Last month, as the industry was buzzing with rumors, we penned a blog post about what an acquisition of Hotel Tonight might mean for the hospitality industry. Last week it happened; Airbnb, which has managed to corner the market on repeat bookings without any points-based loyalty program, announced a deal to buy Hotel Tonight for an undisclosed amount of money.
The publications that covered the news all point to Airbnb’s upcoming IPO as the reason, citing the company’s desire to boost its inventory and build out its end-to-end travel solution. The company now offers accommodations in the form of private homes and hotels (plus treehouses, yurts, trailers and anything in between), for business travelers and personal travelers, in addition to local experiences and services for meeting and event planners, thanks to the acquisition of Gaest.
In our post about the acquisition rumors, we mentioned that an acquisition would help hotels who choose to be listed on the site, since Airbnb’s fees are far less than OTAs. PhocusWright noted, “it will charge a service fee for hotels and accommodation providers in the region of 3% to 5% – much lower, it claims, than that of OTAs which can charge as much as 30%.”
There is no doubt that Airbnb is looking to challenge the OTAs, which is great for hoteliers. In a PhocusWire interview, CEO Brian Chesky said, quite clearly, that the company is “100% battling online travel agencies,” and that it has a number of advantages over OTAs, including ‘unique inventory, a passionate community of people and multiple experiences in one app.’ He also alluded to his mission of the end-to-end solution, saying, “The product in travel is trips. We believe the way we’re going to win or the way we’re going to win over hundreds of millions of customers is to have the best trip.”
In its quest to add hotels to its inventory, Airbnb signed up SiteMinder as its first channel partner, allowing hotels to use a distribution service for listing, versus signing up independently. However, it’s important to note that hotels will need to meet certain criteria to ensure that Airbnb remains true to its roots, including ‘unique design characteristics, inclusion of local influences, access to common gathering spaces and high-quality photography on their content pages.’
These criteria lead me to believe that we were correct in our last post when we surmised that an acquisition could drive some Airbnb loyalists, who previously only rented private accommodations, to try out a hotel, especially if it’s Airbnb ‘approved’ and feels authentic. The acquisition will also likely drive hotels to think about how they can provide more local experiences for guests, offering food and drinks from local suppliers, featuring local art or showcasing local talent.
And, when it comes to digital strategy, the acquisition will likely drive hoteliers to think about new ways to drive last minute bookings. Whereas today, most hotels turn to OTAs to fill last-minute excess inventory, we hope in the future they will think about location-aware technology on SmartPhones or last-minute CRM strategies to drive this growing segment of travelers. Because, according to a Revinate analysis, almost 40% of single-night bookings for the same day were made on a smartphone.
We look forward to hearing about your experiences with Airbnb and will continue to update you on developments around its growth.