Why Hotwire Loves It When Airbnb Puts Pressure on Hotels

kjellberHotwire, which offers discounted hotel rooms and car rentals to consumers without revealing the identity of the brands, stands to gain from the increased pressure that the sharing economy is placing upon hotels and car rental companies.

So says Hotwire president Henrik Kjellberg, who was brought in by Expedia from then-sister company eLong three years ago to turn around a struggling Hotwire. When hotels aren't selling out even during a major city event because companies such as Airbnb or VRBO are attracting guests, that means hotels will give Hotwire more availabilities to fill rooms at the discounted prices that consumers will be ready to book.

"Alternative accommodation for us is certainly something that makes the Hotwire proposition" more valuable, Kjellberg says.

In addition to its "opaque" product, Hotwire offers published rates for hotels and cars. Kjellberg says Hotwire may consider integrating alternative accommodations into its published-rate lodging offerings but definitely wouldn't display vacation rentals or apartments within the opaque product.

Discount sites such as Hotwire and rival Priceline.com generally do better during tougher times for hotels and car rental companies because they are more willing to offer discounted rooms and car rentals under the protective veil that anonymity provides.

Kjellberg says the hotel industry's declining revenue per available room and soft average daily rates during the first quarter of 2016 benefitted Hotwire.

"More supply means better deals on Hotwire," Kjellberg says.

He wouldn't provide revenue or earnings numbers but said Hotwire is on the upswing as it focuses on mobile, executes better and emphasizes spontaneous travel instead of just price.

Some three-fourths of Hotwire bookings within two days before a trip occur on mobile, he says, as do nearly half of hotel transactions.

On the branding front, Hotwire has designated its discounted hotel and car-rental offerings as Hot Rate Hotels and Hot Rate cars with an emphasis on spontaneity and not just price, Kjellberg says. Hotwire does TV advertising in select local markets, he adds.

With Airbnb apparently adversely impacting hotels much more than online travel agencies, Hotwire is poised to make some gains as hotels try to fill rooms. But Hotwire also has to fend off Priceline.com, which is emphasizing Express Deals that basically use the same model as Hotwire.