What Airbnb Trips tells us about the future of hotels

December 22, 2016

Last month, Airbnb announced the launch of a new service called Trips, adding to its existing accommodation booking platform. As well as booking a place to stay, Trips has two new categories (Experiences and Places) that enable users to book unique activities, arrange tours with locals, and receive recommendations on a city’s “secret spots.”

With “Experiences,” travelers can book themed activities, such as discovering Havana’s music scene with an award-winning vocalist, or training with a samurai artist in Tokyo. In contrast, “Places” is all about offering suggestions from local influencers, such as where a reality TV star goes hiking, and the kind of places a club owner likes to party.

So far, Experiences and Places are available in a dozen global cities, but there are plans to expand this to over 50 cities in 2017.

These new features are just the beginning of Airbnb’s grand plans. The company will soon be offering restaurant reservations through its app, and there are plans to launch other services including grocery deliveries, car hire, and flights.

So what does Airbnb’s latest move tell us about the future of travel, and crucially, how will it impact the rest of the travel industry?

The impact on OTAs

Airbnb’s apparent intent to become an end-to-end travel service has led to them being discussed as a new kind of OTA. If their grand plans do indeed come to fruition, they could soon begin stealing market share from some of the industry’s biggest hotel booking sites.

Industry giants such as Expedia and TripAdvisor already sell activities and trips, but Airbnb’s range of experiences look and feel very different. Instead of big sightseeing tours that can be easily found anywhere, Airbnb’s activities and recommendations are hand-picked and unique, giving them an attractive and distinct point of difference.

In a recent interview with Skift, Chip Conley, Airbnb’s global head of hospitality and strategy, discussed how the company has been careful to ensure their trips are community-based, authentic, and deeply local—keenly aware that it’s these very values that its own loyal customers have bought into.

Even if OTAs do attempt to compete by expanding their own range of services, Airbnb can count upon a unique brand loyalty acquired by its focus on localness and community values.

The financial impact on hotels

Plenty has been made of the negative impact Airbnb is having on hotel occupancy levels and rates, although different reports seem to offer conflicting information on how deep this impact really is.

Last year, a study by HVS estimated that hotels lose approximately $450 million in lodging revenue per year to Airbnb. But just recently, an article by Skift discussed the findings of a report published by STR that seems to play down the Airbnb threat while highlighting that room demand in the U.S. continues to grow.

While there doesn’t seem to be a complete consensus on the company’s financial impact, it’s clear for all to see that Airbnb is shaping the way an entire generation thinks about travel.

The Airbnb traveler mindset

The rise of the sharing economy has come to redefine what travel is about, and Airbnb is undoubtedly at the heart of a shift in attitudes. A new breed of traveler is driven by the chance to explore and truly connect with the destination they’re visiting—simply passing through and acting like a tourist isn’t enough.

While millennials most strongly identify with the Airbnb philosophy of “Live like a Local,” travelers across generations are moving away from cookie-cutter experiences. This is reflected in the fact that lifestyle and boutique hotels continue to outstrip overall growth in the rest of the U.S. lodging industry, growing by over 5% each year since 2000.

Arguably, lifestyle and boutique hotels could actually benefit from the Airbnb effect by enticing a generation that are hooked on the idea of unique experiences but want to enjoy a little hotel luxury when they travel.

Driving industry innovation

The growth of Airbnb has also led many hotels to adapt to the changing tastes and preferences of travelers. In many cases, this has inspired certain properties to focus on providing curated experiences that revolve around their own unique selling points.

For instance, West Hollywood’s Sunset Marquis opened up its underground recording studio to guests back in 2013, riffing off its history as a favorite with rock-n-roll icons including Ozzy Osbourne and members of The Who.

New properties are also being designed with the Airbnb philosophy in mind. At the newly opened Arlo hotel in New York City, customized rooms feature personal “touchpoints,” including bathroom amenities supplied by a local cocktail and fashion bar. The hotel’s public spaces can also be transformed into areas suitable for yoga classes and wine tasting.

But it’s not just boutique brands that are adapting to a new type of traveler. Across the industry, the biggest hotel groups are starting to reconsider their own business model.

The evolution of the chain hotel

Even chain hotels have started moving away from traditional brand values to appeal to new preferences in travel. Instead of celebrating consistency in customer experience and design, some of the biggest brands are now introducing innovative touches to bring a distinct character to each of their properties.

Radisson Red (Radisson’s millennial-focused brand) is giving a neighborhood feel to their hotels by commissioning local artwork for each of their properties. Meanwhile, Marriott’s boutique Moxy Hotels are designed to replicate what travelers love about the Airbnb experience, providing spacious communal areas that create a social hostel vibe.

Marriott has also started offering loyalty member branded experiences. These include exclusive access to curated events and activities, such as tickets to Broadway shows and the chance to meet favorite sports teams.

This all represents a grand departure from long-standing traditions. Not so long ago, the chain hotel ethos was built around the concept of familiarity, the supposed appeal being that guests could rely upon the same feel and experience at any property they chose to stay at within a chain. Now that rulebook is having to be hastily rewritten.

The importance of brand consistency can’t be dismissed; offering a reliable standard of service and comfort has real value. But what Airbnb is forcing hotels to do is consider a new generation that also places significant emphasis on the unique and the authentic.

Replicating local experiences

While Airbnb’s continued growth might seem a threat, hotels are now replicating many of the company’s core elements. Just as Airbnb has leveraged its own community of insiders, hotels are also connecting with their own community of influencers and businesses to offer unique experiences in their destination.

For instance, Generator Hostels provides its own events in the eight European cities it has properties, ranging from group tapas tours in Barcelona to whisky tasting in Dublin. Meanwhile, the Conrad Algarve Hotel offers a range of curated tours, including clamming with a local fisherman. By partnering with local businesses to provide one-of-a-kind trips, hotels can start offering guests a way to truly connect with the destination they’re visiting.

A new era of travel

Airbnb has come to define what a new generation wants when they travel, leading many hotels to re-evaluate how they attract guests.

But of course, hotels have certain strengths they must continue to invest in and promote. Perks such as room service and access to a wealth of on-site amenities will always be appreciated and remain an important point of difference to sharing economy accommodations.

In the Airbnb era, the key to success is ultimately about balance. As Airbnb continues to redefine what travelers want from a vacation, hotels must focus on what makes them unique in the first place, while adding local flavor and authentic experiences into the mix.