NEW YORK (MainStreet) —The Priceline.com revolution that began in the late-1990s was a consumer’s dream come true: name your own price. Beggars could be choosers (for once), as hotels weren’t about to balk at filling otherwise empty rooms.
Did it kill the hotel industry? No, but Priceline wrested a lot of control of room inventory away from hotel operators. Not to mention the fact that hotels were paying 20 to 25% commission to Priceline and other online travel agents like Expedia, Orbitz, and Travelocity.
Consumers loved it. A good value meant a good price, but it also meant that great feeling of having gamed the system by unearthing the lost hotel codex. As a result, online bookings reached $162 billion in the U.S. last year, up from $105 billion just five years ago.
Airbnb.com has the potential to disrupt all that, not because it’s usually cheaper than a hotel (by 75% sometimes), but because its 250,000 listings constitute the anti-hotel.
Founded in 2008, Airbnb.com.com bills itself a community marketplace where you can rent someone’s house or apartment in another city and hosts can rent out their own place to inbound vacationers. It’s a young company and it’s a pervasive company, with listings in 33,000 cities and towns in 192 countries. It’s also a well-liked company, which reports a 97% customer satisfaction rating based, in large part, on staying out of the way of its customers. There’s a range of policies for cancellations and refunds, but on par, renters and hosts are encouraged to use a series of company guidelines to conduct their own transactions. In fact, at the end of 2012, Airbnb CEO Brian Chesky claimed his company would be filling more room nights than Hilton Hotels.
The listings are comprehensive, often with professional photography. The listings are also incredibly personal. Renters not only know what they’re getting, in terms of amenities, but they get to know an awful lot about the host—maybe too much sometimes. In the end, though, many renters leave with the vague feeling that they had a good time at an absent friend’s apartment, and hosts walk away with the vague feeling that their wallets just got a little fatter.
It’s the kind of experience that Airbnb.com, in the end, facilitates rather than creates—the inverse of the hotel industry’s definition of “experience.” Call room service and hear a “yes, sir, fifteen minutes, sir.” Call the concierge and hear a “how can I make your stay more pleasant?” Or, call the front desk and hear a wanton “whatever, whenever.”
And, who doesn’t want to hear that?
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It turns out: not everyone, not always, and after a week of hearing it, probably not again for a while.
“New lodging experiences have the potential to diminish our need for commercial hotels,” says David Brudney, a hospitality industry consultant based in Carlsbad, Calif. He cites commercial cruises, bed-and-breakfasts and corporate residential properties as risk factors for hotels in losing leisure and business travelers.
“There is risk, and the hotel industry will adapt to the needs of future business travelers,” says Brudney. “But, Generation X, Generation Y, and some Boomer leisure travelers are looking for new experiences. I certainly wouldn’t rule out Airbnb.com’s area as a market for growth.”
We’ve all stayed in a hotel while on a work trip—and business travelers are central to a hotel operator’s business strategy. But, vacation stays are central to a hotel’s mythology.
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“There’s a time and place for hotels, but they are expensive and there’s no way I would do it, personally, if I didn’t have points,” says Benjamin David, 32, a communications consultant in Washington, D.C. “They feel touristy, and just because I’m a tourist doesn’t mean I have to act like one.”
David travels regularly for work and makes use of hotels for those trips. But, before booking an upcoming vacation with friends, he perused Airbnb.com to find a place to stay rather than a hotel, saving more than $1,200 in the process.
“Cost is a huge factor, but so is what I’m getting for that cost,” he says. “Hotels create a wall between you and people that make a city interesting. Why would I pay for that kind of isolation?”
“I believe there's a hidden common denominator among people that are willing to host or be hosted by strangers,” says George Jibilian, 45, a nonprofit director and Airbnb.com host who possesses a five-star guest satisfaction rating (the highest).“Whatever that commonality is, it has been a positive experience for me.”
Jibilian regularly rents out one bedroom in his historic bungalow for $75 a night in Fort Collins, Colo., an area where a typical hotel night costs between $100 and $149. His listing is certainly attractive from a price comparison perspective, but Jibilian argues that price is only one aspect of the attraction.
“People really enjoy getting a local's perspective on what to do and where to eat. They also like hearing about my personal experiences with places they have yet to explore,” he says. “So, cost is important. But so is personalized and opinionated perspective on the local community.”
That direct connection to “the community” is something that hotels struggle to offer.
“There are a lot of things that are changing in terms of hotel facilities and amenities,” says Brudney. “They’re trying to make themselves more of a social hang-out, where guests can interact and feel comfortable. They’re also trying to facilitate more social behavior.”
But, maybe hotels are trying too hard to do something they cannot, fundamentally, do: create value around an authentic local experience.
“It’s like finding a good cup of coffee in a new city or town,” says Jibilian. “How many people do you know that have gone to a Starbucks while visiting another place and come back with stories about what a unique experience it was?”
Sure, hotels will provide you with glossy Chamber of Commerce walking map. That’s a genuine customer service gesture. But, it’s still one that emphasizes your alien status, armed with a paper accordion that outlines shopping, restaurants, and famous landmarks.
“My parents would want amazing service at the hotel and to go to the Eiffel Tower and Louvre,” says David, “And, sure, I’d like those things, too, but I also want to see what a local sees. I want to see what it’s like to actually live there. And, I think it’s easier to do that, now.”
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