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Peer-to-peer accommodation sites like Airbnb challenge hoteliers to tap into new ways to attract mainstream travelers by offering a balance between affordable travel and customized amenities.
A recent study revealed travelers using Airbnb didn’t change their intended length of stay, however they did choose Airbnb over a variety of hotel classes, mainly midscale. It comes as no surprise that peer-to-peer accommodation services are especially appealing to travelers in big city markets due to the higher price point. They tend to offer custom price-points for the traveler depending on their needs, such as amenities and amount of private space, and budget.
For example, in New York City (one of the highest priced markets) there are nearly as many rooms, apartments and beds available as traditional hotel accommodations. According to LodgIQ’s data from August 2016, these pop up rentals were bringing in as much as 50% revenue as the city’s hotels, causing them to lose out on millions per day of potential revenue.
A recent report by HVS Consulting & Valuation explained “hotels lose approximately $450 million in direct revenues per year to Airbnb… By 2018, HVS estimates that Airbnb room nights will reach five million per year.”
Pressed with vacation rentals increasing popularity, hotel’s revenue managers must reimagine their approach to appeal to their customer base. With that said, here are three ways that hoteliers and revenue mangers can take back their share of the market and approach new challenges with an upper hand.
- Revenue managers need to expand their data horizon by starting with holistic data sets before diving into their own data sets – called an “outside in” approach. This means understanding ALL of the issues impacting the market, including peer-to-peer accommodations, special events, changes in market airlift, and much more.
- Leverage today’s technology that learns by itself (commonly known as machine learning or artificial intelligence) to deal with expanded data sets. Thanks to new technology, computers no longer see in just black and white, they can use complex data to see a full spectrum. The time is now to invest in new emerging technologies in order to stay competitive.
- Don’t just offer the best price to stay competitive. Look at your hotel’s value proposition and work with your marketing department to create packages that achieve premium pricing while also increasing the desire to stay. How can you tie in local attractions, events and local activities with elements from your hotel such as dining and spa packages?
Peer-to-peer accommodations may be changing the rules, but new techniques and technology solutions provide smart revenue managers with an opportunity to rise to above. Revenue managers shouldn’t be discouraged – but they should reimagine the traditional ways to reclaim their territory.
This content is created collaboratively in partnership with our sponsor LodgIQ.