AirBnB is at War with Priceline: Here’s Why You Should Care
It’s been almost ten years since AirBnB was founded by two San Francisco residents who couldn’t afford the rent. The idea was to put an air mattress in their living room and rent the space to short term travelers. Now, the company is more valuable than any hotel chain on the planet. The idea of “living like a local” is a powerful narrative that has captured a significant piece of the global hospitality market, and to say that the founders are eating well is something of an understatement.
Meanwhile, hotels have scrambled to adjust. At times it resembles one of those marquee boxing fights with a lot of money at stake. In one corner, hotels. In the other, AirBnB.
There are few who would venture to say that hotels are winning that fight — but let’s not jump to conclusions. The rules of the game are still in the process of being defined, and there are actually three big players in the mix, not two. Hotels, AirBnB, and OTAs.
AirBnB and OTAs are both concerned with curating inventory and taking a piece of the action, while hotels and hosts provide the bricks-and-mortar service. But AirBnB and OTAs are, at least for now, at odds. Every booking through AirBnB is one that OTAs don’t have, and vice versa. It was only a matter of time before the spotlight shifted toward this particular conflict.
A recent article in the Wall Street Journal explores the showdown in detail, describing how OTAs are moving deeper into AirBnB territory by adding more vacation rentals to their search results.
Not that this should come as a surprise to hospitality experts. Back in 2015, former Priceline CEO Darren Huston gave a candid interview about the company’s plans to accelerate into vacation rentals managed by independent owners. If you search Priceline (or any other OTA) today, you’ll likely find at least one vacation rental side-by-side with traditional hotels and resorts.
In reality, this makes perfect sense. If AirBnB thought that OTAs would cower and consolidate — instead of play offense and blurring the lines — they were sorely mistaken. There is far too much money to be won and lost for this battle to play out with complacency on either side.
But AirBnB is not flying blind. They’ve encroached on “hotel and resort” territory by offering curated travel experiences under the “Trips” banner. A recent article in Hotel News Now goes so far as to speculate if — and when — one of the big OTAs will try to swallow AirBnB whole. The San Francisco-based company may have recently overtaken the last of the giant hotel chains in terms of market value, but Priceline is still worth far more.
The author of that HNN piece argues that hotels should see the writing on the wall and look to buy up (or affiliate with) vacation rentals. The idea would be, in other words, for major hotel players to become their own version of AirBnB. You still have flagship properties, but you have a smattering of curated vacation rentals to boot. Accor of course have already fired the first shots in this war. Following their acquisition of One Fine Stay in 2016, they have now concluded the full purchase of the French home rental company “Squarebreak” and will incorporate this and their other brand “Travel Keys” under the One Fine Stay umbrella. If the other big groups were to follow suit it could be TKO for AirBnB. The local, funky, alternative narrative simply wouldn’t belong to them anymore. They would just be another hotel company with a lot of different properties on the market, managed by a lot of different people.
The thing is, I think we have become so distracted by the perceived threat of both OTAs and AirBnB that we have forgotten the distinct advantages of hotels, and with the “live like a local” routine becoming old news, hotels have a fresh opportunity to establish their relevance in today’s hospitality market. Observe the fight between the other protagonists of course, but never forget that at the end of the day, guests want to stay somewhere in a value-for-money room with value-for-money service. That could be in a vacation or home rental, or it could be your hotel. Where they choose depends on you!
For further industry insight, please follow the links below.
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