should not be on the OTA’s—I’d lose money on account of such high commissions. Rather, the question I should ask myself is: Do I have the ability to widely reach my potential customers? How much should I invest in increasing my visibility and boosting my direct sales?
What I hope to show by inviting you to ask yourself these questions is that both options have costs and both options are valid in their own right. Losing money is having an empty room. The important thing is that the hotel never loses track of its inventory of rooms; depending on its size, product, location etc. The strategy that suits each hotel is unique, but you must have a strategy that allows you to manage inventory according to the season and your occupancy.
Experience Tells Me to Follow The Trends
When I started in the hospitality industry, I was heading a very luxurious boutique hotel that did not have the capacity to make heavy monetary investments in marketing. I knew that OTA’s commissions were expensive, but that didn’t mean we couldn’t have visibility or reach in the market.
Furthermore, tour operators charged significant commissions. However, I never neglected my direct sales and I controlled my inventory. With the hotel’s location in Cartagena de Indias- Colombia, there were seasons in which clients arrived on their own, with no need for third party distribution channels. However that did not mean we had no use for these distribution channels, they would be my allies at other times of the year, so maintaining that commercial relationship was important.
I also operated in hotels which sold only through OTA’s and tour operators, and it worked for them. That’s why each hotel is unique and we cannot generalize. In these times of fierce debate between the OTA and Airbnb’s role and their impact on the hotel market, my recommendation, if you know your product and you know where you want to take it, is not to assume radical positions.
What Makes The Airbnb Innovation Process Different?
Returning to the topic of Airbnb’s innovation, it’s still soon to assume a position. What we know for sure is that they have the capacity to enhance their service offerings, and have shown that they have achieved what they originally proposed, offering a model apparently less costly, in which hotels—regardless of their size—with more favorable conditions and a less bureaucratic system will have the opportunity to take advantage of the OTA platform.
Airbnb went on to fill spaces in the market that neither traditional hotel services nor OTAs were covering, and their
success at doing so shows an increasing trend in various countries around the world. Moreover, it met needs for boutique hotels and bed&breakfasts by offering customers a more user friendly platform at less cost.
Consider that Airbnb’s innovation project supports a model in which they are “…dedicated to working with small hospitality businesses that offer a great experience for their guests and that share [their] mission to make travelers feel like part of the place they visit.”
I personally feel that these types of vacation rentals are a valid and viable business model considering: they are well regulated and well controlled, they respect the laws, they are operated with all the formalities, they have equity at the tax level that currently exists for hotels, they do not negatively affect their community, and that the services they offer are of quality.
Such is the case with Room Mate, strongly criticized when it launched its BeMate product for “betraying” the traditional hotel market. “Traitor” or not, BeMate went on to cover a market of real needs that listened to its clients. And that’s where the difference lies: Are we listening to our customers? Indeed there is a market that prefers a well managed and operated vacation rental to a traditional hotel.
So what can you do? Be present! Do not make extremist decisions or take extremist positions. Do not underestimate any option that can fill your boutique hotel. Remember, earning less for assuming commission and distribution costs is not losing. Losing is having empty rooms.
Ana María Pittaluga
Hotel consultant, founding entrepreneur of AMP Hotel Consulting and mentor, with more than 20 years of experience in the tourism and hotel sector, leading business innovation and business development plans in Latin America and Europe.