By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
As a hugely successful and globally influential
accommodations company, it is only natural that the press has zeroed in on this
sharing economy juggernaut during the topsy-turvy news cycle of the Covid
pandemic. But just because Airbnb had massive layoffs during the spring months
and is pivoting towards long-term rentals does not mean that you should count
this entity out as a direct competitor for your ‘traditional’ hotel.
In fact, Airbnb will likely end up leaner and meaner as a
multi-purpose accommodations provider by this time next year. To understand
why, consider what makes the average consumer opt for going to the supermarket
versus a collection of specialized grocers.
True, the platform is still a bit on the ropes, at least as
it concerns our brands. Superhosts and their ghost hotel units were devastated
by the lockdown as their high monthly fixed costs forced many of them to shift
inventory from short-term rentals into the long-term market; and once it’s in
this latter pool, a unit is hard to swap back. Many also point to what on paper
is the spectacular failure of Airbnb’s experiences vertical. Together, this
could be seen as less overall competition for hotels moving forward.
But look closer and you’ll see that this accommodations
juggernaut is setting itself up to become a more versatile platform for just
about any form of non-purchasable living space a customer could want. This is
why the supermarket model works – in a word, convenience.
Some consumers will want to go to their independent fruit
market then to an organic butcher followed by a bakery or fromagerie, likely
because the goods are of higher quality, made by niche producers and they can
interact with trusted personnel to take advantage of their recommendations. But
visiting all these separate entities takes time and there is no guarantee that
such specialized shops will have everything that a certain individual needs at
that exact moment. So, you go to the supermarket to get your fruits,
vegetables, meats, bread, cheese and sauces; and just in case you also need
more toilet paper, they have that on aisle three.
In this sense, it’s not just about the convenience itself
but the guarantee of this convenience. One reason you go to a
supermarket is because products that aren’t necessary on the weekly shopping
list but are nonetheless available will ‘halo’ back onto whatever items are
sought after on that particular shopping day. As ‘the everything store’, Amazon
has also derived much of its success from this model in that you can buy books,
gardening tools, dried spices and underwear all at the same time and all
without leaving your home.
Applying this psychological foundation to Airbnb, the
experiences vertical makes perfect sense even if it’s unprofitable on paper for
the first few years after launch. The company’s core revenue generator is
selling the equivalent of hotel rooms – staying to stay in desirable locations
– and, like visiting a supermarket, even just the possibility of also
purchasing an experience to coincide with a short-term reservation means more
customers will be drawn to utilize this platform over others.
Hence, with each new gross functionality added to Airbnb, it
has more spokes on its wheel to keep the center cap of short-term
accommodations spinning. Therefore, developing a long-term rental platform will
benefit the company in the same way as it will mean more eyeballs going to the
website and using the app, spurned on by the convenience of ‘one stop
shopping’. And once people are comfortable with using the interface to find what
they want, new habits will be formed and will be ever-harder to break.
Key for traditional hotels to grasp from all this is that a
resurgent Airbnb after Covid will mean even more users on its platform than
before the pandemic, which will inevitably result in a revived fight against
ghost hotel operators, albeit in a few years once their liquidity has
stabilized. Hence, we hoteliers must continue to push for a level playing field
once the more immediate concerns of reshuffling our operations to meet the
demands of the next normal are addressed.
Furthermore, consider how the supermarket analogy can work
to your brand’s favor. If your primary business is derived from selling rooms
product, then what ancillary services can you add to halo back onto this central
revenue generator? This will be an interesting question to answer in the
immediate pandemic aftermath as many costly operations that would give you this
halo in a conventional sense – like a spa or restaurant – may no longer
motivate guests, at least in the near-term. Remember to look for features or
amenities that are relatively inexpensive, even when poorly utilized by guests,
but will help draw people to consider your property in any top-of-funnel
search.
All told, Airbnb is here to stay and is working to swiftly
adapt to the challenges presented by Covid so that this lodging platform
remains a competitor for traditional hotel brands for many years to come. For
your hotel, there are many things you can learn from this company so that you
are better prepared to capitalize upon the post-pandemic travel surge with the
supermarket model being just one of them.
About Larry Mogelsonsky
Larry Mogelonsky
One of the world’s most published writers in hospitality, Larry Mogelonsky
is the principal of Hotel
Mogel Consulting Limited, a Toronto-based consulting practice. His experience
encompasses hotel properties around the world, both branded and independent,
and ranging from luxury and boutique to select-service. Larry is also on
several boards for companies focused on hotel technology. His work includes
five books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013),
“Hotel Llama” (2015), “The Llama is Inn” (2017) and “The Hotel Mogel” (2018).
You can reach Larry at larry@hotelmogel.com to discuss hotel business challenges
or to book speaking engagements.
Media Contact:
Larry
Mogelonsky
Email: larry@hotelmogel.com
Website: http://hotelmogel.com/
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