How Are Short-Term Rentals Impacting Your Hotel?

Search for your city, neighborhood or postal code.

8 Ways Hotels Can Compete With Airbnb

Airbnb since its founding has been a fun alternative to hotels, a way to experience a vacation in a different, more localized way. Yet, in recent years, Airbnb and other short-term rental platforms have become a legitimized threat to the status quo. With each fiscal year, statistics have shown that Airbnb is very much encroaching upon the accommodation market, which until now was monopolized by hotels. 

One area that hotels have doubled down on is their appeal to business travelers.

Despite the recent upheavals in the corporate furnished housing space with the rapid growth of players like Sonder, and Airbnb’s recent investment into Zeus and acquisition of Urbandoor, the hotel industry seems confident in their ability to maintain their hold on business-related lodging bookings for years to come without surrendering much revenue to Airbnb. 

Those who have been to a new hotel in recent years can see signs of this – many of them are built in strategic locations, incorporating corporate event facilities and even co-working spaces, as corporate travel increasingly forms an significant proportion of their clientele. It is hard to debate hotels’ dominance or to claim Airbnb is ready to steal all of their business clients, but it is worth reviewing just how strong of a hold they really do have. In order to see what’s really going on, AllTheRooms Analytics conducted a survey of 1,000 American business travelers from around the country to see the data behind their preferred accommodation options.

The Survey Results

Straight away the survey data shows that hotels are indeed preferred at a much higher level than Airbnbs when it comes to traveling for work. Of people surveyed, 92% of people that travel for work will stay in a hotel rather than an Airbnb. A note on methodology, if a person taking the survey never travels for work then they were exempt from answering their preferred place to stay for business. The 92% stems from all the people that took the survey that travel weekly, monthly, quarterly, yearly, or rarely for business. 

Additionally, AllTheRooms Analytics asked all those who answered in favor of hotels, why they would not consider staying in an Airbnb for business travel. And while there was a smattering of answers, the two largest percentages that came back were 40% for “Hotels are More Centrally Located” and 34% for “My Company Chooses Where I Stay”, highlighting the importance for hotels of business-friendly locations and corporate travel partnerships.

That final answer brings about another interesting finding from the survey. 38% of people are not in charge of booking their own accommodations, their company books it for them. Thus, this is 38% of the representative population that does not even have the option to elect to stay in an Airbnb with a few exceptions where corporate travel policies are particularly flexible.

Less important for our survey respondents but still worth noting was 6% for “I don’t know how to use Airbnb”, another sign that the boomer demographic is driving the current preference of business travelers for hotel accommodation over short-term rentals.

Next up was 5% for “I don’t have use/have a hotel rewards scheme” and 4% for “lack of convenience and amenities”. Loyalty programs are a major weapon in hotels’ arsenals against short-term rentals, but while Airbnb has no large scale rewards program currently, they have recently been experimenting with a program with Airline Delta to allow Airbnb guests to earn SkyMiles when reserving on the platform. It’s widely speculated that Airbnb will continue to push further towards creating it’s own rewards ecosystem as it continues it’s grab for the corporate travel market.

Hotels continue to have an upper hand for business travelers when it comes to convenience in terms of prime locations, but in terms of amenities and room service the aforementioned players in the short-term corporate housing market are rapidly narrowing the amenities and service gap, with Sonder and Airbnb acquisition Urbandoor offering gyms, pools and concierge services.

Our Analysis

Again, it is hard to say that hotels are in any position to worry about changes coming to the way businesspeople travel. But that is not to say that they can get complacent. On the contrary, the survey does, in fact, reveal some results that may swing some people towards Airbnbs. 

First, let’s bring in some data from another survey conducted in conjunction with the business traveler survey. In this questionnaire, it was revealed that while only 8% of people who traveled for business preferred Airbnb, nearly 30% of those traveling for leisure or events, would rather stay in an Airbnb, or other short-term rentals. Additionally, a higher percentage (around 35%) of Millennials prefer Airbnb to a traditional hotel.

Again these results are for leisure rather than business, but it is very possible that this demographic trend could begin to bleed over into the business world. For one, look at one of the biggest reasons why hotels are preferred over Airbnbs, “my company chooses my accommodations for me”. With the Baby Boomer generation quickly aging, within the next decade, the workforce is going to be dominated by younger, technologically literate Millennials with modern working habits who work for companies with more  flexible corporate attitudes. At which point does the higher number of Millennials that prefer Airbnb begin to leak into companies’ travel policies? Could a younger workforce shift the power balance more towards the middle? Potentially. Even if suddenly 35% of business travelers prefer Airbnb, that would still mean hotels have a majority share of the market. But the change from 8% to anything close to the 30% range represents a massive loss in revenues for hotels. 

The belief that “hotels are more centrally located” is maybe the best thing hotels have going for them right now. But the statement, despite it being the favorite answer amongst business travelers, is not necessarily true. Around the world cities and municipalities are entrenched in legal battles with Airbnb, and other booking platforms, to keep short-term vacation rentals (often unlicensed and illegal) out of city centers. Some attempts to regulate the location of Airbnbs have been successful but just as many other battles have gone in favor of Airbnb.

Against the backdrop of an increasing focus on corporate travel from Airbnb and an eroding advantage in service and amenities as the high-end short-term rental market continues to evolve, hotels should continue to tout their high-utility locations near airports, convention centers and central business districts, and focus on their ability to reward loyal customers and provide integrated corporate lodging and event solutions to their employers. This should allow them to continue to maintain the corporate travel partnerships that provide their best defence against short-term rentals in the world of business travel.