Kayak CEO Explains How Airbnb Combats Hotel Surge Pricing

Airbnb already poses a threat to traditional hotels, due to the startup’s lower prices, wealth of inventory, and unregulated nature, some observers would argue.

In an interview with Bloomberg yesterday, Kayak’s CEO Steve Hafner notes that Airbnb is hampering hotels’ tried-and-true method of surge pricing. Ordinarily, a major event like the Olympics in Rio de Janeiro would inflate hotel rates exponentially, but with Airbnb, travelers have many other options and need not surrender to peak prices. Of course, Airbnb hosts are also apt to raise prices during major events, potentially removing their price-lowering benefit to the time period.

“The impact [of Airbnb] hasn’t been felt on day-to-day operations yet,” says Hafner, explaining that Kayak competes somewhat with Airbnb by dealing in non-traditional hotel rooms and apartments.

By and large, hotels specialize in attentive service and reliability, appealing to an older demographic, while Airbnb specializes in a shared local experience, skewing younger. “Millennials certainly don’t have the same desire to own assets in the way that my generation does,” Hafner says of the sharing economy’s rising popularity.

More Predictions

Hafner also reports that recent terrorism hasn’t impacted travel nearly as much as the Brexit vote, according to Kayak’s data. “The day after the vote, we saw 50% more people in the U.S. looking for searches to the UK, because the UK is on sale,” says Hafner. “And we also saw 40% higher search volume from people in the EU going to the UK.”

Turkey's attempted coup saw a drop-off in potential visitors to the country, and Hafner expresses hope that President Erdogan will curb some of the anti-American rhetoric in order to encourage a tourism rebound.

Watch Bloomberg's interview segment on Airbnb here

Watch Bloomberg's interview segment on Brexit here